Rush Street Interactive seeks Colombian and prediction-market clarity, J.P. Morgan analyst says
Executives of Rush Street Interactive said they were keeping an eye on political developments in Colombia and “hoping for clarity” on the country’s levy on igaming, said J.P. Morgan analyst Daniel Politzer, who met with them at G2E in Las Vegas.
Even so, demand in Colombia was said to be robust and nothing new was impending on the regulatory front. Rush Street, Politzer reported, was operating under the assumption that the value-added, 16% tax would stand through the end of 2026, atop the statutory 15% gaming-revenue impost.
RSI executives believed that “the new president [Abelardo de la Espriella] has suggested he may avoid pursuing new revenue sources and instead rely on borrowing.” A recent earthquake in Colombia caused a short hiatus in online play, but it was as yet unknown whether the disaster could spur new gambling taxes.
Politzer huddled with RSI CEO Richard Schwartz and Chief Financial Officer Kyle Sauers in Las Vegas. The duo took comfort that igaming was protected from prediction-market incursion, saying that the Commodity Futures Trading Commission “has been explicit in not supporting products that resemble casino gambling.”
The executive duo was of the opinion that prediction markets were not encroaching upon igaming, at least not yet. They did feel there was a risk of that, but that CFTC language blunted the threat.
Looking ahead to near-inevitable United States Supreme Court action on prediction markets, Schwartz and Sauers foresaw event-contract purveyors offering a compromise. Game outcomes would be defended as “economically viable” swaps, while parlay wagers and proposition bets would be less tenable.
Soft August igaming results in the United States were blamed on a later-than-usual Labor Day weekend, extending the holiday period. Schwartz and Sauers theorized that digital players tend to vacation in states where igaming is not legal and had fewer summertime opportunities to play.
“More broadly, RSI emphasized that it hasn’t seen any change in overall demand and that trends remain consistent across all player cohorts,” wrote Politzer, irrespective of income bracket. Although September business was not discussed, he believed that RSI was well out ahead of the rest of the industry.
Schwartz and Sauers also liked trends in customer-acquisition costs and the long-term value of their players. They reported a stable promotional climate, despite recent flurries of activity from bet365 and Hard Rock Bet.
RSI executives were optimistic about igaming legalization in Virginia’s next legislative session. They noted that Indiana “came close” and believed legalization in Ohio hinged on the outcome of the governor’s race.
In the Buckeye State, Democratic candidate Amy Acton has come out in favor of igaming while Republican rival Vivek Ramaswamy has yet to declare a position. Brick-and-mortar casinos were seen as a major impediment to igaming in New York State, though.
Alberta’s online sports betting and igaming launch was said to be “trending well,” per Politzer, and better than Ontario’s. However, the presence of unregulated, gray-market operations was seen as hampering the speed of adoption.
RSI shares had been battered on the stock market of late but top executives espied an opportunity in that. With $100 million in cash set aside for repurchases, they looked to accumulate shares.
David McKee is an award-winning journalist who has three decades of experience covering the gaming industry.
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
2025/10/30: Rush Street Interactive sees upside across the board in third-quarter outlook
2026/02/18: Rush Street will refrain from prediction markets … for now
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
2025/10/30: Rush Street Interactive sees upside across the board in third-quarter outlook
2026/02/18: Rush Street will refrain from prediction markets … for now
The Backstory
Colombia remains the swing factor
Rush Street Interactive’s latest comments to J.P. Morgan analyst Daniel Politzer fit a pattern that has defined the company’s recent investor messaging: strong operating trends, guarded optimism on regulation and persistent concern about taxation in Colombia. The country has become both a growth engine and a source of earnings uncertainty for RSI, whose BetRivers and RushBet brands have used Latin America to supplement slower-moving U.S. legalization.
The immediate issue is Colombia’s layered tax structure. RSI has been operating as though a 16% value-added tax on igaming will remain through the end of 2026, on top of the country’s 15% gaming-revenue tax. That assumption is conservative but significant. It affects pricing, bonuses, margins and investor expectations in one of the company’s most important international markets. Executives have said demand remains healthy, but the tax burden has repeatedly distorted reported revenue and cash flow.
The company has been through several versions of this problem. In earlier calls, management described how a prior Colombian levy forced it to spend heavily on player bonuses to soften the impact on customers. In the third-quarter outlook, Inside Asian Gaming reported that Colombian gambling revenue fell 27% even as player-count growth stayed strong. That illustrated the core tension: RSI could keep customers engaged, but doing so under a higher tax regime meant absorbing pressure on profitability.
From emergency taxes to election uncertainty
Colombia’s gambling-tax debate has shifted several times, adding to the uncertainty. RSI executives previously said a 19% value-added tax had been replaced or suspended after legal review, only for a new 16% emergency-style impost to emerge. During the company’s first-quarter earnings call, Schwartz and Chief Financial Officer Kyle Sauers acknowledged the risk but said the company had not paid additional levies for the first 10 weeks of 2026. They also noted the country’s pending presidential election, making clear that politics could reshape the tax outlook.
