RSI CEO Claims Company is "Better Equipped Than Competitors" to Manage Colombia VAT Impact

Rush Street Interactive (RSI) CEO Richard Schwartz has stated that the company is well-positioned to handle the impact of Colombia’s emergency 19% VAT on player deposits better than its competitors. The new tax was introduced by President Gustavo Petro as part of an emergency decree to generate funds for state finances.

Previously, the company had indicated it might need to cut operating and marketing expenses in Colombia if the tax became permanent. According to a filing from RushBet’s parent company, Colombia makes up about 13% of the group’s revenue.

Earlier this week, crypto-first operator Stake announced a cashback promotion for players, equivalent to the tax’s value on their deposits. During RSI’s 2024 earnings call, Schwartz mentioned that the company’s strategic approach to the Colombian market is likely to fare better than the reactive strategies of its competitors.

He said: “Competitors are all trying to determine, like we are, how to manage this most effectively. I feel very good about our situation because of our technology and the fact we can do a lot of things with our platform that are very common to do from others in terms of segmentation to ensure the proper players are getting the bonusing. You’ve already seen some operators start with one approach and change their approach pretty drastically. What we’re doing is staying the course and tweaking and monitoring situations to ensure we’re always looking after the players that matter most for our business. I’m confident we have the best team in the industry down there and a top-quality platform for the market which should allow us to manage through this better than our competitors.”

In reviewing RSI’s full-year 2024 financial results, the company reported revenue of $924.1 million, marking a 33.7% increase compared to the previous year. These results, released after the market closed on February 26, led to a nearly 10% rise in RSI’s stock during pre-market trading.

The adjusted EBITDA for the year reached $92.5 million, soaring by over 1,000% year-on-year from 2023’s $8.2 million. After considering revenue costs of $602 million, advertising expenses of $158.6 million, $106.9 million in administrative expenses, and $32.2 million in depreciation costs, total expenses for the year rose 22.1% to $899.8 million. This left the company with an income of $24.3 million for the year, a significant improvement from a $51.6 million loss in 2023.

In Q4 2024, company revenue hit a record $254.2 million, a 31.1% increase year-on-year compared to Q4 2023’s $193.9 million. Net income for the quarter amounted to $2 million, up from a $1.7 million loss in the same period in 2023. Adjusted EBITDA for Q4 was $30.6 million, reflecting a 166.1% year-on-year rise and setting another record for the company. Monthly active users in the US and Canada rose by 28% year-on-year to approximately 205,000, while active users in Latin America reached 348,000, a 71% year-on-year surge.

RSI operates the PlaySugarHouse and BetRivers brands in North America, with RushBet serving its Latin American operations. Average revenue per monthly active user in the US and Canada was $346, similar to the $345 reported in Q4 2023. In Latin America, the metric decreased by $3 to $39.

Looking forward to 2025, RSI has projected revenue between $1.01 billion and $1.08 billion, along with adjusted EBITDA ranging from $115 million to $135 million. CFO Kyle Sauers mentioned during the analyst call that these projections account for the impact of the Colombia VAT fallout but added that the guidance might change if policy shifts in the market.

He said: “If the tax were to be reversed or shortened, that provides upside to both the bottom end and top end of our guidance. We’re only a few days into [the VAT]. We’re learning as we go and what the impact might be.”

Commenting on the company’s full-year performance, Schwartz noted: “We are excited to report another quarter of record performance, including for both revenue and adjusted EBITDA. We experienced broad-based growth and success across all our geographies and products. We continued to accelerate player growth, acquiring more players efficiently while maintaining industry-leading player values. Our commitment to focusing on player needs and leveraging cutting-edge technology to deliver a world-class user experience continues to drive significant growth and profitability. As we enter 2025, we are excited about the opportunities ahead. Our investments in technology, strategic partnerships, and providing an exceptional customer experience have set a solid foundation for sustained growth and profitability.”