Company: RSI
Filing Date: 2025-02-28
Form Type: 10-K
Source: 0001793659-25-000047
Chunk: 22

Company: Rush Street Interactive, Inc.
Filing Date: 2025-02-28
Form: 10-K
Item: Item 15
Chunk 22
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 as well as substantive audit procedures. We obtained an understanding, evaluated the design, and tested the operating effectiveness of management’s controls over share-based compensation. We tested controls over management’s review of the assumptions used with regards to the valuation of the RSUs with market-based conditions. We also tested management's controls to validate that data used in management’s estimates in the valuation was complete and accurate. Our substantive audit procedures included, among other things, inspecting grant agreements and Board of Director minutes to evaluate key terms of the RSUs with market-based conditions granted, testing the significant assumptions underlying the performance conditions, and testing the completeness and accuracy of the underlying data by agreeing the underlying inputs, such as grant 

F-2

date, exercise price, and vesting conditions back to source documents such as Board of Directors minutes and grant agreements. With the assistance of our valuation specialists, we evaluated management’s valuation of the RSUs with market-based conditions by evaluating the Monte Carlo valuation methodology and the reasonableness of the valuation assumptions, including the expected volatility, the risk-free interest rate, and correlation coefficients, and independently calculating a fair value estimate for the RSUs with market-based conditions. We tested management’s significant assumptions by comparing the assumptions to current market and economic trends, historical results of the Company's business, and to other relevant factors. We also evaluated the adequacy of the Company’s share-based compensation disclosures included in Notes 2 and 8 of the consolidated financial statements in relation to these matters.

Capitalized Internally Developed Software Costs

Critical Audit Matter Description

As described in Note 2 to the consolidated financial statements, the Company capitalizes qualifying costs incurred to develop internal-use software when (i) the preliminary project stage is completed, (ii) management has authorized further funding for the completion of the project and (iii) it is probable that the project will be completed and perform as intended. These capitalized costs include compensation for employees who develop internal-use software and external costs related to development and implementation of internal-use software. During the year ended December 31, 2024, the Company capitalized $24.4 million of qualifying costs incurred to develop internal use software. As of December 31, 2024, the Company had $38.9 million of unamortized internally developed software costs. Management applies judgment to estimate the costs incurred by its software engineers, specifically during the application development stage of capitalizable projects. Given the judgment required by management, our audit procedures required a high degree of auditor judgment, subjectivity, and effort to evaluate