Rush Street will refrain from prediction markets … for now
Rush Street Interactive executives were besieged by Wall Street stock analysts in its fourth quarter earnings call yesterday, who wanted to know if or when the company was going to enter prediction markets. The former remained mostly firm in their demurral.
Chief Executive Richard Schwartz had addressed the topic glancingly in his opening remarks, saying prediction markets were primarily benefiting from sports betting, “which is not a priority for us.” He added that event contracts were a subject of constant evaluation at Rush Street.
Rush Street was, he said, unique in terms of leading with igaming rather than sports betting. Igaming players, Schwartz explained, tend to demonstrate higher retention rates and greater lifetime value to the company.
Asked if Rush Street’s business was being cannibalized, Chief Finance Officer Kyle Sauers replied, “It’s hard to tell. It doesn’t appear it’s hurting our online sports betting business.” In Delaware alone, he said, Rush Street saw revenue increases of 50% month over month, for the past four months.
Schwartz added that many of the prediction-market platforms were not as technologically advanced as their gaming-industry equivalents. Rush Street technology, he said, could be leveraged for prediction-market use, particularly if there were an element of skill to the gambling activity.
As for the potential incursion of prediction markets into traditional igaming, Schwartz said his team was “monitoring it very, very closely. We’re very thorough. It would be more challenging to justify a prediction market where the underlying event is being played for stakes. There’s a lot more to come in this area.”
Regarding traditional igaming, Schwartz was upbeat, if vague, on Rush Street’s prospects in newly legalized Maine. He called it “an attractive market. It’s about trying to find the right fit and the right relationship” among the Pine Tree State’s Native American tribes. “We are a very attractive and appealing partner there.”
Rush Street executives said they were seeing relatively little effect from recent tax increases in Illinois, where the company had hiked its minimum sports bets from US$1 to US$5 per transaction. “We’re not passing through a transaction fee,” Sauers explained. “We’re choosing to use a minimum-bet strategy,” one that the company may employ elsewhere.
“When you look at Illinois, the activity levels have shown that the [handle] tax is not good for the consumers,” Sauers added.
The promotional environment overall, Sauers continued, was not really changing. Schwartz interjected that Rush Street was not heavily into using bonuses to grow its market share.
“We’re particularly excited about the upcoming launch in Alberta,” Schwartz resumed, which he felt would happen sooner than expected, although Rush Street was not factoring it into its 2026 revenue guidance. “We’ll continue to prioritize markets where we can deploy our full suite of products.”
Canadian regulators, the Chief Executive continued, were moving quickly and the Alberta market might be open by the end of the second quarter or early in the third trimester. “We think we’re set up really well to be successful there,” Sauers added, possibly being profitable within a year of launching.
In Colombia, igaming operators had been hit in late 2025 with a 19% revenue tax, superseding a 19% value-added tax. The newer tax, though, has been suspended by Colombia’s Constitutional Court.
Rush Street execs stressed that they were budgeting and guiding for 2026 as though the revenue tax would continue to be in effect, whose impact Sauers said would be hard to forecast. He estimated that Rush Street had done an extra US$75 million in Colombian bonusing last year, costing it US$25 million to US$30 million in cash flow.
Looking back, Schwartz said of the value-added tax that: “Not only did we successfully manage through this period but we’re confident we gained market share from our competitors.”
Continuing to reflect, Schwartz said of 2025, “This has been a record year, setting new records across nearly every metric. We also grew the bottom line,” including over US$74 million in fourth-quarter profits.
David McKee is an award-winning journalist who has three decades of experience covering the gaming industry.
Verticals:
Sectors:
Topics:
Dig Deeper
Related stories
2025/05/01: Rush Street Interactive surmounts adverse sporting results
2025/07/31: Rush Street leaders take victory lap in earnings call
2025/10/30: Rush Street Interactive sees upside across the board in third-quarter outlook
2025/05/01: Rush Street Interactive earnings, profit grow in first quarter
2025/05/01: Rush Street Interactive surmounts adverse sporting results
2025/07/31: Rush Street leaders take victory lap in earnings call
2025/10/30: Rush Street Interactive sees upside across the board in third-quarter outlook
2025/05/01: Rush Street Interactive earnings, profit grow in first quarter
The Backstory
Why prediction markets can wait
Rush Street Interactive’s decision to hold off on prediction markets follows months of signaling that the company views event contracts as adjacent, not core, to its strategy. In several recent updates, executives described prediction markets as an area to monitor rather than a lane to enter. On its spring call, leadership said it was educating itself on the opportunity and would consider it if the right moment arrived, but emphasized its focus on casino-led growth and profitability. That stance was reiterated over the summer, when leaders framed prediction markets less as a competitive threat and more as a potential catalyst for regulated online casino if state tax bases were pressured by event-contract operators. By the fall, the company was more explicit: it would not be a pioneer in a legally unsettled space and did not plan to push regulatory limits.
