Rush Street Interactive Stock

All right. Thanks, everyone, for joining us this afternoon at the Oppenheimer 29th Annual Technology Internet and Communications Conference. My pleasure to have Richard Schwartz, CEO; Kyle Sauers, President and CFO of Rush Street Interactive. Rush Street Interactive, I think, if you look over the last 2 to 3 years, have been the best-performing name in a very tricky sector for investors. So they've executed very well, very strong. So pumped to have them here to answer some questions. And Richard and Kyle, thanks for joining us.

Great to be here, Jed.

Thanks, Jed.

Yes. All right. So you reported earnings at the end of July, gave a solid beat and raise cadence across North America and Latin America. Can you just talk about where you are seeing these pockets of strength across the businesses and what gave you the confidence to raise your full year outlook?

Yes. I can jump in, if you want, Richard, certainly add on. But I don't know if I'd call it pockets because it's pretty broad-based. And it's really -- I'd point to 2 main things. One is Latin America continues to be a big growth driver for us. Obviously, World Cup was a benefit to have that event in June. Obviously, it will impact Q3 with July as well, but that was a great event for us. And even without World Cup, our Latin American operations in Colombia, Mexico, Peru have been growing really nicely, and we expect that to continue.

And then in North America, I think we continued to outpace market growth in just about all of the North American iCasino markets that we're in. That's the primary focus for us in North America for player acquisition and product innovation and experience, and it's paying off for us nicely. So as you pointed out, we've beat and raised again for -- it might be 15 of the last 16 quarters here. So we've continued to be able to execute.

And I kind of want to get into some of the m-o-m growth, but that's just making a good point. I think there's not a lot of companies in the digital gaming space that have been in the race in the last 3 years, 4 years. So this kind of shows the power of having like an 80% iGaming mix in North America and just sort of the revenue predictability you're able to get off that algorithm?

Well, certainly, it makes our jobs easier when talking to investors to be more focused on iCasino because as you point out, it is more predictable. It's nothing certain, but when you're focused more on the slots category in North America, the tolerance is much tighter. Volatility is less. You don't have the same level of seasonality that you do in sports, although we enjoy that seasonality for the sports part of our business that works really well in North America and also in Latin America.

But your point is right that being more focused on iCasino allows us to predict what's going to happen with our business quite a bit better. It allows us to focus on what the value of players is likely to be, and therefore, what we're willing to spend to acquire new players, which obviously, we've been doing at record rates. And we're actually even doubling down a bit more in the back half of this year because our cost to acquire players is -- has continued to go down. So absolutely, it helps with the predictability. It helps with our ability to plan for investments, not only in marketing, but in people and product and technology. So I see it as an advantage.

I would just add as well that besides the predictability, I think it's also nice that we have the focus. We know clearly what economic engine is of our business. And being able to focus on the casino markets, we've been able to grow market share in North America casino for 4 quarters in a row, again, validating that when you focus on the right things and you have the predictability that Kyle mentioned, we also have the focus, which allows us to continue to do the things we need to do to innovate and improve the user experience and deliver the results that you're seeing from us.

Do you see a lower churn among your iGaming cohort versus your sportsbook cohort in North America?

You do. It kind of goes back to your consistency of results. You have more consistency in the play. You don't have people who take a break for Major League Baseball because they like NBA and NFL as an example. So it is a stickier audience.

Got it. And when I kind of look at it, the one thing that always sticks out over the last 3 or 4 reports is the North American iGaming m-o-m growth. I think this year -- this last quarter accelerated to 64%. When I look at where you are versus your peers, I think that growth is right, 4 to 5x the industry. Some of the states you're operating in, some of these are like 5-plus years with iGaming. So where do you see this significant relative outperformance? Is it better marketing, bonusing or better game inventory? Can you kind of give us a sense of what's going out there without spilling your secret sauce to competitors?

Yes. Well, we try to be careful on that front. But the truth is, is that it takes all aspects of the user journey to be right. It takes the marketing, the right messaging, the right audience, the right tools to attribute marketing to the right tools to ensure you measure the right ROI in every jurisdiction, but also ultimately comes down to what the players feel about us as a brand and the user experience. Because our brand is really -- Rivers is a primary brand in North America, it's truly an authentic casino brand.

We're not having to sort of dress up a sports brand as a slot brand because it naturally is already a casino-first brand. So -- and then we've really built over a decade, a user experience that really caters to the casino user in a way that others, I think, haven't done to the same degree. And so for example, we have built a real-time reward engine directly into our platform. So when you're playing any game on the site, including games that everyone offers from, let's say, the Wheel of Fortune from IGT, which is a very popular game, our players are playing that. And in addition to just playing that great game, we have fun, exciting pop-up rewards layered on top of the popular casino games that players already love.

So when you play with us, you're not just playing that game, the Wheel of Fortune, you're also playing our version of it, which adds an extra dimension to fun. So we built slot tournaments and bingo games and random prizes and chances to win jackpots, all on top of that journey. And so we've built something very innovative and very differentiated, which creates a perception of greater generosity for the players and unexpectedness for the players, which really ultimately delivers a loyalty, which allows us to get the highest -- we do have the highest average player values that anyone published by a substantial amount, which is an indication that the players are loyal with us and they stay and they prefer to play with us with a higher percentage of their entertainment budget than they would other brands.

So I think it comes down to really treating the players well, innovating on the product and user experience. We build community into the player experience as well. We're the only ones to do this, where players are chatting with each other and with us in real time while they're playing with us. And so we combine that with all the innovation I described earlier, we truly have a differentiated experience of high quality that then retains the players.

And ultimately, that's what the key of the game is in our industry is not commoditizing your product, but building innovation and having insights to know what to build, having the teams with the knowledge and capabilities to build these innovative experiences and then make sure we have a customer service team that's truly creating an environment for the players where we earn their trust. And they feel like we're helpful and we're friendly, and we're going to do little things that make the player feel like we're being thoughtful towards them.

When you put the whole package together, it delivers a better experience, I think, than what you get at other brands. And so that we're able to kind of grow our casino business, which, by the way, is the engine of our industry when the states have [ sportsbook ] and casino legal, we're seeing that casinos are earning 4x the sportsbook revenues. And this is prior to any impact of prediction markets, if there is any, which, of course, we haven't seen, but it's very minimal. But the point is, is that casinos we want to be strong, and that's what we focused on since the beginning of this company. And so I think we're seeing the fruits of that labor pay off now.

Yes. Jed, the only thing I would add to that is for all those reasons, we're highly confident that if people show up and download our app and make a deposit and start playing that they're going to love the experience and they're going to stick around. But another reason for all this player count growth is because we're filling the top of the funnel faster than we ever have, 4 -- I think it's 4 straight quarters now of record first-time depositors. So these are new people who are showing up with solid player values, and we're doing it at ever lower prices, which is why we're leaning into more marketing spend in the second half.

Is there something that's changed, whether it be AI or is it adding maybe more of your home exclusive content or more of your in-house studios? Is there anything that's just been -- just blocking and tackling and because it does seem like you're taking a significant amount of share.

Go ahead, Richard.

Well, it's -- yes, we have exclusive games that we -- it helps a little bit, but it's actually really the program I just described to you that allows us to bring these unique games to all players no matter what base game they're playing. So it's not like if you get an exclusive game, which is what some of our peers are trying to do to differentiate. It's -- the problem is for that strategy is it only appeals to a small segment of the players who are playing that one game. When you have 10,000 games on your site, when you're playing the other 9,999 games, you're not getting anything unique.

With us, when you're playing any of the 10,000 games, we're always bringing unique experiences to players in real time. So I think it delivers more unique experiences all the time for our players, which is what I think the consumer wants is something fresh and different, which is why you go to a movie theater, not that many of you want to see the same movie 10 times. You want to see a different variety of experiences. And so we've built up over a long period of time. We built a moat around this product experience that's truly differentiated and unique that has been built over many -- over 12 years now. So I think that's really ultimately what allows us to differentiate.

Yes. And maybe just it's not -- it isn't one thing, Jed, or 2 things. It's a host of a lot of different things that all -- a bunch of our teams are doing much better. I think the good news is we've got a long list of things we can keep doing better as well. So as much progress as we've made, there's a lot of things that we still have on the list that we think will make the experience for players even better.

Got it. And we are -- coming out of this quarter, we are starting to see sort of some higher promotional activity or category leaders signaled they're potentially going to promote more aggressively into online sports betting. They also have a pretty significant iGaming base. Do you have any concern of some of that higher promotional activity we see in sports betting carrying over to iGaming?

I don't think -- I personally don't because I haven't seen a change in strategy that you've seen for several years of a lot of the larger companies are sort of they're trying to -- historically larger companies. We're not one of the larger ones, but they're trying to sort of get to the casino audience. But as I said earlier, we have a dual strategy. I didn't say this earlier, but one of our strategies we do the cross-sell from sports to casino in the markets where we have both casino and sports is where we emphasize our marketing budget and spend.

But we also have a slot and casino-first player acquisition strategy that we really are unique in that we can deliver on it because we have the brand and the caters -- the experience that caters to that type of player really resonates with what we're doing.

So I would say that while you're always going to have intensity, I think part of the intensity is also focusing on the prediction markets for a couple of -- for FanDuel and DraftKings primarily. But the results are showing though that our acquisition costs keep improving. It's the lowest since we've been public recently. And we had another record first-time depositors, as Kyle said. So I think what we're doing is working extremely well, and we're very focused, which I continue to think is a big advantage for us.

And then again more on the competition front in North America. We have seen some incumbents in sports, primarily Fanatics and bet365 have some success growing their handle share, engagement share in OSB. Are you seeing any level of like share -- different shifts in iGaming in terms of like emerging competitors, maybe somebody like a Hard Rock might come to mind? Or has this kind of the competitive environment stayed pretty -- been pretty stable?

I mean I think for years, we've had others coming in and spending and trying to kind of grow their positions. And it's as competitive as it's ever been. I think a lot of companies have been focusing on casino. And we've been growing, like I said, market share for 4 quarters in a row despite all that effort from so many companies. So I would say that ultimately, we are the fourth large online casino operator in the U.S. We've gained share 4 quarters in a row. We have really built a decade of casino-specific product and player engagement expertise that is just not existing in most of our peers and haven't prioritized casino the way we have since inception.

So I think you're starting to see the results of that. So I think as you mentioned Hard Rock, I think they've done a nice job. Certainly, they have exclusivity in Florida, not just sports, but they've been able to kind of build a casino-like product using horse -- motor racing results. But I certainly think in the other jurisdictions, we continue to sort of grow faster substantially than the rest of the market, which is validating that our strategy and approach is working.

Got it. And I think you gave some encouraging stats on Alberta on the conference call. Can you just give us any update on how that's trending and relative to Ontario, which I think is about a 4-year-old market now?

Yes. So yes, on our call, we talked about the fact that -- so obviously excited about Alberta. First iCasino launch in a while. So that's exciting. It's a smaller population. But on a -- when you adjust for population, our player registrations, active users at the time of our call a couple of weeks ago, were 2x what they were in Ontario. And that comparable has actually gotten even better for Alberta in the last couple of weeks here. So very excited about it. It will take a little while for that to build given that it's a -- was an existing gray market, but it's off to a great start. We're very excited about it.

And just for people that might be on the call that might not be as much in the weeds, how does -- when they hear gray market, can you just kind of give us a sense of like any structural differences in how you sort of ramp that market because you do have, I guess, gray operators going to regulated. So can you just give people like a quick overview?

Yes, sure. I mean the gray would be sort of unlicensed operators that really are operating without a clear -- without a license and without paying taxes locally. And so the goal of the government should be to transition the unregulated gray market operators to a regulated place that can generate the benefits of tax revenues and player protections, which are often typically almost always done better in regulated market.

So I think in Alberta, similar to Ontario, it started with some of the gray market operators that were there. We're able to sort of transition without really any consequence from a preregulated market to regulated and kind of bring with them their database of players and their brands, which were already known. So there were some sort of advantages from operating in an unlicensed environment in those 2 jurisdictions. We've had to start from scratch, which we have done very successfully in Ontario. We're doing very well there and growing nicely as we are in all of our online casino markets.

But we also launched very quickly in Alberta, and we did a really comprehensive plan that lets people know that we're a trustworthy brand, very much localized the user experience to the Alberta audience to show the players there who might be newer for them as a brand that we are sort of legal and licensed and the stamped approval of the government, which I think helps to kind of migrate some of those players from the unregulated to regulated.

It also helps is that the regulated sites like us when you do launch, have a greater variety of proven games of suppliers that are able to service the unlicensed markets, which are able to participate and are eager to help support a regulated market like us operating there. So there's some advantages in terms of content catalog being available now for the first time in Alberta, which we're using to our advantage as well.

Makes sense. And then just an update on state regulations. I mean it's been a while since we've seen a competitive launch. I know you launched in Delaware about 2 years ago. It seems like we got close with Virginia. Maybe people mentioned potentially New York, Illinois. Just kind of can you give us a lay of the land on anything we should be thinking about over the next 12 to 24 months?

Well, I think what's most exciting for investors, I think, is only 12% of the U.S. population has access to legalized online casino today and compare that with 61% that have access to online sportsbook. So it's a big gap there, big opportunity. In states that already have sports, it's very easy to add casino because you already have the infrastructure in place, you have the servers, you have the regulators, you have the licenses, et cetera. So really just a matter of adding a server to existing sportsbook and being able to offer a bigger variety, which as I said earlier, generates now roughly 4x the revenues for taxes that sportsbook does in a state and especially the pressure from additional markets.

Casino is a lot more shielded and more of an upside opportunity, which we could play into some states' views on it. I think historically, the budget gaps in states has been another reason why you would want to maybe legalize and regularize online casino. That's going to only grow starting after midterm when some of the federal funding on things like Medicaid and food stamps maybe are reduced to the states from what they had historically. So there will be some increasingly larger budget gaps in states. Obviously, consumer protection is very important for government as well and regulated does bring that to the table.

I think historically, you haven't seen as much alignment as you have today among our peers who all recognize that online casino is the economic engine with all of us having access to. So I think there's more effort to support the legalization of online casino. And you mentioned Virginia was very close. It will be, I'm sure, an effort made again this year. Other states are also moving along and there's some positive developments that we're working with.

And I think it just comes down to educating a lot of the legislators that, hey, anyone who's concerned about having an online casino available to people more accessible has to realize that these products are already available in everyone's pocket through crypto casinos and sweepstakes casinos, and prediction market-style casinos. And so I think ultimately, it's really a matter of if it's going to be there, we'd rather protect the consumers and fill pretty sizable budget gaps. And so we're excited for the next sessions coming up next year, and we're working to prepare for an effort in multiple states.

You think the threat of prediction markets is an accelerant for more regulation -- not more regular , more legalization?

It's really for some stakeholders with a recognition as some political stakeholders, that's a concern because it's -- it is -- if you're having a proliferation of prediction market, then you're going to certainly realize that it's now available in your states to do these types of betting mechanics, whether or not it's through a state-issued license. But if you're a state, you'd rather capture that opportunity yourself than to sort of have, I think, the federal government generated and not sort of get the upside and be a regulator the way your state wants to. So I think this certainly is a factor.

And it would probably protect their sports betting, right? Because you said earlier, iGaming is 4x sportsbooks and dual product states.

Cross-sell casino gives you an advantage as a state that you don't have otherwise.

But if you look at states like Illinois and New York, right, that operate at pretty high tax rates, if they didn't have iGaming, it probably makes sense to run a prediction market. But they had iGaming, the state could probably say, if you want the iGaming license, you must -- you cannot operate a prediction market in our state.

I think that's fair. That would generate a lot of interest in companies that want to be part of the iGaming regulated marketplace. So that could change people's strategies on how to participate and whether to participate in prediction markets.

All right. And then before we dive into the Latin American portion of the business, can you just give us an update on your sports strategy, if you're seeing any cannibalization from prediction markets, just kind of where that business is?

We're casino first, as you know. And so we're not seeing an impact. And as I referenced earlier, the acquisition costs continue to improve. Active players are up over 54% from year-over-year. So we're seeing a really healthy business. We did file a CFTC application in June just to kind of preserve optionality. So we have the flexibility if it becomes a relevant business to our future, we have the flexibility to participate potentially.

So I think we're just monitoring the market. We certainly haven't seen an impact to our sportsbook in the license states we operate. But it's also important for, I think, investors to realize that a very small part of our business is tied to U.S. sportsbook, a larger percentage of our sportsbook business is international. And so I think any impact from U.S. sports, if there was any, it wouldn't really impact us anywhere close to how it might impact others.

Got it. Makes sense. And that license you filed with the [ CFTC ] was that like an FCM or become an introductory broker or...

Yes, it's FCM.

Okay. Okay. So switching gears to Latin America, seeing real strong growth there. I think like your users were up 62%, $55 ARPMAU. So that business is almost scaling to like $400 million by year-end. So just can you give us a sense on the opportunity where you're strong, where you're seeing good share growth? Just give us a sense of what's working there?

Yes. You want me to go?

Yes, I want you.

Yes, so I think it's all of the markets that we're in are seeing very nice growth, and I think the opportunity is strong in all of them. So you just go down the list here, Colombia is a more sports focused market for us in terms of revenue mix. But iCasino is actually growing faster the last several quarters than sports. So we've got a lot of opportunity to grow both sides there. We don't know the exact market shares because it's not reported. But given our growth profile, it'd be hard to suggest that we aren't taking share there, but we see a lot of opportunity.

In Mexico, we've still got kind of low to mid-single-digit market share, growing very quickly, real opportunity for us to build a really nice business there. If you compare Mexico to Colombia in terms of the time post launch, we're right on the same path that we were in Colombia. So if we can -- Mexico is a much bigger market. But if we can make it look anything like Colombia, that would be a big success story. And then Peru is still pretty small, but it's the fastest growing of the 3, and we're starting to see some nice momentum there. So it's been a great opportunity for us to be down there, and we're -- I think we're taking advantage of it.

If I could add one more thing about your question earlier about states legalizing online casino, Jed. What's really exciting, I think, for every investor with us is that we have the rest of Latin America available and in many cases, markets, very large population markets with like 210 million people in Brazil, already legal for online casino and regulation -- already regulated. Argentina is licensed and regulated. You have markets like Ecuador and Panama and Chile that are also still available for options for us.

So while we're waiting and pushing to get U.S. markets open, there's no shortage of markets already legal, already regulated that allow us to massively expand our service there in markets where we're already proving to be able to grow share consistently quarter after quarter. So I think what we like about our strategy is that we're not limited only to the U.S. legal and online casino, we're getting extremely excited for all the ability to leverage our existing teams and brands and assets already performing really well in Latin America to additional markets and are new market opportunities there for us.

And is there like -- if we kind of look at these markets, is there like a target share that you want to be? Are they more competitive? I mean you look at Brazil, you look at some of the -- that seems like a very competitive market. So sort of how do you kind of target the share gains you want in certain markets? And then how do you decide what new markets you would potentially want to enter?

Yes. So we're looking into all -- for which new market to enter, it's a very thorough analysis of size of the market [indiscernible] demand casino as well, what's the adjacencies of our brand awareness from other jurisdictions we're already operating, what's the tax rate, what's the stability of the environment, what's the size of the market size, what's the competitive state of competitors there. So all those are factors that we look at. I think so far, we've chosen countries -- I think we really choose the same countries over and they've all been really successful.

I think what we see is we've grown in every jurisdiction down there consistently since we've launched. So we have a high degree of confidence that the product we have, mainly because so much of it is so innovative in a very highly competitive market like the U.S. we're still growing share, as we talked about and outperforming. So when you bring that same level of capability to Latin America, where maybe some of the existing operators there haven't focused as much on product as you've seen in the U.S., I think our product really shines even more. And we combine that with a really high-quality operations team down there as well, you start to see the growth.

So I think it comes down to that even in core competitive markets, when you bring something that's high quality and unique, you're going to see that you're going to grow everywhere. And that's why we consistently are growing across our business in all of our casino markets. I don't know if there are any parts of that question that maybe I missed or cut.

Well on the -- yes, I was just going to jump in on the like target market share. It's less for us about coming up with a market share that we think we are entitled to or can get and more about is this market going to have reasonable or attractive economics? Are we going to be able to compete well? And the answer to that, we believe, is always yes. And then how much money can we put to work how quickly and at what point in our maturity in that market and our brand awareness and how much can we spend relative to the value of the players we're bringing in is going to help dictate how quickly we're going to grow in that market.

Now if we would have -- I wasn't around when we launched Colombia, but if we would have told people we were going to get 25% plus market share and be the #2 operator there when we launched, probably would have looked a little silly, but it doesn't so much now.

I was there when we made a decision.

I know you were...

But the truth is that if you understand the user and you build the experience to the way it needs to be localized it properly, we can do that, and we're seeing that across the board everywhere we operate.

And are you the largest cap by, I guess, company-wide market cap or cash generation? Are you the largest player globally in those markets? Like is there any -- like -- because you're competing mostly against local operators, right?

Well, there are operators that are in other markets in Latin America, some that are in European markets, but not necessarily from maybe the direct peer set that our investors look at. There's not much competition down there, if any, really, from a pure-play perspective on our U.S. peers.

So, I guess, like the one advantage you do have, too, is you've got your U.S. market, right, which probably generates, what, almost 6x an ARPU that the Latin American market does. So is there an ability to take that higher unit economic profit dollars from the U.S. market and deploy more in Latin America just to accelerate share?

