Brazil ban leads RSI third-quarter results discussion, with positive expectations for igaming in the Americas
Executives of Rush Street Interactive (RSI) professed to be unruffled by Brazil’s recent ban on igaming and online sports betting (OSB), addressing the topic during their third-quarter earnings call late on 28 October.
“We were very disappointed by the decision,” CEO Richard Schwartz said of the edict, which he predicted would be counterproductive, driving players to the black market. “Clear rhetoric” during the just-concluded presidential campaign indicated, he said, that Brazil’s was a risky climate. Still, “we always have to remain open-minded if there are opportunities” to do business.
“Brazil has been an ongoing issue for years,” the CEO continued, and a very unpredictable one. However, Schwartz saw no spillover into other nations in the region: “What you see in Brazil is somewhat unorthodox.”
Asked by one Wall Street analyst if nearby Colombia was “over the hump” of increased taxation, CFO Kyle Sauers replied, “I don’t want to spike the ball just yet.” He lauded the new government’s pro-business tilt and lack of gambling-tax increases in the next budget.
Meanwhile, Schwartz noted that the tax on gambling revenue would soon revert to 15%, but Sauers said he would keep his eye on Colombia for the rest of the year, lest the situation should change.
Schwartz grew even more upbeat about the prospects of new igaming territories in the United States. He was most optimistic regarding Virginia and Ohio. Schwartz called the District of Columbia “a very prudent, near-term opportunity” and felt that Indiana was a similar case.
Illinois and New York State have particular motivation to legalize Internet gambling, Schwartz continued, as they face steep Medicaid liabilities under the latest federal budget noting that money would have to be found somewhere. “We think there’s an increased interest in alternative revenue sources such as online gaming,” he stated.
Hailing his company’s third-quarter results, Schwartz began by crediting RSI’s emphasis on igaming and its performance in Latin America, “the cornerstones of our growth.” Although the executive described igaming as “the core driver,” he also highlighted the contributions of OSB and online poker. However, igaming represented 75% of RSI revenues for the quarter.
Player levels in the quarter, Schwartz continued, were below their World Cup peak but still the second highest in RSI history. He described the tournament as a key player-acquisition opportunity, one significantly better than the Copa America tourney of 2024.
“The World Cup was a really good event for incremental activity,” Sauers later said, particularly for brand awareness of RSI. Some 50% of first-time OSB depositors had placed at least one igaming bet as well. “We’re really pleased with how the trends continue,” the CFO added.
Asked why the World Cup had been so strong for the company, Sauers said it went to RSI’s execution “and how much better we’ve gotten over the years,” along with improved brand awareness.
In North America, RSI “saw a more-measured pace of growth,” Schwartz reported. “This [slower] momentum has been broad-based,” not concentrated in any one player segment.
Turning to Alberta, Schwartz said that “we remain encouraged by what we are seeing,” which included market growth at double the rate of Ontario. Still, “we expect the market to be a gradual build.” He noted that legacy operators in Alberta had enjoyed a three-month promotional advantage, particularly in terms of sign-up offers, but that the playing field was level going into the fourth quarter of 2026.
Overall, marketing costs were up. Sauers attributed this to “our strong marketing efficiency and attractive player-acquisition costs.”
Marketing outlays depended on the jurisdiction, the CFO continued, and the company was moving revenues around as made sense. “We executed on what we intended to,” he said, and player-acquisition costs were the lowest they’d ever been—although RSI would spend even more if circumstances warranted it.
Sauers also cautioned that marketing costs had been bumped up by the Alberta launch, which led to increased bonusing. “I wouldn’t suggest we were stepping on the gas for promotions,” with the higher costs being driven by new-player recruitment.
However, the executive ruled out cost-cutting. “We still feel very confident about the growth profile of the business,” Sauers explained. RSI was still investing in long-term expansion and “we haven’t over-invested […] There’s a lot of growth left in the markets that we’re in.”
Noting a third-quarter slowdown across the igaming landscape, Sauers said, “We’ve had some really strong growth in the industry. We’re confident this is still a significant, long-term growth opportunity,” despite monthly fluctuations. iGaming waxes and wanes, Schwartz observed, “but it’s always come back stronger.”
