Rush Street hit with new tax in Colombia
During his company’s 28 October earnings call, Rush Street Interactive Chief Financial Officer Kyle Sauers said “I don’t want to spike the ball just yet,” referring to the imminent demise of Colombia’s 19% value-added tax on gaming deposits, due to expire on 31 December.
Sauers’ caution proved warranted. On 29 October, the new, right-wing Colombian government proposed a revived, 19% VAT.
Article 41 of the regime’s planned fiscal-reform act would tax player deposits at the new level, beginning in 2027. As Jefferies Equity Research analyst David Katz said in a 30 October investor note, this would be “effectively recreating the tax structure RSI faced in 2025.”
Katz pointed out that the tax must past muster with legislative committees, as well as votes of both houses of the Colombian parliament. He called the tax a potential 2027 adversity for RSI.
The analyst pointed out that central to the discussion of the effect on RSI was not the sheer tax rate but whether it ultimately landed on deposits rather than gambling revenue. “A deposit-based tax creates a substantially greater economic burden,” he warned. RSI’s 2027 financial outlook, reiterated earlier in the week, was predicated on a reversion to Colombia’s 15% tax on gambling revenue.
A deposit-based VAT could have dire effects on RSI’s Colombian business, Katz offered. He estimated that instead of 4% growth in average-monthly-user revenue, player spending would flatten or plunge as much as 30%.
The previous Colombian administration’s VAT met with judicial scrutiny and was due to sunset at 2026’s end. “RSI largely shielded RushBet customers from the tax through incremental bonusing rather than reducing playable balances, creating a meaningful profitability headwind,” recounted Katz.
While the Colombian legislature shot down renewal of the VAT when the prior administration sought an extension, it has been revived by the new, more conservative government. RSI executives had previously praised the incoming regime as “pro-business” on multiple occasions.
According to Katz, the tax’s fate in the legislature bears monitoring. Much was riding, he wrote, on whether lawmakers shifted the tax to revenue. The latter would be much more bearable for RSI, he opined. “Conversely, passage of a 19% VAT on deposits substantially unchanged would recreate the central issue RSI faced in 2025 and could pressure profitability if the company again uses bonusing to protect customer balances,” Katz wrote.
Katz ratched his projections of RSI’s Latin American performance sharply downward. Instead of US$498 million in revenue, he now forecast as much as US$497 million or as little as US$336 million. Cash flow also stood to take a hit, veering from a previous estimate of US$298 million to between US$273 million and US$295 million.
The analyst concluded that this represented a US$125 million revenue decline, as well as a cash-flow declivity of US$25 million company-wide.
David McKee is an award-winning journalist who has three decades of experience covering the gaming industry.
Verticals:
Sectors:
Dig Deeper
Related stories
2026/07/30: Rush Street execs downplay prediction markets during earnings call
2026/04/29: Rush Street execs celebrate record quarter on success of ‘casino-first’ strategy
2026/08/19: Jefferies analyst reiterates confidence in Rush Street Interactive
2026/10/29: Brazil ban leads RSI third-quarter results discussion, with positive expectations for igaming in the Americas
2026/07/30: Rush Street execs downplay prediction markets during earnings call
2026/04/29: Rush Street execs celebrate record quarter on success of ‘casino-first’ strategy
2026/08/19: Jefferies analyst reiterates confidence in Rush Street Interactive
2026/10/29: Brazil ban leads RSI third-quarter results discussion, with positive expectations for igaming in the Americas
The Backstory
Colombia again becomes the swing factor
Rush Street Interactive’s Colombia problem has returned in a form that investors had only recently hoped was fading. The company entered the second half of 2026 with management pointing to a friendlier political climate, the scheduled end of a 19% value-added tax on deposits and a path back toward a more conventional levy on gambling revenue. That assumption underpinned expectations for Latin America to remain the company’s fastest-growing region and for Colombia to keep serving as its most important international profit engine.
The latest proposal from Colombia’s new right-wing government complicates that thesis. By seeking to revive a 19% VAT on player deposits beginning in 2027, the administration would effectively restore the tax structure that had weighed on RSI’s Colombian business in 2025. The distinction matters: A tax on deposits can hit player activity and operator margins more severely than a tax on gross gaming revenue because it applies before wagering outcomes are known. For an operator that has used bonusing to protect customer balances, the burden can shift quickly from tax expense to profitability pressure.
The episode also shows how volatile regulated gambling markets can be even after operators appear to have weathered one policy shock. Colombia’s prior VAT faced judicial scrutiny and was set to lapse. But the government’s fiscal needs, and the political appeal of taxing online gambling, have kept the issue alive.
A tax cycle that never fully ended
RSI’s Colombian tax exposure has been building for more than a year. After the original VAT expired at the end of 2025, the market did not simply revert to normal. Colombia imposed a new 19% tax on gross gaming revenue, prompting Jefferies analyst James Wheatcroft to cut his estimate of RSI’s 2026 cash-flow tailwind from US$25 million to US$11 million. Still, he remained positive on the company, arguing that Colombia, the World Cup and execution would support growth, as detailed in Inside Asian Gaming’s report on RSI shedding one Colombian tax and gaining another.