Well, I think we've -- listen, we're producing a lot of profitability, and it's increasing at a rapid rate. So it does -- all the time, we're looking at what's the right amount to drop to the bottom line versus reinvest. And I think we've been making good decisions there. One of the things, I think, I mentioned it already on this call is that we are going to spend more in marketing in the back half. But it's less about saying we're successful here. So should we invest more or overinvest over here.

And it's more about analyzing each market, the profitability of that market based on the cost structure, which usually comes down to tax rate, what it costs for us to acquire more players and the incremental cost to acquire players and how much money can we put to work. And I think we've been doing a good job managing that. But it's not necessarily trying to reallocate because we made a bunch over here that we should invest more here. Each market we look at really on its own merits and how much can we invest and be successful financially.

Got it. Got it. And then obviously, the other key topic in Latin America is Colombia. You've got the VAT tax decree, the VAT decree lapsing. Like how should investors basically frame the potential profitability impacts with what's going on in Colombia, new President, all that's going on?

Yes. So as you know, new President took office last Friday. It's the President that we were hoping would win the election. He's very pro-business, less government, low tax is the platform that he largely ran on. So we're very excited about that and what it could mean for the stability of the taxation of our industry. We have this temporary tax in place that's 16% of revenue that went into place in mid-March.

I think as you point out, that expires at the end of the year according to the decree. The Constitutional Court is, as we understand it, reviewing that emergency decree and the associated taxes with it and could come out in the coming weeks here with a resolution on that, whether it sticks or whether it goes away.

So we'll see how that plays out. The President may look at some of these emergency decrees from the previous administration and think about whether he wants to do something about those, whether ours would be included in that, we don't know yet. But in any event, this goes away at the end of the year, maybe one way to frame it is we had about a $7 million benefit in Q1 from the tax. This temporary tax not being in place for 2.5 months. So annualizing that is roughly $35 million benefit that would have been associated with kind of the revenue run rate we had earlier in the year.

So presuming we continue to grow, that amount could be bigger than that as we get into next year. So a big opportunity. It'd be great to have some stability around the tax structure in Colombia. I think that provides a lot more certainty for us and for investors.

So currently, with everything right now, the effective tax rate on GGR is what in the low 30s?

Yes, exactly. Yes.

Okay. So that's another way to frame it. Okay. Got it. Got it. Very helpful. And then capital allocation, think your cash balance around close to $350 million, no debt. How should we think about how you're thinking about deploying capital?

Do you want to take that one, Kyle?

Sure. Yes, yes. So as you point out, we've very strong balance sheet. We don't need debt. We are a cash-generating business, and that will continue to be the case. So we should be in a good spot for the foreseeable future. Obviously, launching new markets like Alberta take a little bit of upfront capital, but certainly something that's easy for us to manage. Hopefully, we'll -- as Richard was talking about earlier, we'll have some U.S. states that legalize that we'll put money to work into launching.

And then we continue to look at M&A, and that can be things that would be additive to our product portfolio or bring things in-house that maybe we're using partners for. That could be in the form of entry into a new market in Latin America. And then obviously, we've got our buyback out there, newly updated $100 million buyback that we put in place a couple of months ago that gives us the flexibility to buy back stock, which I think is a good use of capital as well.

Do you kind of want to stick to Latin America, stick to what's working? Or do you look at some of these other markets like Africa looks pretty attractive. If you look at some of the economics of the public companies there, I think Europe is pretty competitive. Anything outside of the Western -- maybe looking into Europe or Africa?

Our goal is to be a leader in the Americas. And so we've been -- and we're fortunate that the 2 parts of the Americas, LatAm and North America are the 2 markets we want to be in globally in this industry because they have a lot of growth left ahead of them. And so I think we have our strategy pretty clear. We do get approached by others globally admiring our solutions, our products, they have opportunities. And so we do pay attention.

But ultimately, we've been pretty disciplined in realizing that the real opportunities for us is to keep reinvesting in what's working and where we have a foundation and a base that allows us to continue to succeed like we have. So we find that existing markets are growing really fast for us, and we're growing faster than them. And all these new market opportunities we described in the call are so many. And I think we have enough opportunity here to kind of be able to continue doing what we're doing for years.

Got it. And you just -- we're running out of time, but -- when you look at -- and I didn't have this in the queue, but when you sort of look what's going on with crypto and some of these Bitcoin markets and there does seem to be the opportunity to like potentially prediction markets offer some sort of a slight slot type experience, right? And they're pretty aggressive. Does that concern you at all? Or how do you kind of view some of the stuff they could potentially do with these minuscule crypto markets?

Yes. What I'll say is that we're -- we've been studying those prediction markets for several years. And so we are very well aware of all the possibilities and permutations. And I think our strategy was to file the application with the CFTC so that we are prepared should there ever be a market like that, that evolves that gets stakeholder buying among the regulators and the courts so that there would be an opportunity for us to be prepared for that. We never want to be caught flat-footed.

So I think there are lots of creative solutions, but some of the arguments being made to justify why the sports prediction market should be legal are sort of saying it's not gaming. So if you start to say, well, now we bring in some gaming markets -- casino markets to the predictive market that kind of feeds this core strategy of legally being argued.

So I think there's certainly something we're monitoring very closely, and we will be prepared no matter what the outcome is, it's hard to sort of know what's better or worse because you don't even -- it's hard to know what the rules are of engagement that you're going to be in someday. But all we can do is make sure that we are prepared under all circumstances, which we are.

Got it. So we're coming to the bottom end of the session. Anything important that we didn't touch on or anything key that you want to get to investors here that you think is pretty important for Rush Street into the back half of the year?

Well, I'll just sort of share -- I mean we've shared on the call, but just to make sure it's clear that we've had the fastest growth in 4 years this last quarter. So our MAU, our active user bases are exploding in all of our markets, North America and LatAm from our growth percentages that we shared. Casino in North America, which we referenced is really competitive or people are trying at it, we grew last quarter 62% year-over-year. So really, really, really incredible growth of an already large installed base.

So others in our segment are not seeing anything close to that. So we feel really confident that all of the labor we put in, all the work, all the innovation experience we talked about are being noticed by players. And I think a big story that's worth thinking about is that because our brand is less known than our peers, the Caesars, BetMGM, DraftKings, FanDuel, there's a lot of players in our states where we operate casino online in the U.S. that have never heard of our brand yet. And so we're having a chance to capture those players for the first time.

And when they experience the sign up registration with us and they realize the little things that we do, we think we help to kind of grow those into loyal customers. So I think we have a large opportunity to grow our existing share by just introducing our brand to a large percentage of the player base that doesn't yet know us because we didn't start with the brand that's as well-known as many others are. So I think that's a really exciting thing for an investor to think about.

All right. So last question. If you think we're sitting here a year from today, how many states will legalize iGaming over under 1 or...

I think you probably have a couple of realistic opportunities that are -- maybe you're looking at 1 to 2. I think that's all we need every year ultimately because we expect -- listen, we have so many states left. You just need to start moving again. And I think there's a couple of states that are really close. I mean Virginia got extremely close last year, and we know there will be a similar effort made and similar stakeholders are involved again. So I think the opportunity is.

Does that create like a domino effect that you've seen in OSB in like '22 and '23, like when New York went, Massachusetts went, a bunch of states went, like does that start to give kind of domino effect?

Properties have a mentality to the thing. We saw that in land-based casinos for decades ago where once one state got it, the adjacent states wanted to do riverboat and it's kind of spread like wildfire. You saw the same thing happen with sportsbook. So I think 2 examples of markets like that where that has happened and there's no reason to think that when you see that, it couldn't happen. When you look at the amount of revenue that a state like Michigan is generating, we're talking billions of dollars over the first 5 years. That's a very meaningful tax generation far beyond what most tax initiatives can generate.

So when you see how reliable, how proven and the scale and scope of the revenues generated, I think it becomes a very appealing thing for. And we start to realize it's already operating. You can already play the same slot games or very quick versions already without regulation and without taxation, it becomes logical that you would start to see it. So I think hopefully, there's another wave that comes and you'll see that same mechanic of copying other states and not winding this out on the protections for consumers and the tax generation start to carry the day.

Yes. because it does seem like people have kind of -- the prediction markets have caused people to take their eyes off the sweeps. Does seem like that you've kind of...

Well, yes, in prediction market there has been a dominant conversation in the last 6 months to a year. When everyone else is focusing on that, we're just focused on casino growth, and that takes a lot of effort to get it to deliver results. But I think that's exciting for us and we're not distracted in the way any of our peers seem to be.

Well, I think that focus has been why you've been the best performing stock in your peer group over the last 3 years. So congrats and keep up the great work, and thanks for joining us, Richard and Kyle.

Good day, ladies and gentlemen. Thank you for standing by. Welcome to the Rush Street Interactive Second Quarter 2026 Earnings Conference Call. [Operator Instructions] Please note that this conference call is being recorded today, July 29, 2026. I will now turn the call over to Kyle Sauers, President and Chief Financial Officer. Please go ahead.

Thank you, operator, and good afternoon. By now, everyone should have access to our second quarter 2026 earnings release. It can be found under the heading Financials, Quarterly Results in the Investors section of the RSI website at rushstreetinteractive.com.

Some of our comments will be forward-looking statements within the meaning of the federal securities laws. Forward-looking statements are not statements of historical fact and are usually identified by the use of words such as "will," "expect," "should" or other similar phrases and are subject to numerous risks and uncertainties that could cause actual results to differ materially from what we expect. We assume no responsibility for updating any forward-looking statements. Therefore, you should exercise caution in interpreting and relying on them. We refer you to our SEC filings for a more detailed discussion of the risks that could impact our future operating results and financial condition.

During the call, we will discuss our non-GAAP measures, which we believe can be useful in evaluating the company's operating performance. These measures should not be considered in isolation or as a substitute for our financial results prepared in accordance with GAAP. We will be discussing adjusted EBITDA, which we define as net income or loss before interest, income taxes, depreciation and amortization, share-based compensation, adjustments for certain one-time or nonrecurring items and other adjustments that are either non-cash or not related to our underlying business performance. A reconciliation of these non-GAAP measures to the most directly comparable GAAP measure is available in our second quarter 2026 earnings release and our investor deck, which is available in the Investors section of the RSI website at rushstreetinteractive.com. For purposes of today's call, unless noted otherwise, when discussing profitability, EBITDA or other income statement measures other than revenue, we're referring to those items on a non-GAAP adjusted EBITDA basis.

With me on the call today, we have Richard Schwartz, Chief Executive Officer. He will first provide some opening remarks and then open the call to questions. And with that, I'll turn the call over to Richard.

Thanks, Kyle, and good afternoon, everyone. Before I dive into our second quarter results, I want to take a moment to acknowledge that while Kyle and I have the opportunity to present these results each quarter, our continued success is driven by the exceptionally smart, dedicated and experienced management team we work with every day as well as our talented employees across the organization. I want to thank the entire team for all their hard work and dedication and for once again delivering record revenue and adjusted EBITDA, which continues our consistent track record of strong performance.

I'm particularly proud that we delivered our fastest quarterly revenue growth in over 4 years, even while operating from a significantly larger revenue base. We generated revenue of $393.8 million, up 46% year-over-year and adjusted EBITDA of $64.6 million, up 61% year-over-year. Our results this quarter reflect the continued strength of our casino-first strategy, disciplined execution across operating regions, alongside a well-planned and strongly executed World Cup period.

Our casino-first approach remains the foundation of our business model. Online casino continues to be our primary value driver with sports betting and poker serving as important complementary products to drive incremental profitability, brand awareness and bring new players into our ecosystem. Online casino continues to be our fastest-growing product segment in both North America and Latin America.

This quarter, online casino represented 72% of our revenue with online sports betting contributing most of the remaining 28%, a mix that continues to support the consistent engagement, higher lifetime values, and stronger retention that comes with our casino players.

Player growth remained strong across both regions. Monthly active users in North America grew 51% year-over-year to over 296,000, with growth in our North American online casino market reaching 64% year-over-year. In Latin America, which includes Mexico, MAUs grew 62% year-over-year to over 652,000. Across the company, we again delivered record first-time depositors and continue to deliver attractive player acquisition costs, reflecting the ongoing advancements in our brand awareness and marketing efficiency.

We just finished a month of exciting World Cup soccer, and I'm incredibly proud of our teams and the results we produced. There was incredible effort and execution that went into our marketing programs, player engagement and operations, merchandising our offerings in a compelling way to our players and, of course, ensuring our technology performed fast and reliably at record volumes.

The end result was very successful outcomes, both in terms of near-term financial impact and, more importantly, impressive acquisition and reactivation efforts, especially in Latin America. In June and so far in July, our monthly active users in Latin America are up over 80%. Another good sign is that more than 25% of our new first-time depositors that joined us during the World Cup have engaged with our casino product as well. This is about 50% higher than what we saw during the Copa America 2 years ago. So this is an encouraging sign and validating that the work we've put into improving the cross-sell flows have delivered positive results.

When it comes to the specific results, both handle and hold came in very nicely for the World Cup in June. In fact, Q2 was the highest sports hold in Colombia since inception, driven by solid World Cup results. In North America, we also again had our highest sports hold since inception, driven by both NBA playoffs and positive World Cup results. This wasn't just good outcomes. It's a reflection of an improving product and improving mix of parlays and prop bets that drive higher hold.

Turning to the political situation in Colombia specifically. In June, Colombia held its widely anticipated presidential election. With the winning candidate scheduled to take office at the end of next week, we believe that his pro-business agenda will provide a constructive backdrop for our industry and for the broader operating environment in the country. These policies appear to be in stark contrast to the existing and opposing party. To be clear, the results of this election have no impact on our reported numbers or guidance today.

The new government's broader review of prior tax decrees and future budgeting decisions remain outstanding. Therefore, consistent with our prior earnings call, our full year guidance continues to assume that the 16% GGR tax remains in effect through year-end. We'll keep you updated if there are changes on the regulatory front within Colombia.

We're also excited to announce that we successfully launched online casino and online sports in Alberta on July 13. And while it's still very early days, we're encouraged by what we've seen so far. As a reminder, Alberta is transitioning out of an unlicensed market. So consistent with our experience in Ontario, we expect this to be a gradual build. On a population-adjusted basis, first-time depositors and daily active users are currently tracking at approximately twice the levels we saw in Ontario at the same point following launch. It's, of course, very early, but we are excited to watch the Alberta market build over the coming quarters.

Moving on to the topic of prediction markets. This past quarter, we filed an application for a CFTC designated contract market license. As we have stated previously, we continue to operate with a casino-first focus and do not intend to lean into the crowded sports-focused prediction market space. However, the prediction market landscape is highly dynamic, and we will continue to monitor developments in this space. And this filing ensures we have the flexibility to navigate all possible outcomes.

As we look to the second half of 2026, we remain confident in the strength and continued durability of our business. We're executing well and taking market share across our core markets. We're off to a strong start in Alberta, a market with meaningful long-term opportunity, and we see continued significant growth ahead in the other markets where we operate.

With that, I'll turn it back to Kyle to discuss the financial details.

Thanks, Richard. Let me walk you through the details of our second quarter performance. Record second quarter revenues of $393.8 million represents 46% year-over-year growth, a continuation of our accelerating growth and a new watermark for our fastest growth rate in over 4 years. This performance was driven by strong execution across all aspects of our business, particularly in our 2 areas of primary focus, online casino and Latin America.

Gross margins for the quarter came in at 35.5%, a continuing improvement reflective of our faster growth in higher-margin markets, but still negatively impacted by the temporary tax in place in Colombia. Marketing efficiency continues to be a key component of our success with marketing expenses of $48.6 million in the quarter, an increase of 34% year-over-year and representing 12.3% of total revenue compared to 13.4% in the prior year period. As Richard mentioned, we continue to see attractive player acquisition costs alongside strong player growth. Therefore, we expect to continue investing marketing dollars throughout the second half of the year, particularly as we ramp in Alberta.

In fact, because our efficiency continues to improve, even as we have been scaling up, we now expect to spend more on marketing than previously planned in the second half. As we've always said, when we find strong ROI opportunities, we will increase our marketing spend.

G&A for the second quarter was $26.5 million, or 6.7% of revenue compared to 7% in the prior year period. As previously discussed, while we're achieving leverage over this line item, we have been increasing our investments in people and technology in 2026 to support our growth.

Turning to profitability. Adjusted EBITDA reached a record $64.6 million, representing 61% year-over-year growth and 16.4% margins. We continue to demonstrate scalable profitability expansion through the operating leverage built into our business model.

Additionally, while our year-over-year adjusted EBITDA growth remains strong, it's worth noting that on a sequential basis, Q1 had the benefit of no extra tax in Colombia for about 2.5 months during the Constitutional Court's reversal of the prior emergency decree, whereas Q2 and the remainder of 2026 assumes a 16% VAT in Colombia. And for context, that benefit in the first quarter was around $7 million.

Net income for the period was $29.3 million compared to $28.8 million in the prior year period, representing a 2% year-over-year increase. User acquisition and retention continue to be key pillars of our success. As Richard mentioned, our user growth this quarter hit record levels once again while also setting another record for first-time depositors. In North America, monthly active users grew 51% year-over-year to over 296,000, with MAUs in online casino markets growing 64% year-over-year. In Latin America, MAUs grew 62% year-over-year to over 652,000.

North American ARPMAU was $320 in the second quarter, down 18% year-over-year, but up modestly from the first quarter. As we discussed last quarter, this reflects the impact of our player acquisition levels. Newer player cohorts start at lower value than our established base, but we continue to see this as both healthy and consistent with our historical experience as these cohorts mature over time.

In Latin America, ARPMAU was $55, up 82% year-over-year, reflecting continued strength across the region, the elimination of bonusing in Colombia to offset last year's VAT on deposits and favorable movements in the Colombian currency.

Breaking down our performance by geography and product, we saw continued strength across all areas. In the second quarter, online casino revenues grew 40% and online sports betting revenue grew 64%. Regionally, revenue in North America grew 23% in the second quarter and revenue in Latin America grew 195%. Growth remained broad-based across regions and products, and we continue to see the benefits of the brand awareness and player loyalty that we continue to build.

Our balance sheet remains strong with $340 million in cash on hand as of June 30, and we still have 0 debt on our books. In May, we completed a secondary offering of which we repurchased approximately $29 million worth of shares under our $50 million share repurchase program. And in addition, our Board authorized a new $100 million share repurchase program, which allows us to continue to be opportunistic with share repurchases.

Now turning to guidance. We now expect revenue in the range of $1.56 billion to $1.60 billion, representing year-over-year growth of 38% to 41%. At the midpoint of $1.58 billion, this represents a $65 million increase from our previous guidance and 39% year-over-year growth. This increase reflects continued share gains in North American iCasino, sustained outperformance across Latin America and a well-managed World Cup period.

For adjusted EBITDA guidance, we now expect it to be in the range of $245 million to $265 million, representing year-over-year growth of 59% to 72%. At the midpoint of $255 million, this represents a $15 million increase from our previous guidance and 66% year-over-year growth. This is inclusive of our plans to further lean into that efficiency by increasing our marketing investments in the second half of the year.

We're pleased by the continued strength of our business. We're growing both rapidly and profitably, and we remain confident in our ability to deliver on our full year guidance. And with that, operator, we're ready to take questions.

[Operator Instructions] Your first call is from Bernie McTernan from Needham.

Just had a question on the World Cup customers that you were acquiring. Any thought -- I know it's early days, but any thoughts on the LTV of those customers maybe versus customers you were acquiring previously? And then I have a follow-up.

Yes, it's a good question, Bernie. I think you're right. It is probably too early to tell for sure. Certainly, you're going to have some players who are joining just for the cultural moment and the excitement around their country and their team. But I think we've proven in the past that in events like this, we can bring people in, get them excited about the platform and keep them around.

We mentioned on the prepared remarks that we had really good success early on with cross-sell in Latin America over to the casino side, quite a bit more so than we did in the Copa America a couple of years ago. So we're really excited about that. But you're right, it's pretty early on that.

And then I just wanted to double-click on the marketing commentary in the second half of the year, now investing more than previously planned. Can you just dive into that a little bit more? Is that all Alberta or anywhere else that you're spending?

Yes. No, good question. I think as you already know, we've increased marketing pretty significantly this year. I think we're up for the whole first half, maybe it's around 25%, 26% so far. But I think as the data we've continued to share, the results are really, really strong out of our marketing teams and the strategies they're using. So we just feel like it makes sense to push harder.

The player values are still really good. We've continued to push our cost to acquire players lower. So certainly, there's more spend because of Alberta and because of that launch a couple of weeks ago. But really, what we were referencing in the call is that we're going to push harder on spend in other markets where we see opportunities. And we're going to, like we always have, we're going to move quickly and be dynamic. So if something isn't working, we'll probably pull back. And at the same time, if other things are working really well, we're going to lean in further.

So maybe just to put a number around it, which I'll go back to the fact that we're going to remain flexible, but maybe sequentially from Q2 to Q3, we might spend something like $7 million to $10 million more on marketing in Q3 compared to Q2. And that's inclusive of the Alberta launch.

Your next question is from the line of David Katz at Jefferies.

Maybe go to the next person, operator, and we can circle back to David.

