Introduction
Rush Street Interactive (RSI), known for its BetRivers brand, recently reported a significant 73% increase in adjusted EBITDA for the third quarter. However, the company fell short of revenue expectations for the first time in four years, bringing attention to a slowdown in the North American iGaming sector. Despite the impressive financial growth, with revenue rising 39% year-over-year to $385.9 million, this still fell short of the market consensus of approximately $388 million. The figures, alongside a 93% increase in GAAP net income to $28.7 million, highlight a complex landscape for RSI as it navigates both regional slowdowns and opportunities in Latin America.
North American Slowdown Vs. Latin American Momentum
The North American market, traditionally a stronghold for RSI, displays signs of slowing growth. While online casino operations, which account for 75% of RSI’s revenue, grew by 32%, the more concerning figure is the modest 14% revenue increase in North America. In stark contrast, RSI reported a 218% surge in Latin American markets, indicating a shift in growth dynamics. This divergence is critical as North American monthly active users (MAUs) rose by 34% to 300,572, but revenue per MAU dropped 15% to $309. CEO Richard Schwartz and CFO Kyle Sauers acknowledged this industry-wide moderation, pointing to a broad-based slowdown rather than an issue isolated to their operations.
Analysts like Craig-Hallum’s Ryan Sigdahl and Stifel’s Jeff Stantial have noted this deceleration in iGaming growth. A particular point of interest was a $4.3 million one-time gain in general and administrative expenses due to foreign-exchange. Excluding this gain, RSI’s EBITDA beat would shrink from 13% to approximately 6%, further emphasizing the financial pressures RSI faces in a maturing North American market.
Guidance and Revenue Prospects
Despite these challenges, RSI maintained its financial guidance for 2026, projecting revenues of $1.56 billion to $1.6 billion and adjusted EBITDA of $245 million to $265 million. Interestingly, October’s performance suggests a trend towards the lower revenue guidance range, though EBITDA is tracking towards the midpoint. This marks a significant moment, as it is the first time since early 2025 that RSI has not raised its guidance mid-year.
Financial metrics from the third quarter show a slowdown, with revenue growth decreasing from 46% in Q2 to 39% in Q3. Nonetheless, the company’s adjusted gross margin improved by 240 basis points to 36.4%, with a closing cash balance of $382 million and zero debt. These figures present a company that, despite immediate revenue challenges, is financially stable and poised for strategic maneuvering as it seeks new growth avenues.
Colombian Tax Context and Future Implications
In Latin America, particularly Colombia, RSI might find a respite from North American headwinds owing to local tax policy changes. The potential expiration of a temporary 16% excise levy offers financial relief. The Colombian government’s 2027 budget omits the pending gaming tax, leading to analysts like those from Citizens and Stifel estimating that its expiration could add between $40 million to $50 million to RSI’s 2027 and 2028 EBITDA estimates.
Colombia’s tax relief is an opportunity, albeit shadowed by the broader macroeconomic environment and the necessity for RSI to demonstrate stable and sustainable growth outside of tax advantages. The removal of this levy could not just improve profitability but also incentivize further investment in the region, potentially offsetting softer revenues in more mature markets.
Conclusion
Rush Street Interactive faces a mixed outlook. While profits have surpassed expectations, missing revenue forecasts highlight significant industry shifts, particularly in North America. Latin America’s rapid growth offers a counterbalance but does not fully mitigate the challenges faced in more established markets. The company’s steadfast guidance for 2026 suggests confidence in long-term strategies, including potential tax alleviations in Colombia. Investors and stakeholders will be keenly observing RSI’s ability to navigate these complex dynamics and capitalize on emerging opportunities to solidify its market position in an increasingly competitive iGaming landscape.