That earlier assessment rested on an important assumption: A gross-gaming-revenue tax, while costly, was manageable. It did not directly reduce deposited balances and therefore was less likely to discourage player activity. Analysts still expected RSI to benefit from the VAT’s expiration, with Colombia remaining its primary growth driver and Mexico providing additional momentum.
By April, management was more upbeat. During a first-quarter call, CEO Richard Schwartz and Chief Financial Officer Kyle Sauers described strong deposit trends, improved acquisition efficiency and a “casino-first” model that continued to draw players. They acknowledged Colombia’s 16% emergency tax on gross gambling revenue but noted that RSI had avoided additional levies for the first 10 weeks of 2026. The company’s tone in its record-quarter discussion of the casino-first strategy suggested executives believed Colombia’s tax path could improve after the election.
World Cup gains raised the stakes
The timing of Colombia’s renewed tax risk is especially significant because RSI’s Latin American growth accelerated around the World Cup. The tournament helped the company acquire customers, cross-sell sports bettors into igaming and increase brand recognition across markets where soccer can produce unusually strong betting activity. In the second quarter, Schwartz said RSI posted its fastest revenue growth in more than four years, with Colombia delivering its best-ever performance and the World Cup adding about US$10 million to the quarter.
That performance was not only a short-term windfall. RSI executives framed the tournament as a customer-acquisition event that could feed long-term igaming revenue, particularly in Latin America. Sauers said players acquired during the tournament could help the company through tougher comparisons in 2027, while management argued that the economics of acquiring and retaining casino customers remained attractive. The company’s posture during its second-quarter call, where executives also downplayed prediction markets, was that Latin America still had more room to run even as North American growth was more measured.
Jefferies analyst David Katz later reinforced that view. In August, he described weakness in RSI’s shares as a buying opportunity and cited “outsized growth” in Latin America and U.S. igaming. Colombia’s revenue had surged 185% in the second quarter after the VAT was suspended by the courts, and Katz said the new Colombian president was expected to maintain a business-friendly policy environment. As Inside Asian Gaming reported in its account of Jefferies’ confidence in RSI, Katz maintained expectations for 2027 revenue growth of 17% and cash-flow growth of 31%.
Management’s caution proved prescient
RSI executives did not fully declare victory in Colombia, even as the operating results improved. During the third-quarter call on Oct. 28, Sauers said he did not want to “spike the ball just yet” when asked whether Colombia was past its tax uncertainty. That caution now looks well placed. The following day, the Colombian government’s fiscal-reform plan included the revived deposit-based VAT, putting the central risk back on the table.
The third-quarter discussion had already shown how much RSI’s outlook depended on sustained Latin American performance. Schwartz described igaming and Latin America as the “cornerstones” of growth, with igaming representing 75% of quarterly revenue. Player levels had eased from the World Cup peak but remained the second highest in company history. Half of first-time online sports betting depositors placed at least one igaming bet, reinforcing management’s argument that sports-driven acquisition could become casino revenue.
That growth thesis now depends partly on whether Colombian lawmakers alter the tax proposal. Katz has said the crucial question is not simply whether Colombia taxes online gambling but whether it taxes deposits or revenue. A revenue-based levy would be far easier for RSI to absorb. A deposit-based VAT could force the company back into the same choices it faced in 2025: absorb the cost through bonusing, risk weaker player balances or accept lower engagement.
The company’s broader third-quarter commentary, captured in Inside Asian Gaming’s report on Brazil, Colombia and RSI’s Americas outlook, also underscored regional contrasts. Brazil’s ban was a disappointment but not central to RSI’s results. Colombia was different. It was live, material and embedded in the company’s growth expectations.
Investor calculus shifts from growth to policy risk
Before the new proposal, the investor debate around RSI was centered on how durable its growth would be after the World Cup, how much marketing spending would be needed to retain players and how quickly newer markets such as Alberta could scale. Colombia’s proposed VAT changes that calculus. It introduces a policy variable large enough to affect 2027 revenue and cash-flow forecasts across the company.
Katz’s revised range for Latin American revenue illustrates the magnitude. Instead of US$498 million, he now sees potential outcomes from US$336 million to US$497 million, depending on the tax’s final form and behavioral effects. Cash flow could also decline from earlier estimates. That range reflects more than the statutory rate. It captures the possibility that players reduce spending when deposits are taxed, and that RSI uses promotions to soften the impact.
The stakes are heightened because RSI’s strategic identity has shifted toward igaming. The company has repeatedly emphasized casino-first economics, lower customer-acquisition costs and stronger retention. Colombia has been one of the clearest examples of that model working outside the U.S. A deposit tax would not erase the underlying demand, but it could make the market less efficient and force management to reallocate capital toward jurisdictions with more predictable tax structures.
For now, the proposal must still pass through legislative committees and votes in both houses of Colombia’s parliament. That process gives operators, analysts and investors room to monitor whether lawmakers move the tax base from deposits to revenue. The outcome will help determine whether RSI’s Colombian business remains a high-growth contributor in 2027 or again becomes a drag on margins just as the company tries to convert its World Cup gains into lasting igaming revenue.