Your next call is from Zach Silverberg at Wells Fargo.

In the press release and some of the management commentary, you mentioned that you continue to see meaningful long-term opportunities ahead of you guys to drive shareholder value. Can you maybe quantify or qualify some of that and provide some color on what those opportunities might be?

Zach, it's Richard. I think the 2 areas that I would just focus on clearly is that we have a large percentage of the population in Americas, North America that are not yet legal for online casino and Alberta just launching on July 13 and represents a really meaningful new opportunity for us. But I would also indicate is that within existing markets where we're operating today, I think because historically, our brand doesn't have the same high awareness as some of the other brands we compete with, there's a large percentage of the population in these jurisdictions that haven't really had their first experience with us. And when they do have it, it's a positive experience for the most part, which is why we've been able to deliver the type of results where we're growing share and getting exposure from new players to our platform for the first time in many cases.

So I think we're really excited for the ability to us to continue to grow share in our existing markets. And also, naturally, we have these other 88% of the U.S. population, which today is not yet able to play online casino. So I think between those things and [ even bring the ] Latin America, all the jurisdictions down there that are legal and regulated that we haven't entered yet, we certainly are really excited by all the opportunities ahead of us.

Yes. And the only thing I would add to that is that's going to drive the top line, which is obviously key to the success. But as we have been doing for several years now pretty consistently, we'd expect to be able to get leverage over all of our different P&L line items as we continue to grow.

And just for my follow-up, maybe if you guys have any updated view or outlook on the potential legalization landscape. We've heard from one of your peers that they're expecting Virginia, D.C. Obviously, we know about Maine, Maryland. Maybe just any commentary on that would be great.

Sure. For us, each new online casino market is meaningful to us. So we're working hard, as we've said in the past, to try to educate legislators to try to improve the pace of legalization. We remain optimistic about the long-term outlook for iGaming and believe that additional jurisdictions will legalize over time.

I think one of the key drivers is going to certainly be that reduction in federal support and some increased fiscal responsibilities for states over the next 2 fiscal years. It's going to create even more pressure on funding gaps that we think some reductions in major social programs in many states, including some of the very large population states like Illinois and New York, are going to create opportunities for a greater emphasis on new and sustainable sources of recurring revenue. So we believe that's going to drive the discussion around proven revenue-generating policy proposals like online casino legalization.

So I think between protecting consumers and for the first time starting in October of this year, you're going to start to see some impact from some of these major social programs reductions. And so I think that's going to become real, and that's going to be in terms of deficits and gaps the states are going to have. And so we feel like it's a good time to have a momentum being built.

So we feel -- in terms of specific states, I did note that BetMGM referenced a couple of states yesterday. I think Virginia clearly is one that's progressed further during the 2026 legislative sessions and each chamber passed its own authorization bill before it was not -- they failed to reconcile it before they adjourned, but there's certainly going to be another effort this next year. D.C., you referenced. Certainly, that's an active opportunity. Indiana, Ohio are other markets that we have an eye on and we're monitoring and being active when possible to try to accelerate some of the adoption opportunities there.

Your next question is from the line of Jed Kelly of Oppenheimer.

Just circling back on the MAUs. Are you seeing any change in the CAC or what's going on with the spending? And can you just talk about more where your North American MAUs is coming from? Is it more slots first? Or are you having more success with some of your sports-first customers that that might be a little more table game centric?

No. Good question, Jed. I think the reality is that our cost to acquire players has continued to go down. Most of our spend in North America has been in the markets that include iCasino. And a lot of that is slots-first type creative. Obviously, we welcome all kinds of players, and we're catering to table players as well. And clearly, we're still doing quite well in sports, but most of it is casino first and the cost to acquire players has continued to go down. And the player values continue to hold up as well. So it's the primary reason that we're going to be spending more in the back half because there's a lot of opportunity there.

And then just as a follow-up, when you look at the sports that are getting most of the prediction market share, tennis, I think, is doing about 2x the amount of baseball. Do you have any insight on what's going on there? And are you seeing certain pockets of your sports handle maybe down because it's going more to a sharper player or anything you're seeing in some of -- tennis in particular, if there's anything to call out?

Yes. I don't think we have anything to call out there that we've seen as a big change, but it's an interesting callout.

Your next call is from the line of David Katz from Jefferies.

I appreciate coming back around. It was a misunderstanding with a mute button. I just wanted to go back to the retention of these high volumes of players that you are capturing during the World Cup. I think, Richard, in your prepared remarks, you talked about the ability to cross them over to sports being 50% higher than Copa. But if we look out into the future, your ability to retain those people in your system over time, is there any perspective or any data you can give us to that end?

Yes. So I think it's challenging to have a great comparable to this event. The World Cup, as we all know, was in the right time zone this time around for people in the Americas to watch it and engage in a lot more meaningful way. Our business has changed dramatically since the last World Cup, even since the Copa, which was more of a Lat Am event for us. In North America, we had really good engagement. It was more about a reactivation and using the World Cup as a pop culture event to engage people across the platform. And in Latin America, it was a really big player acquisition opportunity for us, and we're really pleased with how that turned out.

One thing I'll point out is that after Copa, even though I just mentioned it's not the greatest comparable because we're so much larger at this point, the product is better, but we saw a nice inflection after Copa in our casino volumes down in Colombia. And so we're certainly hoping to be able to capitalize on a similar situation this time around. So I think good early signals, but too early to give too much detail.

Understood. And if I can ask one follow-up from a longer-term nature. I noticed some of the other Latin American countries that you've listed as potential future opportunities, at least the last couple of quarters in your deck. How far away or what are the gating factors for those to become a reality?

Yes. Thanks for that question. So as you can imagine, we're very thorough here, and we're very focused on making sure that we pick the right markets to enter, and we do so in the proper way where we're prepared for success. And so there are markets down there that, as you know, are legal and regulated that are exciting, but we have a lot of growth, as you see, in our existing markets, and we have to be very thoughtful how we invest in additional markets. But there are thoughts and efforts going into additional expansion in other markets down there. But certainly, it's not something we're prepared to share at this time.

Your next call is from the line of Dan Politzer from JPMorgan.

First, I want to touch on the prediction markets, the application you filed with the CFTC. I know you mentioned that you don't intend to lean into the sports area here. But I guess, can you talk about maybe what does this allow you to do specifically? Do you envision yourself as a taker or maker? Is this just a way to give yourself optionality? How are you thinking about this in the medium or longer term?

Yes. We do view the applications as a way to preserve our strategic flexibility to maintain our optionality, as you just mentioned, and ensure that we're not caught flat-footed should the market or regulatory environment evolve in a way that becomes relevant for our business. So it's really just being prepared and preserving optionality.

And then can you talk about maybe what you're seeing in terms of the competitive environment within iGaming? Obviously, you've been acquiring a lot of users. I know that you're seeing, it sounds like, strong LTVs in CACs. But in Michigan or any other states, have you seen any incremental competition or even wallet impact from prediction markets?

So I think on your last piece on the prediction markets, I think the answer is we don't believe so. Obviously, it's hard to know for sure. I think on the competitive intensity, listen, it depends on the number of operators in a given state or market in North America, of course. But there's really good competition, and we've had to deal with that for a long time. There are some new competitors that have entered in a couple of our markets, which certainly increases the competition. And we've had some of our competitors who have, I think, recognized that iCasino is a great place to focus on and have talked about putting more efforts there. But all the while that that's been happening, we've been consistently growing market share for, I think, 4 straight quarters here. So we're very proud of that.

Your next question is from the line of Ryan Sigdahl from Craig-Hallum Capital Group.

I want to double-click on the World Cup, the activations -- well, let's start reactivations in North America. Just given that strong 25% cross-sell to iCasino, was there a specific focus on players that maybe had a higher potential to play iCasino? Or is it just product, everything and it was [ Gorilla ] across the board? And then maybe secondly on that, just the Latin America activations. Was there also specific player targeting for players that maybe had a higher likelihood of playing iCasino or that you thought would?

Yes. So just for clarification on that data point that Richard gave, that was related to Latin America. So I just want to make sure that was clear. And I think you're right, there was a lot of different efforts and different styles of marketing and trying to attract different types of players. We definitely leaned into sports first and World Cup first in the Latin American markets and obviously had a lot of success with that. I don't know, maybe clarify if I missed a piece of your question there.

Yes. Just on the reactivations in North America, if there was a specific focus on maybe players that had gone -- weren't active anymore, gone inactive, but had played iCasino in the past if they were a greater focus. Just curious how you focused from an activation/reactivation on iCasino players.

Yes, it was across the board, right? When you think about reactivations, you know who the people are and you know information about them, so you can tailor the messaging and the creative to them based on what you know about their past experiences and their interest. So it was -- I think it was all of the above there.

Very good. Just for a quick follow-up, Kyle, the increased marketing spend, that is pure marketing spend through OpEx, right? Curious how you think about promotions in conjunction with that.

Yes. So yes, that increase is intended to show up in the marketing line on the P&L, correct. From a bonusing perspective, obviously, the more new players we're bringing in, that can have an impact on bonusing. I think we've continued to refine our bonusing strategies, adjust those as we go, and it's different depending on the market, the rules, how taxes are affected by bonusing, how players engage with bonusing. I'll point out that our bonusing sequentially, and this is a North American comment, but bonusing sequentially is down in Q2, up a little bit year-over-year. But it's an area -- we spend a lot of money on bonusing, right? We pay a lot of attention to it, and we want to make sure the right bonuses are going to the right people. Other than hopefully extra new players coming in because of extra marketing spend and some associated bonusing with them, I wouldn't think about a big change in bonusing strategy otherwise outside of typical seasonality heading into the football season.

Your next question is from the line of Mike Hickey at StoneX.

Richard, Kyle, congrats, guys. Awesome quarter. I guess the first topic, Kyle, the second half revenue and EBITDA cadence post 2Q here, how should we think about -- I guess, post 2Q and you raised numbers for the year, how should we think about the relative cadence of revenue and EBITDA between Q3 and Q4?

Yes. Good question, Mike. I think first thing I'll point out, we mentioned that we had really strong hold in Q2 on the sports side. So Q2 was aided by that and probably benefited revenue by around $10 million. So after you net that out of Q2 results to think about the sequential look going forward at the midpoint of our guidance, I'd probably expect Q3 revenue to be relatively flat with Q2. So ex that $10 million, Q3 being up by around $10 million over Q2, obviously, there's a range of outcomes around that, but that's the way I'd think about it. And then like we typically do, we'd expect a real nice uptick in revenue from Q3 into the fourth quarter.

If I move to EBITDA cadence, if you think about revenue that's flat from Q2 to Q3, we're talking about additional marketing spend in Q3, particularly with the Alberta launch and then spending even more in marketing than we previously planned. I think it's likely that Q3 EBITDA will be the low quarter of the year for us and then with Q4 being a sizable step-up in EBITDA due to much larger revenue and then moving away from the Alberta launch costs. So I think that's largely in line with what analysts are already modeling given our previous commentary and historical results.

I guess maybe you didn't ask this one, but while I'm at it, I'll talk about adjusted EPS real quick. As we've become consistently growing and profitable, that's a metric that some investors are looking at in addition to EBITDA. So just a few components for people to be able to have some help with modeling. And I'm going to give you exact amounts. But keep in mind, there's a range of outcomes associated with each of these. But depreciation and amortization is probably around $47 million for the full year. Stock comp expense is around $30 million for the year, interest income around $12 million, tax expense of around $74 million and then a fully diluted share count around 237 million. So at the midpoint of guidance, if it's all those numbers, midpoint of the guidance, that gets you to about $0.62 in adjusted EPS for the year. So as people are modeling, hopefully, that gives a little more color that everyone can look back at.

Kyle, I'll keep you talking here. Maybe Richard, too, just on your '28 (sic) [ '27 ] growth opportunity as you are today, what you think are the most important drivers that could help you sustain that double-digit revenue growth from your current base? And at least on '28 (sic) [ '27 ], how much further can you take EBITDA margins or maybe how we should think about those will take shape for you? And I guess just overall, Kyle, how we think about World Cup as a comp in '28 (sic) [ '27 ]. Is it the unlock for growth if you retain and cross-sell like you expect? Or is that elevated volume and the success that you had more of a challenge for you as you look at '28 (sic) [ '27 ]?

Yes. I'll take that last piece first, maybe. There's certainly a comp element there. I think because it added a significant number of games to the meaningful soccer schedule for the world in 2026, right? So that does impact comps next year, and we had nice hold. So that's an element. I feel very good that with the rest of our growth profile and the number of players we've added and reactivated through that big event that will help us push through those tougher comps next year. You said 2028. I'm assuming you were talking about 2027.

Yes. I did mean '27. Sorry about that.

So we don't skip a year here.

Way ahead, way ahead.

So it's probably a little early for that. We'll give 2027 guidance in a couple of quarters. But I think here's a few things to think about. We're obviously in a growth industry, a really nice growth industry, and we've been able to consistently take share in the North American iCasino market, where we're focused in North America. So I think in 2027, I think we feel good about taking our fair share of the industry growth.

In North American sports, I wouldn't expect as much growth from us. That part of the industry has slower growth, and we aren't investing as much or that much in player acquisition in the sports-only markets. And then if you go south to Latin America, again, the markets that we're live in are growing really nicely. We believe we're taking share in all of those markets, and we'd expect those to be significant growth drivers for us.

And then if you move down the P&L, I'd expect that we'll continue to see operating leverage again next year, just like we've seen over the last 4 years. We're growing more quickly in our higher-margin markets. So with all else being similar, the revenue mix alone should improve our gross margins. And even when adding in the investment market of Alberta, we'd expect to get leverage over marketing spend next year. I suspect the same would be the case with G&A as well. And the only wildcard I would throw in is if -- back to a question Richard was responding to earlier, if we have a new state or 2 in the United States legalize and launch iGaming next year, that would change the profile a little bit, but I'm sure that's something we would all welcome.

Your next question is from the line of Joe Stauff at Susquehanna.

Your North American active growth is impressive. But I was wondering if you could talk just structurally about how this pays off and when it pays off in terms of, say, ARPMAU, if -- and I don't know how you want to discuss that, but certainly, it's been fertile. Your active growth has accelerated even higher this quarter. It seems likely to continue given the investment and it's paid off. Just wondering how to think about if you were to normalize your level of marketing, how we see that in the ARPMAU? Does a new customer that you acquired, call it, in the third quarter, do they contribute maybe a corporate level of ARPMAU a year later? Just talking about details of how an iCasino new customer ramps in that spending. I don't know what you could share with us.

Yes. So without getting into exact numbers, it's a good question, Joe. First of all, I'd say I think it's already paying off when you look at our growth across the business. Our player counts are driving -- our added players are driving a lot of growth, right? In terms of the progression of the value of players or maybe a player cohort, there's 2 things that happen. The longer players stay with us, the more valuable they become. And also the retention improves dramatically. So there's a natural falloff for us and for this industry of players that get acquired. And early on, you're going to lose a decent amount of those players, at least for a while. And then their value builds over time.

In iCasino, that payback is faster than in sports. At least that's been our experience. In terms of what -- I don't want to get in the habit of forecasting ARPMAU future quarters, future years. If and when our player growth slows, which we're at a pretty high clip right now, so that's probably natural that it's going to happen at some point. That's when it's more likely to see that ARPMAU increase. I think we pointed out that it improved a little bit sequentially, which I think is great. This is actually more on the MAU side, on the denominator, but this is the first quarter in 6 years where -- a first second quarter in 6 years where we had a higher player count in North America in the second quarter than the first quarter. So it just tells you how much we're driving growth there and how much of it is casino-led and not as dependent on the sports season. So hopefully, that gives you a little bit to think about there without going into a lot of quantification.

Yes. No, I appreciate that. And just to clarify, in Colombia, Richard, you had mentioned the pathway. We'll see next week where the -- I guess, the executive branch of the Colombian government and how they -- if they're going to remove that tax or not. But just remind me, is there a constitutional court pathway as well that's active similar to the last one?

Yes, there is. And there is an opportunity to be heard again. The current temporary tax that exists will be heard by the Constitutional Court, and there's always a possibility that they rule against it, which would mean there could be a change in that tax impact for us.

Your next question is from the line of Jordan Bender at Citizens.

Maybe to start more broadly, you've obviously had a ton of success down in Latin America under the RushBet brand. Would you guys ever look to bring that to the U.S. just to cater to some of the Spanish-speaking population here?

Jordan, it's a conversation we do have internally at times. And certainly, it's something we've considered and thought about. I think certainly, a multi-brand strategy is something that every operator should consider at some point. Some have already pulled the trigger on that. Certainly, I think that for us, it comes down to the right timing to try to address multiple brands in a similar market. Some jurisdictions are easier to have multiple brands, some are more challenging. But ultimately, I do think that we have an opportunity to really cater to some of the Spanish-speaking Americans who certainly would probably prefer at times to play a site that's very native for their preferred language.

Great. And just a follow-up, just to take another swing at some of the incremental marketing costs. So that 3Q, that comes at a time when normally ahead of the NFL season, you get a ton of spend from the sports betting industry. This year, we all can imagine how much is going to be spent on the prediction market side. Is the increase in marketing going into Q3, is there anything within that to say maybe that's a little reactionary to what is to come? Or is it truly the customer economics of what you're seeing are just very attractive and you're just stepping in ahead of that?

I would say 0 of it is in reaction to what others are doing and where they're spending and that we feel like we have to match something. It is all about the player economics, the player values and the economics around acquiring those players and how successful we've been and actually improvements we've continued to make within our marketing programs and technology where we think we can spend more and do it at the same rates.

[Operator Instructions] Your next question is from the line of Chad Beynon from Macquarie.

Just one from us tonight, just around the prediction markets, again, more related to, I guess, what you saw at the end of the second quarter during the World Cup and maybe into the third quarter. We've seen lots of data in terms of prediction market volumes that are out there. I think most of it is probably in the states where you don't participate. But just wondering if you could add any additional commentary if you believe that in the states where you have sports betting, so 28% of your business, if you have seen decelerating volume trends or anything else that you can talk to help us think about the trajectory of OSB into the back half?

Yes, I'll start. I think the answer is no, we haven't seen that impact. But it's also true that we probably don't have perfect visibility into it. I think the fact that we're not focusing on new player acquisition in sports-only markets, and we're doing as well as we are in sports relative to our peers probably tells you that we're not being impacted by it a whole lot.

I would just add as well that we're not catering to the sharp customers either potentially the way they may find the prediction markets more appealing than maybe a conventional sportsbook.

Yes. One other thing I was just going to clarify for you because you did say you mentioned 28% of our revenue. But you got to keep in mind that about half of that, maybe more than half of it, if I went back and checked, is coming from Latin America. So that isn't at risk in the areas that you're referring to.

There are no further questions at this time. We have reached the end of the Q&A session. I will now turn the call back to Richard Schwartz for closing remarks.

Thank you again for joining us today. We look forward to updating you on our progress when we share our third quarter results in the fall.

This concludes today's call. Thank you for attending. You may now disconnect.

Good morning. I'm Kyle Sauers, the President and Chief Financial Officer of the company. And on behalf of Rush Street Interactive, we welcome you to this Annual Meeting of Stockholders for Rush Street Interactive. Today's virtual-only meeting is a live audio webcast. Thank you very much to those who are participating today.

I will act as the Chair of this meeting. Selden Ross, who serves as our Deputy General Counsel, Commercial and Corporate Secretary, will act as Secretary of this meeting. Erica Young, a representative of Continental Stock Transfer & Trust, our transfer agent, will be acting as the inspector of election for this meeting and is also in attendance.

The meeting will now come to order. At this time, Mr. Ross will give the Secretary's report on the notice of this meeting and the affidavit of mailing.

Thank you, Kyle, and good morning. Continental Stock Transfer & Trust has provided a list of stockholders of record of the company at the close of business on [ April 14, 2026 ] the record date for determining stockholders entitled to notice of and vote at this meeting. This list is available in the Meeting Documents section towards the center of the screen.

Continental Stock Transfer & Trust has also provided an affidavit stating that the notice of this annual meeting and the proxy materials were sent to all stockholders of record beginning on or about April 24, 2026. If you need a copy of the annual report or the proxy statement, copies are available in the meeting documents section towards the center of the screen. Finally, Continental Stock Transfer & Trust has reported that the holders of a majority in voting power of the company's common stock issued and outstanding and entitled to vote on the proposals at this meeting are present by proxy. Accordingly, a quorum for this Annual Meeting of Stockholders is present. These materials will be made part of the minutes of the meeting.

We will now proceed with the business of this meeting. To ensure the orderly and expeditious conduct of the business of this meeting, I call your attention to the rules of conduct set forth for this meeting. These were made available to each stockholder in the meeting documents section towards the center of your screen.

We ask that in fairness to all stockholders attending this meeting, you please honor these rules. As described in the proxy statement, the items of business for today's meeting consist of the election of Neil Bluhm, Jack Markell, Niccolo de Masi, and Thomas Winter as Class III directors to serve for a 3-year term ending at the 2029 Annual Meeting of Stockholders and until their respective successors are duly elected and qualified.

Also the ratification of the appointment of WithumSmith+Brown, PC as the company's independent registered public accounting firm for fiscal year 2026 and the approval of amendments to the second amended and restated Certificate of Incorporation, the charter to, a, provide for officer exculpation as permitted by Delaware law; and b, make certain clarifying changes to the director removal process, the charter amendments.

