Rush Street Interactive: iGaming prospects better than ever

Source: CDC Gaming

“This has undoubtedly been our best year ever,” enthused Rush Street Interactive Chief Executive Richard Schwartz (pictured) at the outset of the fourth-quarter earnings call, late on February 26. He cited numerous metrics, as well as “significant advances in our technology platform.”

The fourth quarter of 2024 exceeded, Schwartz said, the high end of Rush Street Interactive’s guidance, and included an eleven-fold increase in cash flow.

But what seemed to interest Schwartz the most was a possible outbreak of igaming legalization. The Chief Executive said the company was “closely monitoring” 2025 legislatures. “There is a growing recognition that online casino gaming is already happening,” he explained, including untaxed, unregulated sweepstakes games.

Citing federal budget cuts, Schwartz called the present situation “a clear display of the need of the states to raise taxes,” a plus for Rush Street Interactive if it means an expansion of igaming. He also stressed the size of the population that is already gambling online illicitly.

Schwartz observed that more effort was going into legalizing igaming than ever before and that the industry was coming together to make it happen. The existence of the illegal market “is a really strong accelerant.”

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“You’re starting to see the cracks in state budgets,” he continued. “The need for state revenues to increase is more than it has been in previous years.”

Raising the example of sweepstakes games, Schwartz said, “there’s a proliferation of a Wild West mentality.” He described the games as looking, feeling and playing like regulated online games without being legitimate or regulated.

“It’s a product that is trying to circumvent the gambling laws,” Schwartz lamented. He said that minors were particularly at risk – but that the explosion of sweepstakes games might speed up the legalization of legitimate igaming.

Also raising revenue is Colombia, which recently surprised Rush Street Interactive with a 19% VAT. “We expect several strong legal challenges” to the VAT, said Chief Financial Officer Kyle Sauers. He assured Wall Street analysts that the impact of the VAT was already baked into the 2025 earnings guidance. 

Sauers added that potential tax increases in other jurisdictions were not factored into Rush Street Interactive’s 2025 projections. “We have to evaluate the situation,” he said of a proposed tax hike in New Jersey, noting that higher levies in the Garden State wouldn’t necessarily result in less marketing for the business.

When pressed for further details on mitigation, Sauers responded, “We’re only a few days into this, so we’re learning as we go.” Calling the situation in Colombia “dynamic and fluid,” Schwartz avoided specifics of how Rush Street Interactive was responding. 

Sauers resumed that “things are holding up well down there,” and that Rush Street Interactive was modifying bonus awards and reducing marketing. Having a proprietary bonusing platform, he added, gave the firm an edge on its competitors.

“We expect you’ll see continued discipline from our marketing efforts,” Sauers continued, adding that the company wouldn’t be afraid to spend if needed. He predicted 13% revenue growth in 2025 and 39% greater cash flow.

Given that Rush Street Interactive has US$229 million on hand, Sauers said, “we’re comfortable with our cash position.” He told analysts not to correlate cash in the bank with merger activity or share repurchases. “We’re actively considering and assessing [opportunities] all the time,” Schwartz conceded, especially in Latin America.