Expanding Latin American Monthly Active Users by 61% in Q1 despite Colombia's Tax Influence, as per Rush Street Interactive's Report
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On a breezy Wednesday, online gaming giant Rush Street Interactive releases its Q1 earnings, revealing a staggering 21% year-over-year surge in revenue to a whopping $262.4 million. Surprisingly enough, the business that was hemorrhaging $2.2 million in Q1 2024, is now raking in a net profit of $11.2 million for the first quarter of 2025.
The quarter's Monthly Active Users (MAUs) reached an all-time high of 354,000 across LatAm, with Colombia maintaining a steady stream of users despite the introduction of a 19% Value Added Tax (VAT) on online gambling operators in the country. Rush Street Interactive also set a new record for MAUs in Colombia, demonstrating its resilience in the face of taxation.
On the post-results analyst call, Rush Street Interactive CEO Richard Schwartz elucidated their strategy to mitigate the impact of the tax through bonusing, avoiding passing the extra cost onto players. This savvy move helped the company retain its market share in Colombia, while keeping Gross Gaming Revenue (GGR) levels near all-time highs, up by an impressive 55% in local currency.
However, the CFO Kyle Sauers expressed concerns over other financial metrics such as Net Gaming Revenue (NGR) falling short of base expectations in Colombia, while the average revenue per MAU across LatAm as a whole dipped to $36 from $44 in Q1 2024.
"In each of March and April, our net revenue growth was significantly impacted," Sauers said. "So, in March, our net revenue in US dollars was actually down slightly year-over-year. And in April, it was relatively static year-over-year."
To put things in perspective, the temporary tax, initially slated to last until the end of December, may have dampened the market's projected 50% growth, which is now on hold.
Is there a chance the tax gets scrapped?
To fund the response to ongoing civil unrest in the Catatumbo region, the Colombian government implemented the VAT in February by momentarily eliminating exemptions for online gambling operators. The tax is still uncertain about its permanence.
Industry insiders express a degree of skepticism, as local lawyer Juan Camilo Carrasco, a partner at Bogota law firm Asensi Advogados, forewarned iGaming Business, "We know that regarding taxes, nothing is more permanent than something that comes in temporarily."
However, Schwartz ensured the tax is currently subject to review by the Colombian courts to assess its constitutionality, with a final ruling anticipated by late May or June. Rush Street Interactive exudes a hint of optimism that the tax could be repealed, indicating that the reversal could lead to a significant boost in both revenue and EBITDA[1][3].
"Given the strong volumes that Colombia has shown, should the temporary tax be cancelled before the end of the year, we could witness substantial gains in both revenue and EBITDA," Sauers commented. "The abolition of the VAT tax would be a considerable factor driving growth for us when it occurs and when we have those comparables in place."
Latin America: Beyond Colombia
Colombia aside, Rush Street Interactive demonstrates faith in its ventures throughout the LatAm region, as the company also operates in Mexico and Peru.
In Mexico, Q1 revealed near 50% year-over-year growth as the company embarks on its third full year in the market.
"In terms of Mexico, we're seeing some fantastic growth from this market," Schwartz expressed. "It continues to be one that genuinely excites us, and the dynamics are moving in a very positive direction for us there."
With cautious optimism, the company is adopting a more measured approach in Peru, where it debuted its RushBet brand in July 2024 as part of its strategic entrance into the LatAm region.
Rush Street Interactive believes that Peru holds promise, despite postponing marketing investments to optimize the user experience and localize the platform.
Expansion opportunities for Rush Street Interactive in LatAm
In its results presentation, the company highlighted various prospective expansion markets in LatAm, such as Chile, Argentina, and Ecuador, as well as the recently regulated Brazil. By 2028, Rush Street Interactive could vie for a total addressable market of $15.9 billion in LatAm.
"There are other LatAm markets that we've been focusing on, evaluating ways to penetrate those markets," Schwartz revealed. "We haven't announced anything yet, and so I won't be able to share anything with you today."
However, Schwartz hinted at further expansion possibilities, adding, "Certainly, as you can imagine, once you have a powerful brand, a robust platform, a talented team, effective marketing, and local insights, it becomes much easier for us to thrive in future markets."
EBITDA soars for Rush Street Interactive in Q1
Alongside growth in revenue and net income, Rush Street Interactive announced a staggering 95% year-over-year increase in adjusted EBITDA to $33.2 million in Q1. This significant boost occurred even as adjusted sales and marketing expenses creeped up by 3% to $38.8 million.
MAUs in the U.S. and Canada also rose by 17% to 203,000, while the average revenue per MAU in North America was significantly higher than in LatAm at $368 compared to $36.
Rush Street Interactive reiterated its FY2025 guidance, predicting revenue to range between $1.01 billion and $1.08 billion and adjusted EBITDA to reach $115-135 million.
"These exceptional results stem from our commitment to innovation and improving the quality of our player experience, alongside efficient acquisition and retention of high-value players," Schwartz beamed.
- The company, Rush Street Interactive, noted a potential boost in revenue and EBITDA if the temporary tax on online gambling operators in Colombia is repealed, as suggested by the CEO, Richard Schwartz.
- In the year 2024, Rush Street Interactive ventured into the Peruvian market by launching its RushBet brand, but instead of aggressively marketing, the company opted to localize the platform for optimal user experience.
- Despite Colombia's introduction of a 19% Value Added Tax (VAT) on online gambling operators in 2025, the business quarter's Monthly Active Users (MAUs) reached an all-time high in the country, showing a promising resilience in the face of taxation.
