Columbia Presents Strong Q1 with Online Gaming

In its Q1 2025 earnings report, Rush Street Interactive (RSI) revealed a robust 21% year-on-year revenue increase, reaching $262.4 million. This growth was accompanied by a significant turnaround from a $2.2 million loss in Q1 2024 to a net profit of $11.2 million. Despite these positive figures, the company faced challenges in Colombia due to the recently introduced 19% value-added tax (VAT) on online gambling operators.

Record Monthly Active Users in LatAm

One of the key highlights of RSI’s Q1 performance was the record-breaking number of monthly active users (MAUs) in Latin America. The company reported 354,000 MAUs, the highest quarterly total ever for the region. Colombia, in particular, demonstrated impressive growth, with the company managing to maintain a strong user base despite the VAT's imposition in February.

Rush Street Interactive CEO Richard Schwartz explained that the company absorbed the tax impact through promotions and bonuses rather than passing the increased cost onto customers. This strategy helped RSI retain its market share in Colombia and maintain strong gross gaming revenue (GGR) levels, which saw a 55% increase in local currency. However, the company’s Chief Financial Officer (CFO) Kyle Sauers noted that other financial metrics, including net gaming revenue (NGR), fell short of expectations.

The introduction of the 19% VAT in Colombia has impacted RSI’s growth trajectory, especially in March and April, when net revenue growth slowed significantly. In March, RSI's net revenue in U.S. dollars was flat year-on-year, while April showed minimal year-over-year growth. Despite this, the company remains optimistic about Colombia’s future potential, should the VAT be repealed before year-end.

The VAT was introduced in February 2025, temporarily eliminating the exemption previously enjoyed by online gambling operators. The Colombian government has cited the need for additional funds to manage civil unrest in the Catatumbo region as the reason for this tax. Though the tax is set to last until December 2025, uncertainty remains as to whether it will be extended or become permanent.

Schwartz mentioned that the tax is under review by Colombian courts, with a ruling expected by late May or June. If the VAT is repealed, RSI anticipates a significant upside in both revenue and earnings before interest, taxes, depreciation, and amortization (EBITDA). CFO Sauers emphasized that the removal of the VAT would be a key growth driver for the company moving forward.

Strategic Focus on Mexico and Peru

While Colombia has faced setbacks, RSI continues to expand its footprint in other Latin American markets. In Mexico, the company saw nearly 50% year-on-year growth in Q1 2025, marking the third full year of its operations in the country. CEO Schwartz expressed his confidence in Mexico’s long-term potential, predicting that it will eventually surpass Colombia as RSI’s largest market in the region.

In Peru, where RSI launched its RushBet brand in mid-2024, the company has taken a more cautious approach. Schwartz noted that the company has not yet ramped up its marketing efforts in Peru, focusing instead on optimizing and localizing the user experience. Despite this, RSI remains optimistic about the market's future, considering Peru's relatively large population.

RSI is also eyeing potential expansion opportunities across the region, with particular interest in Chile, Argentina, Ecuador, and Brazil, where online gambling regulation has recently been introduced. The company projects that by 2028, its total addressable market in Latin America could reach $15.9 billion.

Schwartz emphasized that the company’s strong brand, platform, and team would facilitate its entry into new markets. While specific plans have not yet been disclosed, RSI is evaluating opportunities to expand its presence in these emerging markets.
Strong Q1 Performance in North America

In addition to its Latin American operations, RSI saw growth in its North American markets. The company reported a 17% increase in MAUs across the U.S. and Canada, bringing the total to 203,000. Average revenue per MAU in North America was significantly higher than in LatAm, at $368 compared to $36.

RSI also reported a 95% year-on-year increase in adjusted EBITDA, reaching $33.2 million in Q1, despite a slight rise in sales and marketing expenses. The company reiterated its full-year 2025 guidance, forecasting revenue between $1.01 billion and $1.08 billion, with adjusted EBITDA expected to reach $115 million to $135 million.

Given how strong the volumes have been in Colombia, should the temporary tax go away prior to year-end, we could see meaningful upside to both revenue and EBITDA.

Looking Ahead

Despite the challenges posed by the VAT in Colombia, Rush Street Interactive’s strong financial results and expanding user base in Latin America reflect the company’s resilience and strategic approach to market conditions. As the situation in Colombia evolves and expansion efforts continue in other regions, RSI remains well-positioned for sustained growth in both North and South America.