The company has not received notice from any stockholder as required under its bylaws of any other matter to be considered at today's meeting, and so no other proposals may be properly introduced by stockholders. I now declare the polls open for voting at this meeting at 9:04 a.m. Central Time. If you have not voted or wish to change your vote, you may do so now by clicking on the link provided online.

Any stockholder who has already voted and does not want to change their vote need not take any further action. The polls will remain open until immediately after any discussion on today's proposals. Colin, please present the proposals.

Thank you, Kyle. Proposal #1 is for the election of the following nominees to serve as Class III directors on the Board of Directors of the company for a 3-year term ending at the 2029 Annual Meeting of Stockholders: Neil Bluhm, Jack Markell, Niccolo de Masi, and Thomas Winter. All of the nominees currently are members of the Board of Directors of the company. Directors elected today will hold office until the company's Annual Meeting of Stockholders in 2029 and until their respective successors are duly elected and qualified.

The company's bylaws require any stockholders desiring to nominate a person for election to the Board of Directors to submit such a nomination in writing and in a timely manner to the Secretary of the company. Since no such stockholder nominations were received, the nominations for election of directors are closed.

Proposal #2 is for the ratification of the appointment of WithumSmith+Brown, PC as the company's independent registered public accounting firm for fiscal year 2026. Proposal #3 is for the approval of amendments to the company's charter to provide for officer exculpation as permitted under Delaware law and make certain clarifying changes to the director removal process.

Consistent with updated Section 102(b)(7) of the Delaware General Corporation Law, the proposed amendments to our charter would provide for the elimination of monetary liability, i.e., exculpation of certain of our officers in the limited circumstances permitted under Delaware law.

Let's proceed with voting on the proposals. We will close the polls immediately after any discussion of these proposals. So if you wish to vote and have not yet done so, now is the time to submit your vote by clicking on the link provided online. Any stockholder who has already returned a proxy card or voted by Internet and does not want to change their vote need not take any further action.

If you have not yet turned in a proxy card or voted or if you are a stockholder of record and you wish to vote your shares are different than you have indicated on your proxy card, you may do so now by clicking on the link provided online. If there are any questions regarding the voting procedures or wishes to comment on or raise any questions regarding the proposals now being voted on, you may submit questions by entering your question online under the heading 'Submit a Question,' clicking 'Submit'.

If you submit a question and we don't address it during the meeting, perhaps because it wasn't related to the voting procedures or proposals, we will try to follow up directly at some point after the meeting.

There being no discussion of the proposals, we will now close the polls. If you wish to submit your vote and have not already done so, please submit your vote now by clicking on the link provided online.

[Voting]

I now declare the polls closed at 9:08 a.m. Central Time.

Based on the preliminary review of the votes cast, the inspector of election has informed me that each of the nominees for director have been duly elected; the appointment of WithumSmith+Brown, PC to serve as the company's independent registered public accounting firm for fiscal year 2026 has been duly ratified; and the charter amendments have been approved.

The inspector of election certificate and report on the final tabulation of the votes will be annexed to the minutes of this meeting. Final results will also be published in a Form 8-K filed with the Securities and Exchange Commission within 4 business days, including the date of this meeting. I'm aware of no other business that should be brought before this meeting, and accordingly, this meeting is adjourned at 9:09 a.m. Central Time.

This concludes our 2026 Annual Meeting of Stockholders. Thank you for joining us here this morning. Goodbye.

Great. Good morning, everyone. Thanks for joining us. My name is Bernie McTernan, I'm the Internet Analyst here at Needham & Company. My pleasure to be joined this morning by the team at Rush Street. We have Richard Schwartz, CEO; and Kyle Sauers, CFO. Thank you both so much for joining us.

Thanks, Bernard.

So a lot's happened in the last year. Really, maybe just wanted to start, what do you think has been maybe catch investors up in terms of what's been the most impactful to the story?

Yes. So I would say that our consistency and our stability as a digital leader. It's been something that's really caught attention of the investor community. We're now 4 years of consistency of executing our goals of expected financial objectives, gaining market share in North America iCasino despite that being a highly contested market with everyone focusing a lot more energy on that as still continuing to outperform, setting records in terms of new volumes and new customers at record low prices for us. So having success acquiring customers when others are, I think, struggling and then, of course, delivering the revenues per active user at the highest rates in the industry. So North America just goes from strength to strength. And then we have the Latin American business also, which has continued to grow at extremely fast rate, faster than I think most people expected. And we've now seen that not only can we can and continue to grow as fast as we have in a market like Colombia, but other markets we've entered like Mexico also having similar growth profiles and are ahead of where they -- where we were at the same time years ago with Colombia. So there's a lot of optimism about our path to continue to grow all parts of our business.

No, that's great. Let's focus on -- start by focusing on the U.S., record first-time depositors in the first quarter. I'm assuming it's a lot of different things stacking up on top of each other, but what's working in particular?

Yes. Maybe I'll jump in, Richard. I think you're right, it is everything. We've gotten asked the same question on the earnings call the last several quarters. Like is there some -- is there some magic bullet or one thing that you've gotten access to or started doing differently? And the reality is, it's all kinds of things.

So Richard, talk plenty about the differentiated user experience and retention and how we keep people around and all the promotional tools we use that we think are very unique. But the reality is we're filling the top of the funnel faster than we ever have. We've got record first-time depositors for many quarters in a row now. And that's in an environment where we haven't launched any new markets, which is usually when you see all of the incremental player adds at a faster pace. And we're doing so at record costs.

So by the record, I mean, the lowest they've been to acquire players. So we've actually been starting to spend more in marketing recently than we previously had and kind of reaccelerating there because we see the value to be so good, both the value of the acquisition, but then the value of the players that we're bringing on. And I think as you mentioned, our player growth rate in iCasino markets being over 50% for a few quarters in a row here being at very high levels and expectations for us to see really strong continued growth in player count, that's just such a good leading indicator for what's to come. And I think the Q1 results on revenue beat was an example of how those players drive revenue for us over time.

Yes. And so there's clearly a ton of momentum in the business. When you guys were -- and it's almost investors are in amazement in terms of like how fast you're growing U.S. MAUs right now, was there any leading indicator that gave you insight that you would be able to grow? I mean you said North America iCasino MAU is growing over 50%. Like what was the leading indicator there that gave you insight that this could be possible?

Yes. I mean, I think -- so first of all, I think you know us well enough that we're not going to get on a call and pound our chest and say this is going to continue at these fast rates forever. But we have so much opportunity because there are so many players out there who just have never heard about Rivers or have never tried us. We have that advantage.

I think what I'm saying leading indicator, I'm really more referring to the growth in our players very rapidly, which in the near term, actually decreases the average value of the player because you're diluting it so quickly, but that should reverse course over time.

I think the indicators are what we've been doing with reactivations, what we've been doing with new adds and the value of the players that are coming on to the platform today being still very, very solid. And that we've been pretty dynamic and iterative with how much we are spending on marketing and which channels we spend it in because when we see things working, we can generally adjust those things pretty quickly and put more to where good things are happening. So I think that's been part of the excitement over the last year or so is that we're seeing places where we can win more players, and we're putting more dollars to it. So we are remaining pretty flexible on that because it's fairly obvious when we get on a quarterly call, if we spent our money well or not, based on what's happening with new players coming on to the platform, and the active players that we keep coming back.

Yes. Makes a lot of sense. And maybe from like a modeling standpoint. Obviously, we're in this period now we are adding so many first-time depositors. It's weighing on ARPU. But how should we think about sort of MAUs thinking about revenue growth in the future, thinking about that balance of continuing to add MAUs but then also ARPU as well?

Yes. It's interesting. If we went back a year ago, I firmly would have said player count's going to be the bigger driver, not as much from the average player value. And I think to the extent we're able to grow players at a really significant rate relative to the market like we have been, that's going to continue to be true.

I mean if we're growing players at 30%, 40%, 50%, 60%, the player -- the revenue growth is going to come from that, but there will be at a point in time at some point, no new markets launching in that scenario, player growth will slow at some point. And then I think that's when you see the player value start to contribute more to the revenue growth. But we're very confident that as that player growth slows down at some point in the future that the player values are going to come back because you just have so much bonus seen early on, you have players who are only around for a part of the new month and aren't contributing as much. It takes a while for retention to build with new players. So all of those should move us towards continued solid growth. We're very, very optimistic about the growth opportunity in North America, even without new market launches.

Yes. And maybe talking about new market launches. I think the most recent, Delaware, how is Delaware going? Is it still a significant contributor to growth?

It is. So I think the I think the latest state data that it's been out has shown Delaware growing at 50% to 60% year-over-year. There's some point where that's going to slow down. But we've had -- we continue to have really nice player acquisition there. Player retention is strong, obviously, as the only operator on 3 different partner brands, our co-partner brands. We don't have the competition there that we need to deal with. But I think there's a lot of growth left there. I think when we launched Delaware or shortly thereafter, we talked about it being a -- at some point, being a potentially $300 million GGR opportunity. And we're not there yet, but we've been getting there pretty quickly. So maybe there's a chance we've underestimated the longer-term opportunity in that market.

Got it. I want to make sure we hit on LTV to CAC and there's a lot of maybe increased spending on the online sports betting side of the industry. I mean, Kalshi just raised $1 billion. Where are you seeing CACs trending? And is this -- what's going on in prediction markets impacting maybe your CACs where you're traditionally spending on iGaming first customers?

Yes, it's a good question. And I think there's -- we've had a few of our peers talk about some pressure around marketing that's centered around sporting events, right? And that just in North America, that just isn't where we are putting a lot of capital to work. Most of our marketing spend is going into markets that include iCasino, it's generally iCasino-led. And I think we are just in different places going after, generally different audiences will all work to cross-sell, the prediction market folks, but the traditional operators we're all working to cross-sell after we bring players onto the platform. But we -- I mean we had our lowest CACs that we've had since going public this last quarter again in North America. So we're not -- we're simply not seeing pressure from that at least today.

And so therefore, if CACs are record low, your LTV to CAC must be through the roof.

It's very solid. You could certainly -- I mean, we have been spending more on marketing and to the extent it's working, we're going to continue to keep spending more because the values are very strong. It may have been one of your firesides or somewhere else, but I recall a year ago talking about how much our CACs have come down and how we felt like they were probably somewhat industry-leading and then we get a year later and they're far lower than they were. So that's what our marketing team said they'd be able to do, but we don't like to build that level of optimism into our guides.

Yes. No, understood. And so I wanted to transition over to prediction markets, it seems like we can't have an investor conversation with investors on the online sports betting that was talking about prediction markets right now. How do you -- is this a competitive threat to RSI? Just how do you view this? How do you view this kind of increased new players in the market?

Yes, as a casino-first operator, we're staying extremely focused on what matters to us, which is the casino market space. And as you see in Kalshi and Rob had a group of others in that coalition. The leaders in prediction came out recently and said, hey, casino is not something they're going to focus on, it's not off the table. It doesn't have the same legal justification as trading on sports market.

So as others are distracted and focusing on that part of the business and having to spend a huge amount of money and executive attention on that. We're focusing on executing and innovating further in the casino-first space. And frankly, it's given us a great chance to legalize online casino in some jurisdictions that are at risk of losing in the perception of some of the revenues from sports betting and having less certainty on the future of that revenue stream as a tax stream.

So it's giving us a chance to go in there and say, hey, it's a disruptive moment in time, let's try to legalize online casino at accelerated rates. And so I think that's actually going to be helpful for us. So we feel really good about the fact that others are having to have higher cost to acquire customers, as you heard Kyle mentioned from marketing, having a lot of others distracted on the sports category, while we are just continuing to be executing on the things that matter most. And I think we have a structural advantage over others and a product advantage and that we're focusing on our iCasino, which is the most attractive segment of online gaming.

In states like Pennsylvania, where you have both sports and casino, 80% plus the taxes are coming from casino. It's a larger market. Slot audience alone is large as sports betting, but everyone is spending all their money and time in sports, and we're happy to have them do that. So we can continue focusing on what matters and continuing to differentiate our experience to continue to advance the reasons why players stay loyal with us, which ultimately is the most important thing is the player finds us, we needed to keep them with us. So how do you do that? You treat them well. You offer them experiences that are fun, that are unique and that they feel like you're there being thoughtful with them and treating them well and then you have the retention that comes from that. So I think that's just a good opportunity for us, which we're taking advantage of right now.

Yes. No, that all makes a lot of sense. And I certainly want to touch on regulation, but just sticking on prediction markets for one more second. What would get you to launch your own prediction market service? Or is that just off the table?

I think we're always monitoring the situation where there's nothing that's happened in the last 2 years in the space that we weren't aware of in advance or following closely. Certainly, if anything was to change where the market became attractive for a business with our profile, then we would certainly be able to put steps in place then to execute on that. So we certainly are never going to be caught flat-footed. So we're always monitoring and have strategies in place. There'll be an opportunity that makes sense for us.

Okay. Understood. And so moving over to legalization and regulation. Will this finally be the year that we can get more material legalization of online sports betting and iGaming because it makes -- with the rise of prediction markets, at least to me, it makes all the sense in the world that you would have increased market access, states losing or realizing potential lost tax revenue. But we just haven't seen it yet. So what's your view here?

Right. I think right now is a great moment. And I'd say now I'm not suggesting it's going to happen in this calendar year, but the work's been put in right now, Virginia came very close. Recently, there's still opportunity in Virginia this year through the budget process. That's not getting a lot of attention, but it's an opportunity that we're still following and involved with. Certainly, if not this year, next year looks promising.

But there's also a large thing. We have Alberta opening very soon in July, so another nice, very attractive market for casino opening in North America that we're going to be targeting. But there are other jurisdictions too. You have a few things happening. One is you have all our competitors and us aligning around the desire to have online casino legalized. Like I said, only 12% of the U.S. population today as online casino. Whereas over 50% of sports, there's a big differential between catching up for some of the casino offerings with the states that have sports. And as they have the risk of losing some of the revenues from sports.

But more interesting, I think, is the fact that the federal government will be reducing a lot of the Medicaid matching funds come after the elections in November. So states are going to start to have a shortage of a material amount of funds that they've had in the past through to other matching programs to the federal government on Medicaid and so states like New York, Illinois, are going to have even greater surpluses in this area, and they all recognize the value of online casino, being a meaningful, proven, reliable method to raise taxes at a large volume, a large amount.

You look at Michigan, they've generated a couple of billion dollars of revenue in the last 5 years. It's a meaningful move the needle number for all these states. And I think the other thing that historically has been a challenge is some of the legislators members of Congress will sort of say -- legislators will say, things like, well, we don't want someone have a slot machine in the purse or in the phone or in the pocket, carrying it around. And what you start to realize with gamification happening around the industry everywhere that you already -- every individual can already play sweepstakes, casinos or crypto casinos on their phones. So the idea that we're going to sort of ban something that already exists proliferated everywhere isn't really as strong argument as it was in the past or maybe this didn't exist.

So now, hey, this is already existing. You might as well protect your consumers, to have responsible marketing and responsible gaming tools in place. And obviously generate huge tax revenues that I just mentioned earlier are very real improvement in this category. It's not a guess. If it's going to happen, it will deliver the results of the predictions and the projection show.

So I think all these things collaborators -- competitors collaborating big opportunity with the deficits proven and more reliable and the other sources of tax generation and the prediction market and the competition, I think are all things that bode well for us and as we try to lobby for more states to legalize it faster.

And by the way, we have all these Latin American market that are legal today already that we can enter. So we're -- we don't have a shortage of opportunities, which is exciting for a company like ourselves or others maybe are waiting for another U.S. State as their primary strategy for expansion. We have multiple other markets in Latin America that are attractive that we're looking at opportunities to expand into and giving our success in existing markets down there, that's something that I think investors should be really excited about long term for us.

Yes. And I was just going to add in on since Richard was talking about Virginia, in particular, just -- so it's a good example, a good comparable to Virginia would be Michigan, where we've continued to grow share over time, but didn't start with any database or a real brand awareness or a partner there that had a database that we could use. And Michigan's approaching like a $300 million GGR run rate for iCasino for us.

So you take a place like Virginia, a little lower population, probably a little higher average player value. We would have strong brand awareness, partner with a database. It could be a very meaningful market for us. And if we're able to layer in New York and in Illinois over a few years after the that, you're still in a pretty small percentage of the population, but the benefit to us is pretty outsized and could be very meaningful.

Yes. No, it makes a lot of sense. One state you didn't mention it was Maine. What's the opportunity -- what's the latest there? Is that an opportunity for Rush Street?

Yes, I think it is. For sure, we're engaged in opportunity discussions there, but it's a little bit of a slow process because there's a lawsuit happening there. And I think there's a lot of efforts going into sort of preserving the legislation as a viable regulatory scheme. So I think we're waiting for that to kind of evolve and mature and certainly actively involved in the opportunity there.

Okay. Let's move on to Lat Am. The player growth has been phenomenal. And then obviously, what's going on with just like the lapping of the tax dynamics in Colombia. Can you just talk, though, to the competitive dynamics? This is a question we get a lot from investors is just who you're competing with particularly in Colombia? But just, yes, I would love to know more about the competitive dynamics in the region.

Sure. Kyle, maybe I'll start. There's -- in Colombia, there's 2 competitors that when we entered the market, they own 90% plus of the market combined. So reminding me of the early days of FanDuel DraftKings in the U.S. where they were kind of dominant brands that had evolved from unregulated business and has already had brands and databases similar to what you saw with the Daily Fantasy in the U.S., where the brands that came from those backgrounds already had brand awareness and players already playing with them. So they became an easier transition for them to become leaders in that market.

The other competitors, probably about 20, none of them had any market share of any size. And to this day, it's still the same case where there really hasn't been anybody else who's been able to grow their share in a meaningful market share other than us. So we came in the market and consistently grown from day 1, every quarter after quarter we grow.

And we've now, last year, passed the #2 operator. And so we've now become the #2 player in the market, and we're growing share on the top player. They're good companies. They're strong teams, but we think what we bring to the table is so unique. And I think relative to what we have to compete with in the U.S. market where we have a lot of other operators that are even pushing the limits as well. I think it's been -- our product was received really well. I think it stands out even more from the casino player standpoint. And the sports book, frankly, is equally strong there for us.

So I think this is the product experience we brought, we built as a company to compete in North America, helps us to also even be stronger in Lat Am. And in Mexico, there's another company named Caliente that's been the dominant player themselves with 70% plus market share for a decade before we enter the market. And we and a couple of others have been growing share at their expense, I would say, the last couple of years. And when we launched in Mexico, we have probably 60, 70 companies and little by little, every quarter, we've been growing share, reflecting a similar experience we had in Colombia, where there are a large number of competitors, and we kind of emerged as one of the top ones. And I'm proud to say that, as we shared in our earnings call 2 weeks ago, we're now mentioned that we're probably #5, top 5 in that market.

So in Mexico, so again, we are able to compete successfully against the very best in these markets. And I think that's something that is exciting for investors to know that we've done not able -- we've been able to do it in multiple markets there, multiple markets in North America. Market even like Latin America, but even in the West Virginia market, we come in late a year after everybody else launched, we don't have any database or any brand awareness there, and we're able to grow to become double digit share in casino in that market. It just shows that I think the quality of what we offer is stands above what most of our competitors and ultimately in the players' minds at least.

Yes. And you said on the earnings call, but you just reiterated that Mexico is tracking ahead of Colombia right now which is -- I mean, which is pretty exciting, but what's working well in Mexico? You mentioned the significant competitor, but yes, I would love to know more about that.

Yes. So we have spent a lot of time localizing the registration flows to make sure we reduce friction. There's other things that are required by the government there. The process they regulate us fairly closely. So we have to sort of make sure that everything was compliant yet we wanted to make sure that we had all the localization needed. So the payment methods, the registration flows.

But ultimately, I think what's been nice is that we are a casino-first brand there as well, and the largest operator, Caliente really is a sports-first brand historically. And so I think by us to be able to bring a wide variety of games to the market. They use a supplier there who also builds their own games and so times maybe they favor the games that are available from the supplier where we don't have that same constraints as we're able to offer the greatest variety of games from all suppliers without favoring one versus others, which I think is helpful at times.

And so at the end of the day, I think it just comes down to that we are marketing to an audience, a very fun experience that is unique to the players. And again, we've now become better as an organization at communicating what our unique selling points are. But ultimately, we keep stacking new feature up to new feature. What's really exciting for Latin America, frankly, is that a lot of the most exciting features we brought to the U.S. market or haven't even been launched yet there, and they're actually getting very close to being launched down there. So when we launched some of these new features down there, we would hope that they would have the same positive impact on those businesses that we saw in the U.S.

No, that's great. And so maybe another question that we always get on Lat Am, but just taxes in Colombia. Can you just maybe refresh in terms of where we currently are? What's embedded in the guidance? And is this now a nonissue at this point? Or is there still stuff that we should be paying attention to?

Well, I think it's always important to pay attention. But we certainly do so we can keep everyone updated. But you'll recall, so last year, there was a 19% tax on deposits. There was no emergency decree that ended at the end of the year. That had the effect last year of a lot of extra bonusing, which reduces net revenue relative to GGR. So we had very solid player growth in GGR growth last year because we were generous with players and took the brunt of that.