This pattern helps explain why executives, pressed by analysts for a timeline, again demurred. The business has leaned into products where it says retention and lifetime value are highest, and it has resisted short-term pivots that complicate that formula. Earlier commentary underscored that point: the company weathered unfavorable sports outcomes while growing online casino, calling itself an attractive option for value-seeking consumers and reiterating that its expansion speed would be dictated by returns, not headlines. That consistency underpins the latest refusal to chase an unproven, still-debated category.
For context, see the company’s spring remarks about “being very aware” of prediction markets while prioritizing casino-first growth in an earnings call recap that highlighted higher igaming receipts, the summer view that event contracts could even create openings for online casino in a leaders’ “victory lap” on record results, and the autumn assertion that Rush Street would not be a first mover where legality remains in flux in its third-quarter outlook.
Casino-first playbook drives the call
Rush Street has been explicit that online casino sits at the center of its growth plan. Over the past year, executives have repeatedly cited higher retention and superior unit economics in igaming compared with sports betting. The company reported double-digit improvements across revenue, profitability and cash flow, while keeping marketing growth modest and channeling spend toward higher-return markets. In the first quarter, revenue rose 21% with profit swinging to the black, as the company added active users and nudged up average revenue per player despite headwinds in Latin America.
The operational discipline surfaced in other ways. Leaders have described marketing efficiency as a highlight, said they would not overextend to enter new jurisdictions, and framed poker as a “gateway” to cross-sell casino and sports. The emphasis on durable growth rather than headline expansion helps explain why the company invoked product fit, technology readiness and regulatory clarity as prerequisites before approaching prediction markets. It has also steered capital toward opportunities where it can deploy a full product suite and capture lifetime value, rather than thin offerings that could dilute returns.
For details on the first-quarter trajectory and how it undergirds the current posture, see the first-quarter earnings report showing revenue, profit and cash flow gains. The poker cross-sell strategy and marketing efficiency are discussed in the second-quarter call highlights and in the first-quarter recap that noted a multi-state poker launch.
Tax turbulence in Colombia, growth lanes elsewhere
The company’s caution around new categories also reflects bandwidth spent managing Latin America’s tax whiplash. Colombia has been a swing factor across several updates. Early in the year, management said a surprise 19% value-added tax was being absorbed through higher bonusing and lower marketing while legal challenges played out. By spring, executives reported that the emergency regime behind the levy had lapsed but the tax’s legality remained under review. Over the summer, leaders assumed no extension in their guidance but continued to absorb the burden for players to protect engagement, while conceding the drag on gross gaming revenue and profitability.
Those moves have consequences. Management said player growth stayed strong even as Colombia revenue dipped, but high churn amid heavy bonusing raised operating complexity. The company has guided conservatively on Latin America, bracing for volatility in Colombia and acknowledging potential tax hikes in Mexico. Even so, it has pointed to faster growth in Mexico than Colombia at similar stages of maturity and described the region as a long-term opportunity, not a quarter-to-quarter trade.
The arc is captured across multiple briefings: the early-year strategy to mitigate Colombia’s VAT in a fourth-quarter wrap that flagged legal challenges, the spring update on court scrutiny and market impact in the first-quarter recap, and the later assessment of revenue pressure and operational trade-offs in the third-quarter outlook.
Regulatory momentum from Alberta to U.S. states
Rush Street’s resistance to prediction markets coincides with optimism about regulated channels on both sides of the border. In Canada, executives have cited rapid movement by provincial regulators and said Alberta could be operational on an accelerated timetable. In the United States, leaders have framed budget pressure and the proliferation of sweepstakes-style games as catalysts for governors and legislators to consider regulated online casino. The company argues that large numbers of consumers already gamble online in unregulated environments, a reality it says is beginning to move policy.
The bet is that capital and product focus should stay aligned with where regulation is clarifying, not where it is contested. That lens appears in the company’s updates on Alberta’s legislative progress and U.S. state momentum in the first-quarter call recap and in its case for accelerating igaming legalization in the fourth-quarter analysis of legislative prospects.
Poker gateway, disciplined spend, and what investors track next
Investors have been watching whether Rush Street’s tight focus can sustain outperformance without splashy launches. The company’s multi-state poker rollout is a test. Management portrays poker as an efficient funnel into higher-value casino play and has noted a rare successful launch. Combined with a measured marketing budget and a bias for higher-return jurisdictions, the approach supports free cash flow and buyback flexibility while leaving room to enter new igaming states as they open.
Domestically, the company has also highlighted growth in Delaware, strong showings in Michigan, New Jersey and Pennsylvania, and the logic of pacing investment as markets mature. Internationally, it continues to balance expansion with tax uncertainty. All of this informs its stance on prediction markets: Rush Street sees more risk in regulatory gray zones than reward in near-term revenue, especially when its core business is setting records and capital is earmarked for regulated growth.
For more on poker’s role and the capital-light posture, see the first-quarter recap detailing the poker gateway strategy and the second-quarter call that underscored flat marketing with rising margins. Broader U.S. and Latin America performance markers are laid out in the third-quarter outlook and the first-quarter earnings summary.