By the second quarter, executives were more explicit. In comments after RSI’s fastest revenue growth in more than four years, Schwartz described Colombia’s incoming right-leaning government as more pro-business than its predecessor. Even so, Sauers said the company was assuming the 16% special tax would last through the end of 2026. That approach gave investors a baseline, though not necessarily comfort. A favorable political turn could improve margins. A prolonged levy would keep Colombia profitable but less lucrative than its player trends suggest.
The stakes rose because Colombia has been one of RSI’s most productive markets. Executives have pointed to strong World Cup engagement, record performance there and a 25% cross-sell into igaming among first-time Latin American customers. Those numbers matter because RSI’s model depends on moving users from sports-led acquisition moments into higher-retention casino play. Tax volatility in Colombia therefore does not merely affect one line item. It can influence how much RSI spends on marketing, how aggressively it promotes and how quickly Latin America can offset slower U.S. state expansion.
The casino-first strategy shapes the response
RSI’s response to Colombia and other regulatory pressure has been anchored in its casino-first strategy. Schwartz has repeatedly argued that igaming produces better retention and player lifetime value than sports betting, making it a more durable business. That posture explains why the company has been willing to tolerate near-term noise in Colombia while continuing to spend on customer acquisition and product improvements.
The strategy also explains management’s relative calm over short-term sports results. In prior investor updates, RSI said its lower exposure to online sports betting helps insulate it from hold volatility. The company’s mature U.S. igaming states have continued to show growth, including New Jersey, Michigan, Pennsylvania and Delaware. In the earlier G2E update, executives told Politzer that market share and monthly active users were rising, despite unfavorable NFL outcomes. That offered a template for the current message: temporary shocks matter, but RSI argues its core demand indicators are intact.
Still, casino-first does not eliminate execution risk. Higher taxes can force operators to recalibrate bonuses, which may preserve activity but reduce cash flow. Heavier promotional spending can acquire customers, but it also tests whether those players stay once marquee events fade. Sauers has warned that some World Cup customers may have joined for the cultural moment rather than long-term play. That uncertainty is especially relevant in Latin America, where RSI sees expansion potential but says it will be selective about new jurisdictions.
Prediction markets create a different regulatory threat
The other thread running through RSI’s recent commentary is prediction markets. The company has consistently tried to distinguish its igaming-heavy business from sports-betting operators that may face more direct pressure from event contracts. In the latest update, Schwartz and Sauers again expressed confidence that the Commodity Futures Trading Commission has not supported products resembling casino gambling, reducing the immediate risk to online casino revenue.
That position has hardened over time. In the company’s fourth-quarter call, analysts pressed management on whether RSI would enter prediction markets. Schwartz said sports-related event contracts were not a priority because sports betting was not the company’s main focus. He also said it would be harder to justify prediction markets tied to events played for stakes, a distinction that protects the legal boundary around casino games, at least for now.
RSI has not ignored the space. The company applied for a CFTC license, but Schwartz later said the move was defensive, meant to prevent RSI from being caught unprepared if the market evolved. On the second-quarter call, Sauers said he had not seen adverse effects on RSI’s business. Schwartz added that the company was not targeting sharp bettors, a group that may find prediction markets more appealing. The current stance is consistent: monitor, prepare and avoid being the first mover into a legally unsettled segment.
Legalization hopes support the longer-term case
Prediction markets may also strengthen RSI’s lobbying argument. Management has suggested that if states see tax revenue leaking to federally regulated event-contract platforms, they may become more willing to legalize igaming. That is why RSI’s comments on Virginia, Indiana, Ohio and New York are important. The company sees Virginia as a near-term opportunity, believes Indiana has already come close and views Ohio’s prospects as linked to the governor’s race. New York remains more difficult because of brick-and-mortar casino resistance.
That state-by-state path has been slow, but each new igaming market is meaningful for RSI. Schwartz has said untapped North American markets represent a large share of the population and that fiscal pressure on states could build momentum for legalization. The company’s Delaware monopoly, strong Michigan share and improving performance in mature markets give it evidence to take to lawmakers and investors. Alberta adds another test case. Executives have said the Canadian province is tracking better than Ontario did early on, though gray-market operators could slow conversion to regulated platforms.
The result is a company balancing three clocks: Colombia’s political and tax calendar, the courts and regulators shaping prediction markets and the slow legislative cycle for U.S. igaming. RSI’s cash position and buyback authorization give it flexibility, but management’s recent comments show that capital allocation remains tied to regulatory clarity. If Colombia stabilizes, prediction markets stay away from casino-like products and more states authorize igaming, RSI’s casino-first strategy could gain leverage. If not, the company may keep growing while investors continue to discount the uncertainty around how much of that growth turns into cash flow.