Moving into 2026, there was a 19% emergency decree on GGR that the court overturned in April. They suspended it in January or returned it in April, said it was not legal. President in anticipation of that, we believe, put a new 16% incremental emergency tax in place in mid-March. So the result of all of that is that we did not have any extra emergency tax for the first 2.5 months of the year.

We have built into our guidance a 16% tax on GGR from mid-March through the end of the year. The Constitutional Court will review this tax as well. So it has the possibility to be overturned. But for the sake of guidance, we're not including that opportunity. And then there is a presidential election that happens in the coming months here that could also be another opportunity for that tax -- emergency tax to go away with the change of administration. That's a possibility. And in any event, this temporary tax goes away at the end of the year. So 16% on a very nicely growing revenue base in Colombia. If it were to go away mid-year or the end of the year, certainly incremental for us for sure.

Okay. Understood. Can we touch on the World Cup. We're about a month away now from the World Cup starting. What's the opportunity for Rush Street and particularly thinking about Lat Am and Colombia and in Mexico, just the potential, not only player engagement but revenue opportunity that brings along with it.

Yes. So maybe I'll start and then Richard can chime in where he wants. But it is -- maybe I'll start with guidance because we've included the extra games because the World Cup 100-plus games is generally incremental to the world soccer schedule this year. So we've built in a little bit for that, probably not so much, if at all, for the potential for significant player growth that impacts revenue in the back half of the year.

So maybe I would start with the reference point of the Copa América, which was 2 summers ago, big soccer tournament, but certainly not on the scale of the World Cup. And certainly, if you look at the ticket prices, it wasn't -- but the beauty of this World Cup is we know it's all in this region, we've got host cities in markets where we have operations. It's a big event. There's certainly a revenue opportunity in June and July because of the extra games because of the number of people that we'll be watching and wagering on those games.

But really, the bigger opportunity is about long-term player count growth, where Copa, we grew 170% year-over-year player count in June and July. We're off of a much bigger base of players today, but there's a lot of room for us to grow pretty significantly in those player accounts.

I'll also say we had a nice inflection in our casino growth in Colombia, post Copa. So bringing on all these players, most of who are were there to watch this big event that's culturally very exciting but then to be able to keep them around and cross-sell them in casino or other sports. So soccer will start back up relatively quickly, right? And so it's not like the Super Bowl where the fun has ended in football unless you're going to bet on arena.

So it's a really big opportunity. It's a big opportunity in Mexico as well. the investment has already started for us. We're already using World Cup-related creative and campaigns. We've got great strategies and assets lined up. You've also got an opportunity in the U.S. where we won't put as much behind it in terms of extra marketing in sports-only markets. But it's -- because of the relatable nature of this overall event, it's a great way to use that to attract both sports betters but also casino players.

And then the last piece of that in North America is in sports, we actually over-indexed to soccer. We've always had a great soccer product. We traded it really well. We partner with Kambi for our risk and odds. And we've always had a very deep offering in soccer around the world. So we've built a really nice following of soccer players -- or soccer betters in North America. So it's an opportunity all around. I think we've been modest about the way we've thought about it for guidance. But if things go as well as they possibly could, it could -- it's certainly a source of upside for us this year.

Okay.

I want to make my comments -- this one real quick. The fact is in the same time zone is prime time for all our players across the Americas is fabulous, right? It's going to create engagement and, of course, the fact that they're going to be hosting games in Canada, Mexico, U.S. markets we operate in, brings an extra level of attention to this event. And so we're going to be able to acquire a large volume of customers, and we expect to be able to cross-sell them to the other products like casinos kind of mentioned. So anyway, really excited for that.

Yes. That's great. And so you mentioned Canada, I know we only have a couple of minutes left here, but launching Alberta in July. What's your expectations for this market launch and maybe if you could speak to the, a, how competitive do you think it will be maybe relative to the Ontario launch, but then b, just the shape of the investment? And when do you think you'll be able to generate positive EBITDA in the province?

Sure. So when we raised guidance in -- on our call a few weeks ago, we increased the midpoint of revenue by $115 million in the midpoint of EBITDA by $20 million. There's a little bit of revenue built in for Alberta. So we just added in Alberta, the impact of Alberta to that guidance. I should be clear on that. So a little bit of that revenue is expected -- increase is expected to come from Alberta. And we've anticipated kind of a $10 million headwind for the year from Alberta. So that's the investments in the market launch and the marketing player acquisition offset by some margin generated from that increased revenue. We're going to remain flexible. And if there's opportunities to invest more because things are going well in Alberta, we will certainly do that.

As probably everybody has, we had a lot of learnings from Ontario. So we think we're much better positioned going into this launch versus Ontario, but it will be competitive, right? There's a lot of players that will launch on day 1. There are gray market operators that have significant player bases that we'll try and attract away. And then we're all obviously going to try and grow that market, which certainly happened with Ontario. So it's a good opportunity. I think it will be slower building. We'll keep everyone updated.

I think in terms of profitability, one of the things we've talked about in the past is every iCasino market in North America has been profitable for us by the fourth quarter of operations. So assuming that, that trend continues, there's probably a little bit of a headwind in the first half of 2027, but not a whole lot in terms of profitability in that market. And then should turn profitable in the back half of the year. So we're very excited about Alberta, for sure.

Yes. No, it makes a lot of sense. I think we're at time there. So gentlemen, thank you so much for all the time this morning. Thanks, everyone, for joining us on the webcast and talk to you guys soon. Thanks again.

Thanks, Bernard.

Good day, ladies and gentlemen. Thank you for standing by. Welcome to the Rush Street Interactive First Quarter 2026 Earnings Conference Call. [Operator Instructions] Please note that this conference call is being recorded today, April 28, 2026.

I will now turn the call over to Kyle Sauers, President and Chief Financial Officer. Please go ahead.

Thank you, operator, and good afternoon. By now, everyone should have access to our first quarter 2026 earnings release. It can be found under the heading Financials Quarterly Results in the Investors section of the RSI website at rushstreetinteractive.com.

Some of our comments will be forward-looking statements within the meaning of the federal securities laws. Forward-looking statements are not statements of historical fact and are usually identified by the use of words such as will, expect, should or other similar phrases and are subject to numerous risks and uncertainties that could cause actual results to differ materially from what we expect.

We assume no responsibility for updating any forward-looking statements. Therefore, you should exercise caution in interpreting and relying on them. We refer you to our SEC filings for a more detailed discussion of the risks that could impact our future operating results and financial condition.

During the call, we will discuss our non-GAAP measures, which we believe can be useful in evaluating the company's operating performance. These measures should not be considered in isolation or as a substitute for our financial results prepared in accordance with GAAP.

We will be discussing adjusted EBITDA, which we define as net income or loss before interest, income taxes, depreciation and amortization, share-based compensation, adjustments for certain onetime or nonrecurring items and other adjustments that are either noncash or not related to our underlying business performance.

A reconciliation of these non-GAAP measures to the most directly comparable GAAP measure is available in our first quarter 2026 earnings release and our investor deck, which is available in the Investors section of the RSI website at rushstreetinteractive.com.

For purposes of today's call, unless noted otherwise, when discussing profitability, EBITDA or other income statement measures other than revenue, we're referring to those items on a non-GAAP adjusted EBITDA basis.

With me on the call today, we have Richard Schwartz, Chief Executive Officer. We will first provide some opening remarks and then open the call for questions. And with that, I'll turn the call over to Richard.

Thank you, Kyle, and good afternoon, everyone. For the first quarter, we generated record revenue of $370 million, up 41% year-over-year, and a record adjusted EBITDA of $60 million, up 81% year-over-year.

Our continued momentum demonstrates the strength of our casino-first strategy, the effectiveness of our operational execution and the powerful momentum we're building across our business. We're scaling revenue off a much larger base at very strong growth rates while improving profitability at about double that pace.

The casino-first approach continues to be a fundamental differentiator of our business model, a business model focused on online casino as our primary value driver, with sports betting and poker serving as important complementary products.

This strategic choice delivers meaningful advantages in player economics. Our casino players engage more consistently, demonstrate higher lifetime values and exhibit superior retention characteristics. These structural advantages compound over time, creating a virtuous cycle that drives both growth in revenue and profitability.

Our player base expanded dramatically during the quarter, extremely impressive results from our teams. Monthly active users in North America grew 46% year-over-year to 296,000, while Latin America MAUs increased 54% to 543,000. In our North American online casino markets, specifically, MAU growth reached 62%, eclipsing the 51% growth we just experienced last quarter. We've now seen an accelerating year-over-year player growth in these markets, each of the last 4 quarters demonstrating the powerful underlying strength of our business.

We also achieved record first-time depositors this quarter, beating our previous record set in each of the last 2 quarters by a wide margin. The combination of record new player acquisition with improving marketing efficiency creates a powerful dynamic that will drive our business to new heights.

We're filling the top of the funnel faster. We're doing it more efficiently than ever, and our retention remains strong. Customer acquisition and retention efficiency continues to be a key pillar of our success. Our brand awareness is increasing, which gives us a meaningful advantage in acquiring players at favorable rates.

This isn't about any single initiative. It's the result of systematic improvements across customer acquisition strategy, product and user experience, loyalty programs, data analytics and customer service.

This quarter, we estimate we grew market share sequentially by around 90 basis points in the North American online casino markets where we operate. Our established markets continue performing well, and we're seeing the benefits of our relentless focus on player experience and operational excellence. The consistency of these results across both mature and newer jurisdictions validates that our approach is working well.

Latin America also delivered exceptional results. In Colombia, despite navigating a complex regulatory environment, we posted our fastest MAU growth in the past 4 quarters. The strategic approach we took throughout 2025, absorbing the tax burden through increased bonusing rather than passing cost to players, has proven to be an effective decision. Our commitment to our players and retaining their trust has positioned us well for 2026.

As discussed in our prior earnings call, the Constitutional Court suspended the emergency decree of 19% VAT on GGR in late January. Furthermore, there was another positive development earlier this month, whereby the Constitutional Court determined the 19% VAT to be unconstitutional, and therefore ruled that no tax was to be imposed under that decree.

In mid-March, a new emergency decree was implemented that imposed a temporary 16% tax on GGR. This new emergency decree and associated tax decree will also undergo a new and distinct review by the Constitutional Court during the coming months.

The result of all this is that the original temporary 19% tax that was determined to be unconstitutional was not applied to us. Therefore, during the first 2.5 months of the first quarter, we had no additional taxes. Moving forward, we have assumed that we will have a new temporary 16% tax from mid-March through the end of the year when considering our raised guidance.

Turning to Mexico. This market continues to ramp nicely and to be more meaningful for us, both from a revenue and profitability perspective. Along with increasing brand awareness, we're seeing strong player acquisition, excellent retention metrics and healthy growth and profitability.

The competitive environment remains favorable, and we're gaining share by delivering the superior player experience that has made us successful in other markets. We have grown revenue by over 100% in each of the last 4 quarters and remain excited about the long-term opportunity and a substantial size of this growing market.

Looking ahead, we are getting closer to launching Alberta. The regulator has set July 13 as the launch date. This represents a significant expansion opportunity for our business. As Kyle will also cover, our increased revenue and EBITDA guidance now includes the impact of the Alberta launch for the back half of the year. We expect to begin investing in marketing and brand building ahead of our launch in Alberta. This will occur in the second quarter, and Kyle will have more details.

With each new market launch, we build on and improve what we've learned in prior launches. Here, we're taking a deliberate, measured approach to market entry, focusing on building a sustainable business with strong unit economics. This disciplined approach has served us well in other markets, and we're confident it will drive long-term value in Alberta as well.

As we look to the remainder of 2026 and beyond, I'm incredibly excited about the opportunities ahead of us. We're operating from a position of strength with momentum across our business, a clear and focused strategic road map and the operational capabilities to continue executing at a high level.

We're continuing to invest in product innovation, technology enhancements and geographic expansion while maintaining the financial discipline that has long characterized our approach. We believe that this balanced strategy positions us to continue to deliver sustainable growth and increasing profitability over the long term.

Our first quarter performance and the momentum we're seeing across the business gives us increased confidence. We remain focused on delivering exceptional player experiences while creating long-term value for our shareholders.

With that, I'll turn it back to Kyle to discuss the financial details.

Thanks, Richard. Let me walk through the details of our exceptional first quarter performance. Record first quarter revenue of $370.4 million represents 41% year-over-year growth, a significant acceleration from the growth rates we delivered in 2025 and our fastest growth rate in over 4 years. This performance was driven by strong execution across all aspects of our business, with growth accelerating throughout the quarter.

Adjusted EBITDA reached a record $60.2 million, representing 81% year-over-year growth and over 16% margins. This profitability expansion demonstrates the operating leverage in our business model as we continue to scale. Gross margins came in at 35.7%, an 80 basis point improvement year-over-year.

Our marketing efficiency continues to improve. Marketing expenses in the quarter were $46.2 million, an increase of 19% year-over-year and representing 12.5% of total revenue, which compares to 14.8% of revenue in the year ago quarter. Our disciplined marketing spend, combined with record player acquisition levels, demonstrates the competitive advantage we're building within player acquisition channels and our cost to acquire players, which, again, are the lowest they've been since we went public over 5 years ago.

G&A for the first quarter was $25.8 million or 7.0% of revenue compared to 7.4% in the prior year period. As forecasted, we are increasing our investments in our people and technology in 2026. But nonetheless, we achieved leverage over the G&A line during the quarter.

The foundation of our financial success is our exceptional user acquisition and retention performance. As Richard mentioned, our user growth this quarter was really impressive, hitting another new record for first-time depositors.

In North America, our MAUs of 296,000 demonstrated growth of 46% year-over-year, and online casino markets in North America grew a notable 62% year-over-year. And in Latin America, MAUs of 543,000 grew 54% year-over-year, demonstrating the brand awareness and customer loyalty we're building in these markets.

North America ARPMAU was $317 in the first quarter, down 14% year-over-year. Given the record volumes of new players we're adding to the platform, the trend of declining ARPMAU is both healthy and anticipated.

New players initially generate lower ARPMAU than our established customer base, but they represent new high-quality player cohorts that we're acquiring at very attractive levels. The key is that we're acquiring these players efficiently and retaining them effectively, which positions us for strong long-term value creation.

In Latin America, our ARPMAU for the first quarter was $54, up 51% year-over-year, largely driven by faster growth in Mexico, which has higher player values than our other Latin American markets and the removal of the VAT bonusing in Colombia which we incurred in 2025. This validates the strategic approach we took throughout 2025 and demonstrates the underlying strength of our Latin American business.

Breaking down our performance by product and geography, we saw continued strength across all segments. In the first quarter, online casino revenue grew 39% and online sports betting revenue grew 47%. Regionally, revenue in North America grew 26% in the first quarter and revenue in Latin America grew 134%.

Our balance sheet remains strong with $331 million in cash on hand as of March 31, and we still have 0 debt on our books. During the first quarter, we did not repurchase any shares under our $50 million share repurchase program. Based on the strength of our first quarter performance and our improved visibility into the remainder of the year, we are raising our full year 2026 guidance.

We now expect revenue to be in the range of $1.49 billion to $1.54 billion, representing year-over-year growth of 31% to 36%. At the midpoint of $1.515 billion, this represents a $115 million increase from our initial 2026 guidance and 34% year-over-year growth.

This is a meaningful increase from the guidance we offered in mid-February. So where is this coming from? In order of impact, as we mentioned earlier, we grew iCasino market share substantially in North American markets during the first quarter. This outsized growth had a positive impact on Q1, but also sets us up well for the remainder of the year. And our significant growth in North American iCasino users supports that confidence.

Next, while we had a lot of confidence in our growth prospects for Latin America heading into the year, that entire market continues to outperform both in player growth and top line revenue. In the first quarter, we also benefited from better sports outcomes in both North America and Latin America. Lastly, we have included in our guidance the Alberta launch expected in July, which will add some modest revenue in the back half of the year.

Turning to profitability guidance. We now expect adjusted EBITDA to be in the range of $230 million to $250 million, representing year-over-year growth of 50% to 63%. At the midpoint of $240 million, this represents a $20 million increase from our initial 2026 guidance and 56% year-over-year growth.

This is a 9% increase in our EBITDA guide and reflects the benefits of all the reasons I mentioned for raising revenue guidance, plus the benefits of the new temporary tax in Colombia being a bit lower than the prior 19% temporary tax that was overturned, and partly offset by significant investments planned for Alberta and modestly higher marketing spend and G&A costs than expected earlier in the year.

Even with these plans for increased spend, at the midpoint of our guidance, we do expect to get meaningful leverage over marketing spend and modest leverage over G&A as well. It's worth noting that our EBITDA guidance raise would have been closer to $30 million without the effect of our Alberta investment now being included in guidance. This will be a 14% increase over our previous guidance.

Our first quarter results demonstrate the strength of our business model and our ability to execute. We're growing rapidly. We're growing profitably, and we're doing so in a way that positions us well for sustained success. The continued momentum we're seeing across player growth, marketing efficiency and profitability gives us confidence in our ability to deliver on our raised guidance and create long-term shareholder value.

So with that, operator, we're ready to take questions.

[Operator Instructions] Your first question comes from the line of Dan Politzer with JPMorgan. Dan, your line is now open. Please go ahead.

I wanted to touch first on the MAU and monthly active users in North America. I mean, it's been a pretty impressive acceleration over the last 5 quarters there, the 46% growth this quarter. Can you just talk about who these customers are that you're acquiring?

Are they from different platforms? Is there a different demographic? Are they concentrated in one state versus another. It's just -- it's obviously pretty impressive growth. So just better understanding, I think, would be helpful.

Yes. Thanks, Dan. I'll take that one. We are very pleased with the progress there. And I'll point out that the growth in markets that have iCasino in North America are actually growing faster than the total numbers that you mentioned. So we've been really pleased with that. We're filling the top of the funnel faster than we ever have, 3 straight quarters of record first-time depositors.

The players we're acquiring, look -- I mean, if you look at our average revenue per monthly active user, while that's come down a little bit in recent quarters, that's because we're diluting it so much with these new players. New players that may not be around for a full month, new players that are getting bonusing when they start out and take longer to build value over time.

So I'd say the players look a lot like the ones that we've acquired before. Surely, there's some additional kind of casual player base that we're adding, but we're seeing only modest lowering of the expected long-term value in all these new players that we're bringing on.

And it's coming from a bunch of different channels. Our marketing team just continues to optimize where we spend, what the messaging looks like and continuing to track a lot of players.

I think one of the benefits for us, even though we're growing much faster than the industry is, there's a lot of players who still don't know who that BetRivers is in North America. So there's a lot of opportunity for us to go after players who maybe haven't played iCasino before, but also played with some of our competitors and give them a shot to play on one of the best platforms, if not the best platform that's out there.

Got it. That's helpful. And then just turning to Alberta, I think that you mentioned, I think it was implied, about a $10 million launch cost or EBITDA impact in the year. Can you talk about, I guess, what you're underwriting there in terms of market share? Is it predominantly going to be iGaming? And then just maybe talk about expectations for the competitive environment.

Sure. So we expect it to be competitive, just like Ontario has been competitive. It also has incumbent great market operators that all the new entrants like us will be dealing with. I don't think we want to put a market share bogey out there just yet.

Ontario, which has been a great market for us, We've grown really nicely. We're taking share there, but we're still relatively small in the scope of the entire market. that's probably a good target for us early on. But I'll also say we've had a lot of lessons operating in Ontario, and we think we'll do really well launching in Alberta.

Our next question comes from the line of Bernie McTernan with Needham.

Great. Maybe just to start, just piggybacking on the question on the strong MAU growth. What customer acquisitions channels are working in particular? Is anything performing better?

I know you brought in a Chief Marketing Officer not too long ago. Just the fact that we continue to see nice growth here on a sustained basis, just want to see what's working. And then I have a follow-up.

Yes. Great. And yes, we did bring in our first CMO a couple of years ago now. We've added a lot of great talent to the team, supplemented the great people we already have there, both in North America and Latin America.

So they're doing a fantastic job. I'll say we're trying a lot of different channels, trying a lot of different things. And clearly, it's working really well. The ones that are working exceptionally well, I'm not sure that I want to highlight that on a public call, though.

Fair enough. And then I wanted to ask on just the World Cup, just any -- I'm assuming that you will see the impact greater in the financials in LatAm over the U.S., but just -- any commentary on what's contemplated in the guide would be helpful.

Yes. So without being super specific on exactly what's in the guide, we have built in some upside from the World Cup and the extra games that will be played because it's largely incremental to the whole soccer calendar for the year. But I think we're -- so we're very excited about that. .

We're very excited about the player acquisition that comes along with it. So hopefully, that will turn into a bigger impact than what we've modeled and what we've guided to. So that could be exciting.

I'll say -- I think one point of it. I referenced it'd be interesting. The Copa America in 2024 that summer, we saw our monthly active users in Colombia increase by an average of 170% year-over-year in June and July, which is the 2 months where that event happened. So that was a big driver of the future growth for us in Colombia.

So we're hoping for a great World Cup, a lot of engagement from new players and existing players, but also sustained growth in our player base afterwards for both sports and for iCasino.

If I could just add that this is a unique World Cup and that is taking place in 3 countries, and all 3 of them are countries where we operate. And we're excited that it's less than 45 days away from the first match, which will open up on June 11 in Mexico City, a great market where we're operating in Mexico is going to play a host game. So I think there's a lot of excitement because of that.

