Rush Street Interactive hit revenue and EBITDA records in the first quarter as BetRivers grew revenue in 15 of its 16 North American markets.
CEO Richard Schwartz lauded RSI’s sports betting and online casino success despite results heavily impacted by the Philadelphia Eagles winning the Super Bowl and bettor-friendly March Madness results.
“We continue to achieve strong results by prioritizing innovation and the quality of our player experience, while at the same time excelling in the efficient acquisition and retention of high-value players,” said the CEO on the BetRivers parent company’s first quarter earnings call.
The stock, though, opened Thursday down 1.1% compared to Wednesday’s close as the Colombian value-added tax issue persists and is eating into RSI’s net gaming revenue.
Colombian operators eating VAT
Rush Street Interactive is following the market in Colombia and absorbing the hit of a 19% VAT on customer deposits.
In February, the Colombian government declared a state of emergency and implemented the tax on iGaming deposits. That decree is under review but could last through the rest of the year.
“In response, at least up to this point, similar to others in the market, we have been absorbing the tax through higher bonusing rather than passing the cost on to our players,” Schwartz said. “This approach has allowed us to retain our market share, maintain strong player activity and keep GGR levels near all-time highs, albeit with lower NGR.”
Colombian gross gaming revenue grew 55% in the quarter, and Rush Street’s Latin American player base jumped 61% to 354,000 monthly active users. The impact of the VAT can be seen in average revenue per monthly active user, which fell 18.2% to $36.
BetRivers continues US growth
Markets with both online casino and sports betting performed “exceptionally well” in the first quarter, with Schwartz noting 40% revenue growth in Michigan.
RSI’s adjusted EBITDA jumped 95% to $33.2 million, outpacing revenue growth of 21% to $262.4 million.
BetRivers’ revenue outside of Illinois and Pennsylvania increased to 64% of total revenue in the first quarter. Rush Street Gaming operates land-based casinos in those two states, which gives the brand an organic boost.
Part of that growth is no doubt from Delaware. Online gross gaming revenue for the First State hit a $135 million run rate in the first quarter as the business has steadily ramped up following its late 2023 launch. That is nearly seven times what former operator 888 hit in its best quarter.
Customers remain cheap to acquire
BetRivers is paying great rates to acquire new customers, echoing what some of its larger competitors have said recently.
Monthly active users in the US and Canada hit 203,000, up 17% from the prior year. Average revenue per monthly active user grew 3% to $368.
“Our cost to acquire players in North America continue to be near the lowest they’ve been since going public and just as important, our first-time depositors in North American iCasino markets, even when we exclude our newest market, Delaware, continue to grow nicely year over year, even while the markets become more mature,” Schwartz said. “[That is] a testament to the expanding size of these markets, our ability to refine our marketing approach and success continuing to find new valuable players.”
RSI spent $38.8 million on marketing, about 3% more in the quarter compared to last year. That equated to 15% of revenue compared to 17% last year.
Stock buyback update
The Colombian VAT announcement in February knocked RSI’s share price down from the highest it had been in more than three years.
That allowed RSI to dip into its $50 million share buyback plan. The company bought about 500,000 shares at $10.35 on average, CFO Kyle Sauers said.
RSI bought another 234,000 shares at a $10.55 average since the end of the quarter. That leaves about $42 million remaining under the buyback authorization.
BetRivers prediction markets?
As is now tradition, RSI was asked if the company had any plans to offer sports prediction markets.
And, like most other operators, Schwartz gave a roundabout maybe. So far, Sporttrade is the only state-regulated sports betting operator that has officially requested approval to offer predictions.
“Clearly, as others have noted, right currently today, there’s a limited amount of liquidity and a limited number of markets that have enough liquidity to offer bets, but you would expect over time that that could and would grow to a greater variety of options,” Schwartz said.
“So, it is something that we are, like I said, very aware of and very focused on understanding all the aspects of it. And should there be an opportunity where licensed operators like us on a state-by-state level are able to participate in that market, that’s certainly something we would consider at that time.”