As for the persistent topic of prediction markets, Schwartz said they were “evolving very fast. It’s a rollercoaster following it.” RSI had prepared options for delving into event contracts because the group’s CEO didn’t “want to be caught flat-footed.” But Schwartz thought it was a positive development that the Commodity Futures Trading Commission was trying to herd prediction markets away from casino-style gaming.
RSI ended the quarter with US$382 million in cash on hand and no debt. It repurchased US$14 million in stock during the third quarter and another US$11 million after the start of the fourth quarter, leaving it with US$75 million in dry powder for buybacks.
David McKee is an award-winning journalist who has three decades of experience covering the gaming industry.
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The Backstory
Brazil tests a Latin America growth thesis
Rush Street Interactive’s latest quarter lands at a moment when the company’s central growth argument is being tested on two fronts: Latin America’s political risk and the slower, state-by-state opening of U.S. online casino markets. The company has built investor expectations around a casino-first strategy, with igaming producing the bulk of revenue and Latin America acting as a key growth engine. Brazil’s sudden ban on igaming and online sports betting therefore matters less for its direct financial exposure than for what it says about regulatory volatility in the region.
Chief Executive Richard Schwartz’s response was consistent with the company’s posture over the past year: acknowledge the disruption, warn that prohibition feeds the black market and keep options open. That approach reflects experience in Colombia, where Rush Street has spent much of the past several quarters adapting to abrupt tax changes without retreating from the market. The company’s argument is that legal operators can withstand short-term policy shocks if player growth, brand position and product retention remain intact.
That resilience has become central to RSI’s story. In April, executives said the company’s record first-quarter performance showed the strength of its casino-first strategy and lower player-acquisition costs. By July, the World Cup had become a major customer-acquisition event, especially in Latin America, while management said it was not relying on sports betting alone to drive future growth.
Colombia became the stress test
Colombia has been the clearest example of both opportunity and fragility. Rush Street’s business there grew rapidly before tax policy became unpredictable. Earlier, the company was absorbing a 19% value-added tax through increased bonusing rather than passing the cost directly to players. That kept engagement higher but pressured economics, making Colombia a real-time test of whether RSI’s proprietary bonusing and retention tools could offset government intervention.
The legal and political backdrop shifted repeatedly. In a prior update, RSI said Colombia’s emergency decree had not been renewed in full and that the tax’s constitutionality was expected to be reviewed. The company’s position then was that the Colombian market, while slowed, remained fundamentally attractive. Revenue that had been growing about 50% had flattened under the tax burden, but management said North American performance helped absorb the impact. That earlier quarter also showed how RSI was willing to accept margin pressure in a market it viewed as strategically important, as detailed when the company said it had surmounted adverse sporting results and Colombian tax pressure.
By the first quarter of 2026, the 19% VAT had been found unconstitutional, but Colombia introduced a 16% emergency tax on gross gambling revenue. RSI again declined to treat the development as a reason to pull back. Schwartz and Chief Financial Officer Kyle Sauers said they were monitoring the presidential election and the court process, but they also emphasized continuing momentum in Latin America. That is why Sauers’ latest caution about not wanting to “spike the ball” on Colombia fits a longer pattern: RSI has benefited from Colombia’s growth but has learned that favorable turns can reverse quickly.
The World Cup widened the funnel
The 2026 World Cup gave RSI a rare event across the three North American countries where it operates and a cultural catalyst in Latin America. Management had framed the tournament as a chance to acquire players, cross-sell them into igaming and lift brand awareness. In the second quarter, executives said the event produced strong handle and hold, including a best-ever performance in Colombia and meaningful cross-sell from first-time Latin American customers into online casino play.
That helped explain why RSI’s third-quarter discussion focused less on whether the World Cup spike would fade and more on whether acquired customers would remain valuable. Sauers had warned earlier that some players would join only for the event. Still, the company’s broader pitch was that a sports moment could feed a higher-margin casino relationship. RSI has repeatedly said online casino, not sports betting, is the main driver of its economics. In the latest quarter, that point was reinforced by igaming’s 75% share of revenue.