But also the time zones for all of our players in the Americas will be the same time zones that are awake, which is rare compared to how it's been about several World Cups even over in Europe or the Middle East, even. So I think this is a chance for us to really capture a large amount of interest from bettors in these markets because we know it expands the pie of recreational users who we can then cross-sell, as Kyle just said, to casino.

Our next question comes from the line of Jordan Bender with Citizens.

I want to touch on the comments around your MAU growth in Colombia the fastest you've seen in the last 4 quarters. You kind of talked about what you're doing and what's going right there.

But can you maybe just kind of tell us or explain like what the exit rate is in the country kind of exiting the VAT tax? And do you think that you're gaining overall share just based off on the adjustments that you've made to the business model in recent quarters?

Yes, sure. So we talked about it in the prepared remarks, but we're very pleased with how the strategy we used last year to kind of combat that, the deposit tax on the players. And we had a lot of extra bonusing, which was a little painful in 2025, but it served us really well and because we treated customers the right way.

So the business grew at a handle GGR player count base really nicely last year. And we're seeing more of that flow through to the net revenue line this year because there's less of that bonusing.

We have increased our marketing spend in Latin America. So that's been certainly impactful on growing the player counts down there and having a faster growth. There's not -- in any of the Latin American countries, we don't have good reported data from the regulators.

It would be really hard to imagine that we are not taking share in all 3 of those markets, given our performance. So we're pretty confident that, that's happening.

Great. And then just sticking with Colombia, that's clearly been a standout market for you guys over the last couple of years. Are you seeing similar MAU growth, engagement monetization trends in Peru and Mexico at their point in their life cycles similar to kind of what you saw in Colombia in early days?

Yes. So I'll say it this way. So Mexico is ahead of Colombia in terms of where we were this quarter relative to the launch date and then comparing that to Colombia versus our original launch date down there. So we're ahead in Mexico from that perspective on this quarter and in aggregate since launch.

Now Mexico is a larger market. So I think we've got a much bigger opportunity there potentially. And then in Peru, it's probably a little bit behind where Colombia was post launch. But all of them still growing really, really nicely and we're very excited about.

Our next question comes from the line of Ryan Sigdahl with Craig-Hallum Capital.

If I look at industry iCasino growth in the U.S., well, continues to be very durable and strong, if decelerating a bit. Your growth is accelerating. You're doing that despite disciplined spend.

Many of your competitors are still there aggressively spending. I think I ask this every quarter, but I'm going to ask it again. I guess, how -- it feels like things are getting easier for you guys with accelerating growth when it feels like it's getting harder for everybody else?

Yes. So thanks for the comments. I wouldn't say it's getting easier, Ryan. I think our teams work really hard and really smartly. I do think we're doing a lot of things much better than we were a year ago or 2 years ago, but that doesn't mean that there's not a lot of things we can keep doing better.

But it is -- I think we've said it all, and there's probably no new answers from your question last time. We're acquiring players faster. So more of them coming in to fill the top of the funnel. We're doing it at lower rates per player. And retention is still really, really good.

We try to be really fair with bonusing and we're trying to continue to optimize that, make sure that players are getting a meaningful experience with their bonusing and promotions, but again, an area we can continue to optimize.

And just the whole life cycle and journey for a player from the time they hear about us to the time they start playing on our industry-leading product, we try to make it as great of an experience for them as we can. And then obviously, we've got a great customer service team that takes care of the players because there's always going to be issues that you have to deal with.

Ryan, I would add a couple of things. One of our goals is to create a fun and fair experience for our players. And when you consistently see their feedback to us, whether it's to our customer service team or in their public comments on our apps in the app store, that they themselves without knowing that that's our strategy, when they repeat themselves that you guys are fun and fair and fast, things that they care about, that just reinforces that we're delivering the experience and meeting the expectations or hopefully exceeding them.

I think a lot of this comes from an ideation process of having a lot of insights from the consumer, really understanding the audience, having the technology capabilities to deliver leading experiences that are new to the industry, not just here in the Americas but globally.

And then delivering experiences that are differentiated for the player that they enjoy enough to sustain their play with us versus others. So I think it's just a consistency of leading having the confidence to build new experiences.

Our team is tremendous at understanding how to translate insights into products that the user wants to play. And of course, making sure the service element is always there to remind those players that we're thoughtful living company that's really treating players fairly.

Well done, guys. For my follow-up question just on Colombia. Constitutional Court declared that there needs to be a refund mechanism for the VAT collected in 2025. Curious if you think you guys will be entitled to refunds, if you're able to quantify that? And if you're able to provide any kind of additional detail on that process?

Yes. So I think you're referring to payments that would have been made in 2026 related to the 19% emergency VAT that was declared right at the end of December.

So there is -- the court did -- had suggested that, that money needs to go back to operators that have paid it. We did not pay any of that VAT into the system from the 2026 19% tax that was ultimately deemed to be unconstitutional, so not really relevant for us.

Our next question comes from the line of Mike Hickey with StoneX.

Richard, Kyle, congrats guys. Amazing quarter. Great start to the year. Just curious on Mexico. It seems like you're having a tremendous amount of success there.

And the market, of course, looks like to be about nearly 10x Colombia. You're already a top 5 share position in the market, but I think your probably overall share is still pretty small given that. I think one operator has the majority of it.

So just curious, the competitive dynamics that you're seeing in Mexico and your ability, you think, over time to take meaningful share in that market? And how big, obviously, the World Cup can be in sort of supercharging you to that point? Because it seems like on paper, given the success in Colombia, you could do 10x the business in Mexico.

Michael, I'll start and maybe Kyle will add in a little bit. We really like Mexico for the opportunity to really differentiate on the casino side. I think a lot of the players there, especially the largest market share, operators really historically focused on sports and has more in their DNA than they do casinos online.

So we're very excited to be able to continue to invest in all the things that are necessary to show those casino players there. Don't forget, that country has a very large legacy retail casino marketplace that we'll be able to leverage those players to help deliver this experience online that is, I think, superior to what you typically would see.

So from that standpoint, we are leaning in on our casino experience, naturally relying on the sportsbook to acquire customers during high-profile events such as Copa America that Kyle referenced in the past, but also more exciting for the upcoming World Cup that I mentioned will be opening up in on June 11 in Mexico City.

So I think the competitive situation there really favors a casino-first operator like us, and we're continuing to try to make sure we do all the little things necessary to deliver the type of experience, not just from the casino experience, but all the little local localizations you need to constantly improve upon to ensure you're staying current with the latest state of the technology that you need to reduce friction for the players in that market.

Kyle, did you have something to add on? Or you could...

I have to say something. I don't think I'll react to your 10x just yet. Give us a little time. But I'll remind you, we started later than others did in Colombia. We came into a market that was already existing, and we've secured ourselves as the #2 operator in Colombia and growing really quickly. So we're certainly optimistic that Mexico can bring really good success over the coming years.

Just a quick follow-up on LatAm and I think you teased us before about maybe looking to open a new market in LatAm. Just curious, your appetite this year or next year to do that still?

Yes. We have mentioned in the past, we do continue to see a broad set of attractive growth opportunities across Latin America. We are actively progressing those efforts.

I think we're -- given our strong performance in existing markets, which -- the 3 countries that we're operating cover a population of 220 million people, we still have the flexibility to be deliberate and pursue those opportunities with discipline, which is what we're doing.

So we still have opportunities. We're continuing to advance those opportunities, but we're not ready to share anything at this point in time.

Our next question comes from the line of Jed Kelly with Oppenheimer.

Great. Just on North American ARPMAU. Is that entirely being driven by just the accelerating users you're seeing? Or is that the decline in ARPMAU is also being driven by the way you're bonusing?

I want to make sure I'm understanding the question. Mike -- or I'm sorry, Jed, you're asking if the decline in the value of the player is in North America is just because of bonusing of new players?

No. Is it due because you're seeing just an accelerating of users, and those first-time users are causing the faster than -- is that -- or is it -- is there something else you're doing in the bonus? And I'm just wondering about the ARPMAU trends you can speak to.

No. It's largely a factor of new players coming in. We added 60% year-over-year in iCasino markets, which is where most of our focus is. Any one of those players might be coming in, in the last part of a month. That goes into that average calculation of the value they're providing.

Most players have negative value early on in their life cycle because they're moving through the bonusing that we give them. So that's the largest factor there, a great problem to have.

We're certainly not going to grow player counts 60% year-over-year forever. So as that slows down and the players that we're bringing in are maturing, retention improves with those players that stay around longer, we'd expect that number to move back up over time.

Got it. And I think you said earlier that you're seeing pretty favorable CPAs. Is that being driven more by what your marketing team is doing, maybe around AI and certain investments? Or do you think some of your competitors might be focusing on other product launches coming up?

Yes. So it's a good question. I don't know that we've seen a big change in the competitive intensity for the marketing assets that we're going after. Obviously, any one competitor might ebb and flow with what they're doing.

Could some of them be allocating marketing dollars someplace else, certainly towards new market launches and pulling away some place? I suppose that's possible. I don't think that's as much of it as it is.

Our team is doing a great job. We continue to improve the player journey. So it's not just about getting people to show up to the app store. They got to download, they got to register, they got to go through KYC. It's got to be easy for them to get a deposit on the platform.

So all of that, it seems so simple, but it's pretty complicated, and our team does a great job, and we're making it better and better. So there's a lot of different things involved. But I think probably the competitive intensity for marketing assets is not a big driver in all that. I think it's more about what we're doing.

[Operator Instructions] Our next person to ask a question will come from the line of Zach Silverberg with Wells Fargo.

Just one on Mexico. So there was an article that stated that a couple of your competitors had their gaming license blocked during the quarter. What are you seeing there post this event? And is it an opportunity to kind of take share from those operators?

Yes. Sure. Zach, yes, that's 365 and Betano, the 2 of the operators that you're referencing, but they actually, I think, have their license closed earlier than this quarter. And so I think their absence from the market, both were meaningful market share contenders.

And so I think their exit from the markets certainly have helped us to acquire some customers from them that previously maybe weren't aware of our brand and they didn't know who we are. Certainly, I think in both those cases, though, there are companies that are primarily, I think, stronger in sports.

So what I said earlier about us being a casino-first operator still holds true. And we think competitively with an environment that we're continuing to kind of be able to grow our casino player volumes.

And as we know, those players tend to generate a larger revenue per active user and ultimately, the type of player engaged, higher-level player engaged with the type of players that we like and are very strong at retaining. So we feel pretty strong about the market opportunity there, and it certainly has helped us to have those 2 operators out of the market.

And just for my follow-up. Mexico, in Colombia, excuse me, there's an election coming up in a few weeks. Is there anything you guys are looking out for there? And anything you guys are handicapping to the election in terms of the future outlook of the 16% consumption tax?

Yes. Thanks, Zach. Certainly, we're watching it very closely. There's the initial round here coming up in a few weeks, and then the final election will be in June. So we are watching it closely. We're not handicapping it necessarily.

Certainly, there's an opportunity there. We talked earlier about the 16% tax, that it's -- there's a mandated constitutional review of the emergency decree that allow that tax to be put in place and then also a review of the tax itself.

And then another opportunity for that to be relooked at would be the next administration that comes into office and how they view the emergency decree, assuming it doesn't get overruled, how they view that decree and the associated taxes. So potential opportunity for upside for us there.

Our next question comes from the line of Joseph Stauff with Susquehanna.

Richard, I was wondering if you could comment on maybe the state of product parity for iCasino. I think it's fair to say for OSB, it everyone is sort of approaching some level of product parity versus each other.

I'm wondering -- your observation, obviously, you've always been front-footed about product development. Have others caught up in terms of offering jackpots, offering bonus spins? What's your assessment of the industry today?

Well, it's a big question, Joe. I'll try to answer it efficiently with that. We continue to sort of lead away our opinion on creating innovative features. And while others are investing more resources the casino experience, largely, we've seen things that are very me too is what -- how I would describe it, where everyone kind of just copies each other.

And if someone offers a free-to-play game as part of the promotion, when you first register every day, everyone does the same thing. People improve the lobby, everyone improves the lobby. Those are real simple things ultimately to improve upon, but they're still important and valuable, but I would say that it's sort of a mass mentality are sort of doing the same improvements in the same area.

So I referenced the lobby, I referenced the free game, I referenced the jackpots. I think we were one of the first ones to have a site-wide jackpot across all of our products. Others are doing some jackpots that are site-wide, but our execution, I still think is more interesting for a player than the others are, and I won't get into the reasons why.

But I think we have good insights into what values we're delivering and why we make the decisions that we do. I think what validating ultimately is the app scores in the store. We are the highest rated app in the store, a 4.9 out of the 5 being the highest level, which is rare to achieve from a casino app.

Largely because a large number of players are already going to -- you can't penalize them like a casino operator on the basis that they lose playing the -- after they may not feel like it was a experience that was positive for them, where it's not like a sportsbook app, primarily where the better makes, that's based on skill and ultimately doesn't really blame the operator if they get the outcome wrong, whereas in the casino world, it's a little bit different.

So the fact that we have such a high score on the app, I think it's very validating to the quality of experience we offer. And as I've shared before, we've been building this technology since 2012, modernizing it along the way, constantly bringing new experience to players. So it's not just 1 or 2 things that we have built, but we've built dozens of features that are still unique to the industry. And it takes a long time to build it, and it's hard to build.

Even if you know they're going to try to copy something, it's hard to get the copy to reflect the quality of experience that we have built. So we feel pretty strongly that we have those nice moats around our product experience in the casino space. And having said that, we're always pushing the limits and we're never going to be satisfied and we're constantly looking to improve. And we have lots of opportunities to get better, and that's what our team is focused on.

And do you think those higher app scores, is that a function of your retention engine and mechanics and capabilities? Or is it a variety of factors, including, say, product depth and so forth?

Do you think the retention capabilities that you have really are, say, a difference maker versus, say, other iCasino products that are out there?

I think what's different about us or what's unique for us is from the very beginning from day 1 and when I started the business, the #1 goal was to retain customers. .

It was less about acquisition. It was more about how to deliver an experience that offers the same quality and quantity of high-quality games. But how can we create differentiation and experience that drives users to prefer to play with us over other apps they may be playing with?

So ultimately, when you do little things right, you pay attention to the details and you get the customer service team doing a great job as our team does, combined with the innovative experience that's unique for the players. Ultimately, you encourage greater retention, which delivers the kind of results that we're seeing. So I think it's really just a matter of paying attention to details. They all matter.

And as I said in the prepared remarks, every thing we do is systematic across all parts of the journey, and all the touch points where you interface with the customer matter. And if we are constantly improving each of one of those, paying attention to every detail along the way, you ultimately end up with experience to come together, and the players notice it.

And we think that's a big part of why a large percentage of our players prefer to play with us, we believe, versus other apps for the also other accounts, but are probably playing at the same level that they play with us.

[Operator Instructions] Our next question comes from the line of Chad Beynon with Macquarie.

Wanted to ask about Virginia, given your current OSB license and the fact that Rush Street land-based gaming has a property there. From what we've heard, it sounds like there were a lot of constituents that were in favor.

Obviously, it didn't get across the goal line. But wondering if you think the progress that was made there sets Virginia up for higher likelihood in '27? And if you guys would have interest if that opened from an iGaming standpoint?

Well, great. Thanks for asking that question because it definitely would be a very exciting market for us, and we are very interested in that opportunity. We remain focused on expanding online casino into a large number of states that have shown recent interest, but Virginia being a key example.

We view Virginia as a real opportunity. It's encouraging the legislation progressed as far as it did this year, with versions passing both the Senate and the House. And so it's a market that we have -- we're working with -- collaborating with our peers. And it seems like a really exciting opportunity potentially for us in the next year.

In addition, as we noted in our prepared remarks, we are advancing plans to bring our platform to Alberta. So we have plenty of exciting things happening in the next couple of months. But we are viewing Virginia in partnership with our -- the land-based property, Rivers Casino there was a great opportunity for us.

And maybe I would just add to that, Chad, just to think about the opportunity there, maybe not to put exact numbers around it, but not dissimilar in size from a Michigan. Unclear exactly how many licenses they'll be. But that's a market where we started off with mid-single-digit share, and we've grown it to high single-digit share over time.

And we did that with a lot of brand awareness or any brand awareness when we launched and no access to a strong database of players. So we have some real advantages in Virginia that we haven't had in a lot of other markets. So it's very exciting for us as that moves along.

Okay. Great. And then lastly -- and this is probably assumed based on your user growth that we've talked about throughout the call. But prediction markets. I guess, one of your -- one of the other digital operators said that CPAs had increased. They didn't grow users as much as you guys did.

So is it safe to say that you're just not seeing any pressure -- or you're not seeing significant pressure from CPA standpoint or just from a user standpoint? And do you think that could potentially change as some of these prediction companies just develop their technology throughout the year?

Yes, I think it's fair to say that we haven't seen -- from a marketing asset, CPA, we haven't seen pressure from those entrants. I think a lot of that is that we're searching for different types of players, and we're searching for them in different places.

So I don't think that's impacted our business. And certainly, you said it, but it's with our CPAs going down being the lowest they've been, that's probably a pretty good indication of that.

Our last question comes from the line of David Katz with Jefferies.

I wanted to just finish off with a discussion on sort of flow-through and aspirational margins. Obviously, not in any kind of a time or guided way.

The increase in guidance on the revenue side of $100 million and EBITDA around 20, just I think begs the question of where do you think an aspirational flow-through level could be? And do you have sort of margin targets out there in the future that you're able to talk about with us?

Yes. So on the longer-term margins, we still think that we can get to kind of low to mid-20%. And obviously, that means we're going to have some decent flow-through over the coming years.

We need a couple more markets -- iCasino markets in North America likely to get to that point and have them mature a little bit. On flow-through in general, we look at 2026, let's say, at the midpoint of our guide, flow-through is very solid at kind of mid-20%.

A couple of things I'd say keep in mind that because of the deposit tax and that associated bonusing going away in Colombia from last year, but with this new tax on revenue, which impacts our gross margins, we've got a bigger improvement in revenue than we do in operating margins in Colombia. So that impacts that metric a little bit.

And then I think maybe you alluded to this, but adding Alberta to our guidance, both a little bit of revenue, but also all of the launch costs impacts that as well. We don't expect Alberta to be profitable in 2027. Having said all that, I'll also point out that we've -- we're always trying to consistently outperform our expectations. So we're going to continue to strive to do that.

There are no further questions at this time. I will now turn the call back to Richard Schwartz for closing remarks.

Well, thank you for joining us today. We look forward to updating you on our progress when we share our second quarter results in the summer.

This concludes today's call. Thank you for attending. You may now disconnect.

Good day, ladies and gentlemen. Thank you for standing by. Welcome to the Rush Street Interactive Fourth Quarter and Full Year 2025 Earnings Conference Call. [Operator Instructions] Please note that this conference call is being recorded today, February 17, 2026. I will now turn the call over to Kyle Sauers, President and Chief Financial Officer. Thank you. You may go ahead.

Thank you, operator, and good afternoon. By now, everyone should have access to our fourth quarter and full year 2025 earnings release. It can be found under the heading Financials, Quarterly Results in the Investors section of the RSI website at rushstreetinteractive.com.

Some of our comments will be forward-looking statements within the meaning of the federal securities laws. Forward-looking statements are not statements of historical fact and are usually identified by the use of words such as will, expect, should or other similar phrases and are subject to numerous risks and uncertainties that could cause actual results to differ materially from what we expect. We assume no responsibility for updating any forward-looking statements. Therefore, you should exercise caution in interpreting and relying on them. We refer you to our SEC filings for a more detailed discussion of the risks that could impact our future operating results and financial condition.

During the call, we will discuss our non-GAAP measures, which we believe can be useful in evaluating the company's operating performance. These measures should not be considered in isolation or as a substitute for our financial results prepared in accordance with GAAP. We will be discussing adjusted EBITDA, which we define as net income or loss before interest, income taxes, depreciation and amortization, share-based compensation, adjustments for certain onetime or nonrecurring items and other adjustments that are either noncash or not related to our underlying business performance. A reconciliation of these non-GAAP measures to the most directly comparable GAAP measure is available in our fourth quarter and full year 2025 earnings release and our investor deck, which is available in the Investors section of the RSI website at rushstreetinteractive.com. For purposes of today's call, unless noted otherwise, when discussing profitability, EBITDA or other income statement measures other than revenue, we're referring to those items on a non-GAAP adjusted EBITDA basis.

With me on the call today, we have Richard Schwartz, Chief Executive Officer. We will first provide some opening remarks and then open the call to questions. And with that, I'll turn the call over to Richard.

Thanks, Kyle. Good afternoon, and welcome to our fourth quarter and full year 2025 earnings call. I want to begin by expressing my profound gratitude to the entire RSI team for delivering what can only be described as an extraordinary year. Their dedication, innovation and relentless focus on excellence in delivering exceptional results have been the driving force behind our success. I couldn't be more proud of what we've accomplished together.

As I reflect on our performance in 2025, this has been a record year, hitting new highs across virtually every metric. We continue to set new records in revenue, profitability, cash flow and user counts as well as other core KPIs. In 2025, without the benefit of any new markets, we achieved record revenue of $1.13 billion, representing 23% year-over-year growth and exceeding the high end of our raised guidance range. Even more impressive, we grew adjusted EBITDA by 66% year-over-year to a record of $153.7 million, also exceeding the high end of our raised guidance and demonstrating the powerful operating leverage inherent in our business model. In 2025, we also materially grew the bottom line with net income of $74 million compared to $7.2 million in 2024.

What makes these results particularly compelling is their consistency and breadth. This strong performance is evident across all geographies and product verticals. Our player engagement remains exceptionally strong as evidenced by record-setting monthly active users in 2025. In North America, our MAUs grew 37% year-over-year in the fourth quarter to over 278,000, including an impressive 51% in online casino markets. Not to be outdone, in Latin America, we grew MAUs 47% to over 493,000, demonstrating impressive growth and resilience amongst temporary tax headwinds.

When discussing the strength of our 2025 results, we are frequently asked about the secret that is driving our accelerating growth and profitability. What is the magic bullet that's driving our success? The answer is there isn't one single factor that is responsible for our success. Our exceptional performance is a product of our intense focus on our customers and the cumulative improvements we've made across every aspect of our business.

Over the past several years, we've systematically enhanced our capabilities throughout the entire customer journey. We've advanced our customer acquisition strategies, diversifying our marketing channels and optimizing each one to reach the right customers at the right time with the right message. We've reduced friction in our user experience, making it easier for players to discover, engage with and enjoy our platform. We've invested heavily in enhancements to our loyalty programs and retention strategies, creating more personalized experiences that we believe keep players coming back. These improvements span every touch point with our players, from the moment they first discover our brand to their ongoing relationship with us.

We've also enhanced our data analytics capabilities, allowing us to make more informed decisions about player preferences and behaviors. We've improved our customer service operations, ensuring that every interaction reinforces our commitment to player satisfaction. And we've continuously innovated our product offerings to create unique differentiated experiences that players won't find elsewhere.

Throughout 2025, we also continued to invest in the operational excellence and technological innovation that differentiate our platform. These innovations aren't only about technology. They're about understanding what our players want and delivering experiences that exceed their expectations. Our focus on customer centricity drives everything we do from product development to customer service to marketing strategy.

The result of these cross-functional improvements is a virtuous cycle. Stronger customer acquisition brings in higher-quality players. Improved retention keeps players better engaged, and enhanced experiences drive increased player value. When you execute well across all these areas simultaneously, the cumulative impact is significant and yields sustainable growth.

Our casino-first strategy continues to be a fundamental differentiator of our business. While we maintain a growing and profitable sports betting business, our focus on leading with online casino has positioned us uniquely in the market. This strategic focus has proven particularly valuable in 2025.

Our North American online casino markets continue to drive exceptional growth, as stated earlier, with MAUs increasing 51% in the fourth quarter, representing our second highest quarterly growth rate during the past 4.5 years and impressively achieved on a much larger player base and without the benefit of new market launches. What's even more encouraging is that in each successive quarter of 2025, we saw the continued acceleration of year-over-year growth in monthly active users in our North American online casino markets.

Our casino-first approach allows us to focus our resources and expertise where we believe that we can create the greatest value. Online casino players typically demonstrate higher lifetime values, better retention rates and more consistent engagement patterns compared to sports-only customers. By prioritizing these markets and continuously improving our casino experience, we've been able to drive both growth and profitability simultaneously. In fact, in 2026, in support of our casino-first strategy, we plan to increase our investments in developing differentiated casino content and online casino legalization efforts.

Another significant accomplishment of 2025 was our successful navigation of the challenging tax environment in Colombia, one of our core Lat Am markets. I'm proud to report that not only did we successfully manage through this period, but we're confident that we gained market share from our competitors, setting ourselves up for continued success.

Our approach in Colombia was measured and strategic. Rather than immediately passing the VAT tax cost on to our players, we absorbed much of the tax impact through adjusted bonusing strategies, which inherently reduced revenue. This allowed us to maintain player engagement and loyalty while still attracting a significant number of new customers. The results speak for themselves, but despite a temporary drop in net revenue last year, for the full year, we achieved annual GGR growth of 66% and increased MAUs by 34%.

Looking ahead, the temporary VAT tax that was in place during 2025 has now expired. There was a new emergency decree issued in late December 2025, along with associated tax decrees that were issued for 2026. This structure has a more traditional but lesser impact on our business as a tax on revenue rather than tax on deposits, which we offset in 2025 through a higher bonusing.

However, this emergency tax decree was suspended less than a month after it was issued in late January 2026 by the Constitutional Court and will be under further review in the months ahead. This is a positive step towards recalibrating to the previous and what we view as the more appropriate tax structure in Colombia. Our experience in Colombia demonstrates our ability to navigate regulatory changes while maintaining our focus on long-term player relationships and market leadership.

Now I want to briefly address the topic of prediction markets, which has been highly topical in recent industry discussions. At RSI, we're constantly evaluating the evolving industry landscape. Prediction markets today are primarily benefiting from sports event contracts, which is not an area of high priority for us. We will continue to monitor developments in the event contract space and in the meanwhile, continue to focus on executing our proven casino-first strategy and delivering exceptional experiences in our current markets while capitalizing on significant growth opportunities ahead of us.

As we look to 2026 and beyond, we have tremendous confidence in our growth trajectory and strategic positioning. We're particularly excited about our upcoming launch in Alberta, where the regulatory environment is progressing toward a launch time line that could occur in the coming quarters, sooner than we were anticipating during our last earnings call. This represents a significant opportunity for us to leverage our success in other North American online casino markets, particularly given our strong performance in Ontario and our established and growing brand recognition across Canada.

Beyond Alberta, we continue to evaluate additional expansion opportunities in both North America and Latin America. The success of our selective disciplined approach to market entry has enabled us to achieve strong returns on our investments while building sustainable competitive positions. We will continue to prioritize markets where we can deploy our full suite of gaming offerings and create meaningful value for both players and shareholders.

The 2026 calendar is also filled with marquee international sporting events, such as the current Winter Olympics and the upcoming World Cup. We are well positioned to capitalize on these multinational events across both our sports betting and online casino products.

Overall, 2025 was a transformational year for RSI. We demonstrated the power of our business model, the effectiveness of our strategic approach and the dedication and execution abilities of our team. We've built a strong foundation for expected continued growth while maintaining the operational discipline that has driven our success. We're excited about the opportunities ahead and confident in our ability to continue delivering strong results for our shareholders while providing industry-leading experiences for our players. We have a clear path forward, strong financial resources and a team that is executing at the highest level.

With that overview, let me turn the call over to Kyle to walk through our detailed financial results and provide guidance for 2026.

Thanks, Richard. I'm excited to walk you through what was truly an outstanding fourth quarter and full year 2025 with record-breaking performance. Fourth quarter revenue of $324.9 million, up 28% year-over-year, set another record high and marks our 11th consecutive quarter of sequential revenue growth. Full year 2025 revenue of $1.13 billion grew 23% compared to 2024, exceeding the high end of our raised guidance range. This strong top line performance was driven by exceptional user growth and engagement across our platform.

Our gross margins during the fourth quarter were 34.4%, reflecting the continued shift we've made to higher-margin markets. For the full year, our gross margins were 34.6%, in line with the prior year. On the expense side, we continue to drive operating leverage through our disciplined approach. Marketing expenses in the quarter were $45.4 million, an increase of 5% year-over-year and 14% of total revenue. For the full year, marketing expenses were $158.4 million, representing a 2% year-over-year increase and 14% of total revenue.

Compared to the full year 2024, marketing spend as a percentage of revenue decreased by 290 basis points. This demonstrates our team's ability to continue to optimize our acquisition channels and improve our player acquisition costs while simultaneously growing our player base and hitting new records for first-time depositors each of the last 3 quarters.

G&A for the fourth quarter was $22.3 million or 6.9% of revenue compared to 7.5% in the prior year period. For the full year, G&A was $81 million or 7.1% of revenue compared to 8.1% in 2024. This reflects our continued investment in technology, personnel and infrastructure to support our growth while maintaining operational leverage.

Fourth quarter adjusted EBITDA of $44.1 million set a new quarterly record and increased 44% year-over-year. Full year adjusted EBITDA reached $153.7 million, an impressive 66% increase year-over-year, above the high end of our raised estimates and reflects our disciplined approach to growth and operational efficiency. The foundation of our financial success continues to be our exceptional user acquisition and retention performance. In the fourth quarter, North American MAUs grew 37% year-over-year to 278,000 total users. What's particularly impressive is our performance in North American online casino markets, where MAUs grew 51% year-over-year in Q4, which represents our second highest quarterly growth rate during the past 4.5 years and again, achieved on a much larger base of players.

In Latin America, we delivered equally strong results with MAU growth of 47% year-over-year in Q4, reaching 493,000 total users. This growth demonstrates the strength of our platform, operations and brand recognition across the region, even as we have navigated the challenging tax environment in Colombia.

North American ARPMAU declined 5% year-over-year, which reflects the healthy and expected dilution that comes along with our exceptional growth in user volumes. When you're growing your player base at the rates we've achieved, some ARPMAU compression was not only expected but confirms that we're successfully attracting large volumes of new players to our platform, who initially have lower ARPMAU than established players. The key is that we're acquiring these players efficiently and retaining them effectively, which positions us for strong long-term value creation.

In Q4, Latin America ARPMAU was down 21% year-over-year due largely to the extra bonusing in Colombia. However, Q4 player values in Colombia were at their highest point of the last 3 quarters, validating the continued strength in our user experience. ARPMAU should return to meaningful year-over-year growth in Lat Am with the removal of our VAT bonusing strategy as of the end of last year.

Breaking down our performance by geography and product. We saw strength across all segments. North America and online casino continue to be our primary growth drivers, benefiting from our strategic focus on these higher-value markets. Our sports betting business also contributed meaningfully to our results, growing consistently throughout the year. In the fourth quarter, online casino revenues grew 30% and grew 28% for the full year. Online sports betting revenue grew 20% in the fourth quarter and grew 7% for the full year. Regionally, revenue in North America grew 29% in the fourth quarter and grew 25% for the full year. Revenue in Latin America grew 17% in the fourth quarter and grew 12% for the full year. Of note, all these growth rates include the burden of the extra Colombia bonusing that stopped at the end of 2025.

As Richard previously mentioned, the tax situation in Colombia remains dynamic. Let me provide more detail and discuss the implications for 2026 in our guidance. The temporary 19% VAT tax on deposits that impacted us throughout much of 2025, which was implemented through an emergency decree, expired at the end of the year as we expected. Under a new emergency decree, a new tax was implemented for 2026 with a 19% VAT on revenue. Compared to the tax on deposits that we navigated in 2025, this tax on revenue will have less of a punitive impact on our business from a profitability perspective.

However, the Constitutional Court of Colombia suspended the emergency decree and associated decreed taxes at the end of January. The results of this review should be concluded in the next few months, and we're optimistic that it will be resolved in our favor. In any event, we expect the additional tax to be paid for the month of January before the suspension occurred. And given the dynamic nature of this situation, for the purposes of our guidance, we assume that this new 19% tax on revenue will be in place for the full year 2026. This new tax environment, combined with the market share gains we achieved in 2025, positions us well for strong growth in Colombia and across Latin America.

Our balance sheet remains strong with $336 million in cash on hand at the end of the year. Net of stock repurchases, we generated $142 million of cash during 2025. Our cash generation capabilities have improved dramatically, and we expect to continue building our cash position throughout 2026.

During the fourth quarter, we did not repurchase any shares under our previously announced $50 million share repurchase program, which has approximately $42 million remaining. As we look ahead to 2026, our guidance philosophy reflects both confidence in our business momentum and prudent assumptions about market dynamics. There are some key growth drivers that influence our 2026 outlook. First, we expect continued strong performance in our North American online casino markets, which have shown consistent acceleration throughout 2025. Second, the incrementally improved tax environment in Colombia should allow us to capture more of the strong underlying growth in that market. And although not included in guidance, our anticipated launch in Alberta as well as other potential new markets provide additional upside.

For 2026, we expect revenue in the range of $1.375 billion to $1.425 billion, representing growth of 21% to 26% year-over-year. We expect adjusted EBITDA in the range of $210 million to $230 million, representing growth of 37% to 50% year-over-year.

When it comes to cadence throughout the year, we would generally expect both revenue and EBITDA to improve as the year progresses, similar to what we've seen in years past. Regarding other line items in our financials and where we'll see leverage, gross margins should improve modestly in 2026 compared to 2025. We continue to improve our cost structure, drive revenue growth faster in higher-margin markets but are absorbing the impact of some higher gaming taxes, including the 19% emergency decreed tax on revenue in Colombia.

We have continued to get more efficient with marketing spend, which gives the opportunity to keep increasing investment in this area. So we expect meaningful increases in marketing spend in 2026 but at a rate slower than our expected revenue growth, driving leverage across that line item.

Regarding G&A, we continue to see opportunities to improve the product, improve our player experience and explore new opportunities. So we expect G&A to grow more closely in line with our revenue growth.

This guidance reflects our confidence in the underlying strength of our business while incorporating prudent assumptions about market maturation and competitive dynamics. We believe this positions us to continue delivering strong shareholder returns while investing appropriately in innovation and long-term growth opportunities.

And with that, operator, please open the line for questions.

[Operator Instructions] Our first question comes from the line of Dan Politzer with JPMorgan.

I wanted to touch on Colombia. You gave a lot of helpful commentary in the remarks about how this could play out in terms of the timing and the year. But is there any way to perhaps put some numbers around maybe what the impact was in 2025 in terms of revenue and EBITDA with the tax on deposits versus maybe what you're forecasting if it is, in fact, in place for the full year in '26? Is it the tax on revenue?

Yes, Dan, let me -- I'll try to help with a little bit more color. So you'll recall, in the third quarter, Colombia had more challenging sports sold and that cost us incrementally on the deposit bonusing and then that, in turn, reduces revenue. In Q4, we didn't have that same issue with challenging sports sold. So you saw that play out in our results as well.

In total, for 2025, we had about $75 million of incremental bonusing that we did due to the VAT tax on the players, so that's a direct reduction of revenue. It probably cost us in the range of $25 million to $30 million in EBITDA on the year. I think despite the disruption, pretty good news, grew GGR at 66%, grew the user base by 34%, took some meaningful share in the market. And then that headwind, the deposit bonusing goes away in 2026 because we aren't making up for that VAT on the players.

So as I shared earlier, this means that within our guidance for 2025, we no longer have -- or for 2026, I should say, we don't have that revenue headwind for the extra bonusing. And just to be clear, we are assuming the burden of the 19% tax on revenue for the full year of 2026. The impact of that probably is -- it's harder to give you a specific answer on that because we aren't guiding to a specific revenue number for Colombia alone. We do, at the very least, expect to have to pay that tax for January, but it is -- it's a 19% tax on revenue. That doesn't mean the exact impact is 19% because we do have a decent number of variable costs that are based on revenue after tax. So it is lower than 19%, but hopefully, that frames it a little bit for you.

No, that's helpful. And just in terms of Canada, obviously, you have the Alberta launch at some point. I don't know if there's any additional detail in terms of the expectation of when that might happen? And then also along those lines in terms of framing that expectation, Ontario, could you just remind us maybe ballpark of what your approximate iGaming and sports betting share is there?

Sure. Why don't I take the first one, Dan, on Alberta. Yes, the timing is looking like it could -- it will be end of Q2, early Q3, but we're hopeful and it looks like the regulators there are moving at a very determined pace, and it looks like a Q2 opportunity is within the possibility towards the end of that quarter.

Yes. And then maybe just other pieces around Alberta and related to Ontario, our casino share in Ontario is kind of mid- to low single digits. Sports is a little bit lower than that. We're very excited about Alberta. I'll tell you, we don't have it in guidance either for revenue or for incremental costs, so there -- when that comes around and we have clarity on the date, there'll be some marketing costs associated with that. We think we're set up really well to be successful there.

The other thing I would just point out, and we've mentioned this before, but every North American online casino market that we've launched in, we've been profitable by the fourth quarter of operations. And we don't see a reason that, that should be different with Alberta. So we're very excited to have another iCasino market launching in the near future here.

Our next question comes from the line of Bernie McTernan with Needham.

Maybe just a follow-up on that on the first question from Dan. If I just add back $75 million to your revenue for Lat Am in '25, I get to an ARPU that's in the mid-40s, let's say. And so that -- if we look at '22 to -- sorry, '22, '23, '24, ARPU is coming down slightly. And then I think if we add back $75 million and then it spiked up. So was there anything that you were seeing from a cohort level or just like maturity of users that caused such an increase in ARPU, again, if my math's right?

Yes. And you're trying to kind of triangulate around the trends of ARPU and the dip down. I think the thing that you probably need to work in there, Bernie, is what we're putting in our deck and obviously, we're reporting in U.S. dollars is there are currency fluctuations over these years. So you'd probably want to normalize for that.

I would say -- I mean, we're highly confident that the -- that without this deposit tax bonusing that we're going to have a nice rebound in our ARPMAU in Colombia and therefore, for our total Lat Am. The other piece that, I guess, I would throw in just to think about how you do that analysis in Mexico is becoming more significant part of the business in Latin America. And for the company in total, we're having a lot of great results down there. And the player values are higher in Mexico than they are in Colombia. So that starts to impact what you'd see in those numbers and what you will see for the coming years here.

Understood. That's really helpful. And then for Richard, I just want to follow up on one of the comments you made earlier in the investment in content and legalization for -- that's going to go on in 2026. Maybe focusing on the content side and given the context of the G&A guide to be growing more closely to revenue, is that bringing on more engineers? Or how should we think about what's actually going to be coming to market with these investments?

Yes. Bernie, yes, so as you might know, I have a passion for the content side of the business, started years ago when I entered the industry for about 10 years working at a slot machine supplier. So I recognize the value of great content and the ability for us to differentiate further by having great libraries of games that are unique and proprietary to ourselves.

Having said that, we obviously have included in guidance all the costs of -- and the revenue upside we expect to see for new content that we add throughout the rest of this year. We have been able to sort of build our studio and our technology road map, and we'll start to launch those games in the future during this year and try to grow our position as sort of a casino leader in the industry. I think it comes down to quality or quantity and making sure that when you prepare some content that it's really at a very competitive and high-quality level where players will enjoy engaging with that content, not because you're incentivizing them only to play it but because of the quality of the experience they have playing those games.

On the legalization front, we are continuing to plan and put effort into taking advantage of the opportunity that exists in the markets right now where you have states that are having, in some cases, erosion of taxes or in other cases, going to lose some taxes from fewer -- less federal aid for things like Medicaid in the future after election later this year and really trying to mobilize and get additional states to open up in a way that will be very favorable for our company.

Our next question comes from the line of Jordan Bender with Citizens.

I want to start maybe on the tax increases, and maybe more specifically, in Illinois, I saw your minimum bet went from $1 up to $5. I guess question one is that -- was that more specific to the city tax that went in place? Or is there something in that market that changed that strategy? And then I guess, more broadly, I mean, did that -- is the strategy, the minimum bet, do you think that's something that we can expect if we do see other states whether it's this year or some point down the line, of you looking to implement that to kind of offset any of the future tax increases?

Yes. So Jordan, the minimum bet was not necessarily in response to the Chicago tax. So at this point, we're not passing through a transaction fee like some of our competitors are. We've chosen to use a minimum bet strategy. Could we use that in other markets in response to some sort of different tax structure? Absolutely. I think we want to make sure we're using all the levers we have that we think make the most sense both for us financially as a company and so that we're treating players as fairly as we can under a construct. I mean, certainly, when you look at Illinois, the activity levels have not shown that, that tax is probably good for the consumers. So we'll see how that plays out in other markets.

Great. And then just on my follow-up, the North American entrance comment, was that related to Alberta specifically? Or is that more of a broader -- I don't know if it's changed the tone, but you're looking to markets you're not currently in now to basically launch a sports betting product.

So I'm actually not certain which comment you're referring to, but I think we can answer the question either way. It was -- it's more about Alberta or other potential North American online markets that might newly legalize and not so much about revisiting. I mean we definitely continue to monitor and look at all the different markets. But I think we've been pretty clear that most of the sportsbook-only markets that we've passed on, we've done for good reason and focusing on iCasino specifically in North America has been a real winner for us.

Our next question comes from the line of David Katz with Jefferies.

Appreciate you taking my question. There's -- I know you addressed prediction markets in some of the prepared remarks, but we continue to hear about the prospects of more traditional gaming products being produced with prediction underlying math models. Is that something that you have looked at and explored because that seemingly might be more relevant for the core of your business?

David, thanks for asking the question. I think I could have predicted perhaps the predictions questions from you given that, I think, you've hit us with one every quarter so far this year. But it's a great question and obviously, a lot of discussion in this topic. So yes, so first of all, we have been monitoring it very, very closely, as we've repeatedly said. And monitoring means that we don't do things at a surface level of this company. We're very thorough in our ways that we monitor. So we have looked at every angle possible and I think -- or certainly most of them.

I think that we are a very nimble organization. If we need to react in some way at some point, we are able to do so. But when it comes to your specific question, I think that it would be more challenging to justify a prediction market when the underlying event is being played for stakes, right? When you're betting on an underlying event, the underlying event -- game is being played for stakes, I think it's harder to justify that as being the type of market that's regulated there.