The World Cup also helped RSI show that sports can still matter to a casino-first model. The company said half of first-time sports betting depositors in the quarter placed at least one igaming bet. That cross-sell supports the strategy Schwartz has described since the company began highlighting record first-time depositors and lower acquisition costs. The tournament was not merely a betting event; it was a funnel for casino customers.
The question now is durability. RSI has said player levels were below the World Cup peak but still the second highest in company history. That suggests some normalization, but not a full reversal. The company’s challenge is to retain enough newly acquired players to support growth into tougher comparisons, a risk Sauers had already flagged when discussing the World Cup’s effect on second-quarter results and future retention.
North America offers slower but steadier upside
While Latin America provides faster growth, North America supplies a different kind of optionality: legal expansion. RSI’s repeated emphasis on Virginia, Ohio, Indiana, the District of Columbia, Illinois and New York reflects a belief that state budget pressure will revive online casino legislation. Schwartz has tied that outlook to Medicaid obligations, reduced federal support and the need for alternative tax revenue.
This argument has been building for several quarters. After what Schwartz called RSI’s best year, he said states were increasingly aware that online casino gambling already existed through offshore sites, sweepstakes products and other unregulated channels. The company saw that as a policy opening: legalize and tax activity that is already occurring. That theme was central when RSI said igaming prospects were better than ever because state fiscal stress and unregulated competition were strengthening the case for legalization.
Alberta adds another layer. RSI has treated the Canadian province as a gradual build rather than an immediate windfall, especially because legacy operators had promotional advantages before the market fully leveled. Still, management has compared Alberta favorably with Ontario’s early trajectory, even as it cautions that marketing and bonusing costs rise during new-market launches. That balance — invest, but avoid overextending — has been a recurring message from Sauers.
The company’s domestic performance also matters because U.S. igaming markets remain limited. In an earlier third-quarter outlook, RSI highlighted strong growth in Delaware, Michigan, New Jersey, Pennsylvania and Ontario, using that performance to argue that existing legal markets still had room to expand. The company also said online poker could serve as a gateway to casino and sports betting, particularly as Pennsylvania moved into multistate pooling.
Prediction markets remain a watch item
Prediction markets have become a standing topic on RSI calls, but management has consistently tried to keep them from defining the company’s investment case. Schwartz has said RSI applied to the Commodity Futures Trading Commission to avoid being caught flat-footed, not because it intended to push aggressively into sports event contracts. That caution reflects both regulatory uncertainty and RSI’s igaming-heavy revenue mix.
Compared with operators more dependent on sports betting, RSI has argued it faces less direct risk from prediction markets. Schwartz has also suggested a potential indirect benefit: if event contracts erode state tax receipts from regulated sports betting, states may become more receptive to legalizing online casino. That logic mirrors RSI’s view of sweepstakes gambling, which it sees as both competitive leakage and evidence that consumer demand should be brought into regulated channels.
Still, the issue is not settled. In a prior call, RSI said it did not plan to lean into the crowded prediction-market sports betting space and saw little cannibalization. Later, management said the legality of the category remained debated and that RSI would not be a pioneer. The company’s latest comments, including support for the CFTC steering prediction markets away from casino-style gaming, reinforce that risk-managed stance.
Cash gives RSI room to wait
RSI’s balance sheet gives management flexibility as it navigates these competing opportunities and risks. The company ended the latest quarter with US$382 million in cash and no debt, after repurchasing shares and retaining additional authorization for buybacks. That financial position supports launches, marketing surges and possible new jurisdictions without forcing a choice between growth and capital returns.
The stakes are therefore broader than Brazil. A ban in one major market shows how quickly regulation can shift. Colombia shows how taxes can alter profitability without destroying demand. The World Cup shows how sports moments can feed a casino-led model. North America shows why RSI is willing to wait for policy change, especially if state budgets tighten.
RSI’s backstory is one of disciplined expansion into volatile markets while arguing that regulated igaming remains underpenetrated. The company’s latest quarter continues that pattern: disappointed by Brazil, cautious on Colombia, opportunistic in the U.S. and still anchored by online casino revenue. For investors, the question is whether RSI’s execution can keep outpacing the political and regulatory surprises that come with the territory.