So having said that, I think, obviously, a lot of courts are going back and forth. You'll continue to see that. I saw the Ninth Circuit came out with a ruling earlier this afternoon. And so we're going to continue monitoring the stakeholders' views, including regulators, legislators and anyone else involved here to kind of make sure that we're on top of the opportunities, but I certainly think that there's a lot more to come in this area.

Okay. And perhaps an easier one, and I hope you haven't touched on this already. Kyle, in your remarks, you mentioned that G&A grows in line with revenue. Did you -- or can you elaborate on what's in there? Are there some tech upgrades? Or why would that grow in line with revenue?

Yes. So I think it's notable that it will grow faster than it has the last couple of years. And I think we've been known to be a company that's prudent with our investments. Richard talked about it a little bit, but we do have -- we feel like we've got the real opportunity here to spend more on some differentiated casino content that we put out there, also increasing lobbying efforts in a moment in time here where we think there's a real opportunity to get some iCasino legalization across the finish line in the next couple of years.

Obviously, we're always investing in our people, and we have our pay increases in -- just in terms of modeling, we've talked about this before, but our biggest incremental or sequential step-up in G&A is from Q4 to Q1. So we just -- we feel like this is a good time to be investing in those areas, and that's built into our guidance for '26.

Our next question comes from the line of Ryan Sigdahl with Craig-Hallum.

Richard, Kyle, another really nice strong quarter and guidance. I want to start with the North America MAUs, grew 51% online casino. I mean I'd ask the generic question just how that's possible. I think, Richard, you gave some of that in the prepared remarks. But more specifically, are there specific acquisition channels that you're opening up or that you're leaning into? Or really, where is that acceleration coming from in a very competitive market?

Yes. It's really broad-based, Ryan. I think our team just keeps getting better and better. You're right, it's a very -- I don't remember what word you just used, but it's an impressive number. Our cost to acquire players are the -- they're the lowest they've been since before we went public, where we didn't necessarily have the funding to put the right money to work.

So our teams are -- they're continuing to evaluate different channels, different creative. It is certainly helpful to have a product that people want to come back to over and over again because that number is not just about first-time depositors, although despite not launching in any new markets, we now have our third quarter in a row of record first-time deposit numbers, so that fills the top of the funnel, but you've got to keep those people coming back and you got to keep people reactivating that maybe have been away for a little while. So it's a combination of all kinds of things. But our teams are doing a fantastic job in bringing in new players, making sure they know what the product is about and then putting the great product in front of them when they show up.

I'll just add that...

Maine -- go ahead, Richard.

Sorry, Ryan. Just one quick thing. We have a focus on offering the best user experience, but high quality is great but also differentiated. And again, if you just differentiate something but you don't get the experience right, it doesn't matter if you're different, if players don't really find what you've done differently to be all that compelling. So for us, being better and different has been a goal, and everyone in the organization is working towards achieving those high-level goals. And through that, you then have all sorts of A/B testing and all kinds of technical tools that we're using to ensure that we're sort of delivering the right type of customers, the right type of experience that matches their interests.

And just I'll pile on one more, Ryan, just because it would be a shame if I didn't mention it. But I think another piece of the puzzle is customer service and the way we treat customers and making it easy and friendly for them to get through the first time they show up to easily getting a deposit on the platform, easily getting their money off the platform. And when they have any issues, that we're responsive and treat them the right way. So I think we focus a lot on that and do a really good job at it.

Now I'll let you ask about Maine.

All very helpful color. Yes, Maine would be the follow-up question here, just legalizing iGaming. Is that a strategic state for RSI and then your confidence level that you could get a skin agreement with 1 of the 4 tribe licensees there?

Ryan, I think this is a -- Maine is an attractive market by virtue that online casino, which is our strength, will be available there. As you know, there's 4 tribal partners there -- tribes there that are -- that currently have the licenses. And so obviously, it's about trying to find the right fit and the right relationship and create the right proper value for the partnerships to work together well.

Clearly, we are a great partner in other states, for other tribes and other lotteries, et cetera. We've proven ourselves to be very strong in smaller states, populations and be able to really generate large share in those opportunities. And so I think if someone who operated casino and has a poker platform that, I think, does add a lot of value to acquisition in a small state, we are a very attractive, appealing partner there. We are considering the options there to hopefully have a chance to be in that market someday.

Our next question comes from the line of Mike Hickey with StoneX.

Richard, Kyle, congrats, guys. Great quarter, great year, great guide. You're sort of a beacon of light here in a tough market. Just 2 questions, both, I think, on the prediction market. So forgive us, Richard. I don't think it's your favorite topic, but obviously, it's important here.

I guess, first, it looks like there's some evidence now of some handle share loss to prediction market. So just curious your view, especially in concentrated markets like Delaware, where you're 100% share, if you're seeing anything there. The second piece would be the opportunity, also hearing sort [ guidance ], offering sort of incremental TAM or TAM expansion. So curious if you're also obviously seeing some level of that.

And then I'm wondering, Richard, your ability, if you see it over time, still early days, but if you see a migration path from prediction market players to traditional products, where they're looking to sort of get a better value, better parlay, obviously, a better overall experience, if you see an opportunity there and in particular, if you see an opportunity on getting them on to your casino product. Obviously, the cross-sell is very strong. This wouldn't be a pure cross-sell. But given that you're the only casino offering in Delaware and other states, it seems like an opportunity for you guys.

All right, Mike, I'll jump in and Richard can follow on if he wants. There's a lot of questions in there. So hopefully, I'll get them all. I think the first is what we're seeing. I think the fact is it's hard to tell. It doesn't appear that it's hurting our OSB business and handle, but it's definitely hard to measure.

I think when it comes to Delaware, I mean, if you just look at the last 4 months, and I'll include January, we're up over 50% year-over-year each of those months in revenue. So again, it's -- I think it's hard to measure, but that's -- those are pretty solid results. And when you get to TAM expansion, I think it does this -- all of this activity brings a lot of awareness to consumers. So there's certainly an element there that can draw more people in and more interest.

I don't know, Richard, do you want to talk about just the product and kind of how it relates to what's out there for prediction markets today?

Yes, sure. I mean so on the technology side, a lot of the technology elements of the CFTC-approved platforms aren't as technically advanced as what we perhaps have in our industry. And so certainly, a lot of the platforms, the player account management systems that exist in our industry could be repurposed and leveraged for prediction markets.

In terms of -- if you were to have a prediction market product, I can envision there being an ability to cross-sell between the different verticals and treating prediction markets like you might treat a poker, a third-party platform or even your own in-house poker platform, having the verticals across the different jurisdictions where an operator is operating. So I think there's certainly cross-sell opportunities. It comes down to the types of mechanics and products that you were referring to. Clearly, if you're having a product that has a skill involved, you're going to sort of appeal to maybe a player that has a skill interest in a different type of prediction market. And I think if there's elements of chance involved, which is still being worked through the courts, then certainly, I think that is a different type of cross-sell.

So I think there's a lot of opportunity in that ability to sort of learn what works and doesn't work on the cross-sell. But certainly, from a core technology standpoint, there are a lot of similarities between for platforms that are being used today in the CFTC markets and real money gambling platforms.

Just a quick follow-up. I guess maybe a couple of quarters ago, we asked you if you saw -- and I know you're a product guy. That's one of the reasons why you're so strong and have the market share you do. Looking at the prediction market platforms, are there certain qualities on the platform, whether it's ease of use or maybe the cash out piece being more visible, are there certain qualities that you think might resonate to one of your traditional gaming customers that you could look to do sort of product enhancements in the future?

Yes. I mean there's always innovation in all kinds of areas. I think one thing about prediction markets is that operators are self-certifying, which means a little bit of an easier process perhaps to try things out that maybe would be harder to do in a state-level regulatory environment. I think it's still too early to really appreciate all the different elements of what's going to be improved or not, but certainly, you're going to see improvements made in prediction market operators. And I think some are going to come from the approach of trying to replicate a sportsbook interface, and others are going to probably come up with approaches that are going to be novel and differentiated and bring a different element of experience to a user that may be different from what they can get in a more conventional sportsbook.

So I think there's still a lot of the leading minds in our industry who historically have kind of moved from one vertical to next, are focused very heavily on prediction markets right now. So I think you'll start to see some of those types of innovations come to market.

Our next question comes from the line of Jed Kelly with Oppenheimer.

Just going back to the MAU growth, very healthy once again. Are you -- is it strength with that casino first -- that historically casino-first player? Or are you having success more with the first -- sports-first player? Would just love just some background on that.

Yes, Jed. So just to be clear, that 51%, I'm sorry, is the growth in North America in markets that have iCasino. If you look at just North America in total, which includes all of our sports-only markets, it grew 37%. So that strength is really coming from the online casino markets. I mean not coincidentally, that's where we're investing most of our marketing dollars and our efforts there from a marketing perspective, and we're seeing the returns.

Got it. And then just as some of your larger competitors start to market the prediction market products, specifically into football, are you seeing any changes in the promotional environment where you may have an opportunity to take share?

I don't think we've seen -- you'll have different operators have different strategies and at different times, right? And some of them will lean in a little bit more. But I wouldn't suggest that there's been any significant change in the promotional intensity across the landscape.

I would just add that our strategy is really not to try to gain share through bonusing but by focusing when others are maybe distracted and by delivering innovative experiences that are unique and different for the player with the goal that players, when they find us, they stay with us. And so our focus really is about -- less about using incentives to encourage players to stay with us but more about having them stay with us for the reasons that we talked about earlier, that Kyle also mentioned with our customer service, making sure we reduce friction for the players and let them know that we're fair, honest and treating them well.

Our next question comes from the line of Chad Beynon with Macquarie.

I wanted to ask about the sports betting hold maybe for the year, for 2025. I know there was some nice improvement just from a parlay mix standpoint. But can you talk about the year-over-year hold growth that you had in the year? And then more importantly, for '26, are there still opportunities to increase that hold? And is that a part of the guidance?

Yes. So maybe I'll start with the last piece. Yes, I mean, obviously, we've got a guidance range that has ranges for -- of outcomes for various different things, but it is -- our expectations for hold are built into the guidance, probably not expectations that we're going to improve it dramatically on the sports side, but I think we do have the opportunity to continue to improve it.

And to your point, we've continued to improve over the last several years the product. The depth of the markets has gotten so much better. Our percentage of parlays and prop bets has continued to increase. Even in Q3 last quarter, I think we pointed this out on the call, but when it was a bit tougher for sports hold, we had our highest sports hold in the U.S. in our history. And then we did that once again in the fourth quarter. We had a little bit better outcomes in Q4 in the industry, but we've continued to see improvements there. So we think that can continue to happen. There's -- the product will continue to get better, and we think there's continued shift that will happen to more parlay bets. Did I catch all your questions in there?

Yes, that's perfect. And then just a follow-up. I know you have a slide in there, and you've talked about the poker opportunity and how that differentiates you versus some of the other competitors. Where are we on the poker journey either with -- from a Rush Street perspective or just from a North America consumer awareness perspective?

Sure. I think I'll take that one. Poker is sort of -- was expected to be a lot larger market years ago when New Jersey first regulated. But because, historically, it had been a national liquidity and it only opened in a single couple of states where it [ enjoyed ] liquidity, I think it was Nevada and New Jersey initially, you really didn't get the liquidity that you needed to kind of create sustainable table sizes, tournament sizes, variety of tables, different bet sizes. And what's been happening with our efforts is that we've now launched, in the last 12 months, poker in 4 states, tie them all together to share liquidity.

There's no operator right now in the U.S. who has more than 4 states, and we're -- we've talked about our plans this year to add a fifth state, which will make us, I think, the first operator to be in 5 states in the United States. And we -- our view of poker has been really clear that it does appeal to a broad gambler, and poker players and enthusiasts like to play other casino games. And certainly, if we can attract a customer who likes to play poker and then win their business over to play casino games, it's a win for us. And the same thing happens if we can acquire a customer and have an active customer who then stays with us playing poker because they no longer have to leave us to go play with a competitor's brand for poker during a tournament time.

So at the end of the day, we really feel that poker completes the ecosystem, and it really is a great retention tool for us to have. We do have a TV platform as well, Poker Night in America, nationally broadcast TV on CBS Sports for now many years. So it helps us with brand building, and it brings personality and engagement to the brand and brings it alive for betters. And ultimately, that's what's important for us, is to have a way to grow our brand and attract and retain customers.

There are no further questions at this time. I would now like to pass the call back to Richard Schwartz for closing remarks.

Thank you for joining us today. We're excited about the road ahead and look forward to sharing our first quarter results in late April.

That concludes today's call. Thank you for your participation, and enjoy the rest of your day.

Good day, ladies, and gentlemen. Thank you for standing by. Welcome to the Rush Street Interactive Third Quarter 2025 Earnings Conference Call. [Operator Instructions]

Please note that this conference call is being recorded today, October 29, 2025. I will now turn the call over to Kyle Sauers, President and Chief Financial Officer. Please go ahead.

Thank you, operator, and good afternoon. By now, everyone should have access to our third quarter 2025 earnings release. It can be found under the heading Financials, Quarterly Results in the Investors section of the RSI website at rushstreetinteractive.com.

Some of our comments will be forward-looking statements within the meaning of the federal securities laws. Forward-looking statements are not statements of historical fact and are usually identified by the use of words such as will, expect, should or other similar phrases and are subject to numerous risks and uncertainties that could cause actual results to differ materially from what we expect.

We assume no responsibility for updating any forward-looking statements. Therefore, you should exercise caution in interpreting and relying on them. We refer you to our SEC filings for a more detailed discussion of the risks that could impact our future operating results and financial condition.

During the call, we will discuss our non-GAAP measures, which we believe can be useful in evaluating the company's operating performance. These measures should not be considered in isolation or as a substitute for our financial results prepared in accordance with GAAP. We will be discussing adjusted EBITDA, which we define as net income or loss before interest, income taxes, depreciation and amortization, share-based compensation, adjustments for certain onetime or non-recurring items and other adjustments that are either non-cash or not related to our underlying business performance.

A reconciliation of these non-GAAP measures to the most directly comparable GAAP measure is available in our third quarter 2025 earnings release and our investor deck, which is available in the Investors Section of the RSI website at rushstreetinteractive.com. For purposes of today's call, unless noted otherwise, when discussing profitability, EBITDA or other income statement measures other than revenue, we're referring to those items on a non-GAAP adjusted EBITDA basis.

With me on the call today, we have Richard Schwartz, Chief Executive Officer. We will first provide some opening remarks and then open the call to questions. And with that, I'll turn the call over to Richard.

Thanks, Kyle. Good afternoon, and thank you for joining us today. I'm pleased to report on another outstanding quarter that underscores the resilience of our business model and player-first approach. Our third quarter results demonstrate continued momentum and acceleration of growth across key markets, led by our continued outperformance in the online casino space.

Before diving into our key quarterly performance, I want to highlight some important organizational enhancements to strengthen our leadership structure. We promoted Kyle Sauers to President and CFO, expanding his existing role to now oversee marketing, operations and commercial strategy in addition to finance.

This change allows me to focus more deeply on innovation, online casino legalization and strategic growth opportunities, while Kyle drives cross-functional operational excellence across our existing markets. We've also elevated Rob Picard to Chief Strategy Officer, reflecting his contributions to our success. These changes position us well for continued execution as we scale our business. Congratulations to both Kyle and Rob.

Now turning to our Q3 performance. Revenue reached a record $277.9 million, up 20% year-over-year, marking our 10th consecutive quarter of sequential revenue growth over the prior quarter. Notably, this growth was driven by very strong player acquisition and player engagement across our higher-value markets.

Adjusted EBITDA of $36 million increased 54% year-over-year, demonstrating the operating leverage inherent in our business model as we scale. In total for North America, our MAUs increased 34% year-over-year, rising to 225,000. This represents our fastest quarterly user growth rate over 4 years and clearly off a much larger base of players.

What makes these results particularly compelling is the continued acceleration of our growth in North American online casino markets, where we see the highest player value and retention.

In our North American online casino markets, we delivered exceptional performance with 46% year-over-year MAU growth. This is also the second highest quarterly growth rate in over 4 years, again, achieved off a much larger starting player base.

Even more encouraging, we've seen accelerating year-over-year growth in our North American online casino player base every single month since March, indicating a strong underlying momentum that extends well beyond any seasonal factors.

While this rapidly growing player base is driven by our high-quality player experience and strong retention, we also had a record quarter as it relates to first-time depositors across the business, beating our prior high watermark by more than 10%, while doing so at very attractive customer acquisition rates.

Turning to our performance in individual online casino markets. The breadth and scope of our success is encouraging. Delaware continued its noteworthy trajectory with 74% net revenue growth, demonstrating the sustained opportunity in this market even as it continues to mature.

Michigan delivered 48% growth, its second fastest pace since Q1 2022. Even our most mature market, New Jersey, achieved 37% growth, the second fastest rate since Q1 2021, proving that established markets can reaccelerate with the right strategy and execution. Ontario grew 24%, its fastest pace since Q4 2023, while Pennsylvania delivered 15% growth, its fastest growth since Q3 2021.

This broad-based acceleration of growth across markets of varying maturity levels validates our strategic approach of focusing on product differentiation and a high-quality customer experience.

Our proprietary technology platform enables us to deliver unique gaming experiences that drive both customer acquisition and retention efficiently. In Latin America, we continued to build momentum with MAUs growing 30% year-over-year, climbing to a new record of 415,000 users.

While Copa America in 2024 created a challenging year-over-year comparison in July, August and September both delivered over 50% growth, demonstrating the underlying strength of our LatAm operations extends well beyond major sporting events.

Mexico revenue grew over 100% again this quarter, reflective of continued momentum and market share gains in that market. And in Colombia, while GGR again grew over 50%, net revenue was down 27% during the quarter due to player bonusing related to the temporary VAT tax.

In Colombia, we continue to navigate the VAT tax environment. Our strategy of absorbing the tax impact while maintaining player experience has allowed us to grow our market position and continue to grow our player base at a fast pace.

Our strong operational performance in Colombia positions us well for meaningful upside when normal tax conditions resume. As for the President's proposed 2026 tax reform, we continue to believe that Congress will not approve the proposed online gaming tax.

Now I want to address several industry topics that I know are top of mind for investors. First, on prediction markets. We are monitoring this space closely. As a casino-first company, we see less direct competitive risk than sportsbook heavy operators. In fact, if prediction markets create tax revenue erosion concerns for states, this could accelerate online casino legalization as states seek more protected revenue streams, a development that would actually benefit RSI given our market-leading experience in online casino.

The second industry topic is sweepstakes operators. The proliferation of unregulated sweepstakes products with games that look, feel and play identical to regulated online casino games presents both a challenge and an opportunity. The reality is that this online casino gaming is already occurring across the United States through these unregulated and illicit channels. These operators generally pay no taxes, are not subject to consumer protection or responsible gaming standards and often raise concerns about targeting minors.

States are faced with a clear choice, continue to allow this untaxed, unregulated activity or they can legalize online casino gaming and regulate it properly, ensuring strong and consistent consumer protections for their residents and generating meaningful tax revenue for their states. We believe the right choice is obvious and the sweepstakes proliferation only strengthens the case for regulated online casino expansion.

Looking ahead, our pipeline of opportunities remains robust. We're excited about our planned expansion into Alberta and anticipate launching in that market on day 1 when it goes live. This represents a significant online casino opportunity that leverages our proven success in similar markets, such as Ontario, where we continue to hit new quarterly revenue records. We are also actively monitoring legislative developments across multiple U.S. states where budget pressures and the need for new revenue sources are creating momentum for online casino legalization.

As we look toward the remainder of 2025 and beyond, I'm confident in our strategic positioning. Our focus on markets that include online casino, our proprietary and innovative technology platform, our marketing efficiency and our operational excellence creates a sustainable competitive advantage that is difficult to replicate.

The fundamentals of our business have never been stronger. We're growing fast, efficiently and profitably. Most importantly, we're doing so in a way that positions us for continued success in online gaming markets across the Americas.

With that, I'll turn the call over to Kyle for a more detailed financial commentary.

Thanks, Richard. I'll now provide additional details on our third quarter financial performance and outlook. Third quarter revenue of $277.9 million increased 20% year-over-year, driven by exceptional growth across our North American online casino markets and partially offset by lower revenue in Colombia and some player-friendly sports outcomes in September.

Once again, we see the results as demonstrating the consistency and durability of our business model. Online casino revenues grew 34% during the quarter, while online sports betting contracted 16% due to the elevated bonusing in Colombia. Regionally, revenue in North America grew 26%, while revenue in Latin America fell by 11%, similarly affected by the elevated bonusing in Colombia.

Our gross margin was 34.0% during the quarter, reflecting continued improvement in mix shift to higher gross margin markets, but offset by player-friendly sports outcomes, which impacted Colombia results and bonusing and also, to a lesser extent, the increase in New Jersey gaming taxes.

On the expense side, our disciplined approach continues to drive operating leverage. Marketing expense of $38.1 million was down 1% year-over-year while increasing sequentially by 5%. Richard mentioned this already, but it's worth reiterating, we had our highest North American monthly active user growth in 4 years, and we set another new record for first-time depositors for the entire company during the quarter, achieving this while further decreasing our cost to acquire players in North America by over 10% during the quarter, leading to continued leverage over our marketing investments, and this represents less than 14% of revenue.

G&A expenses were $20.4 million, up 8% year-over-year, reflecting continued investment in our technology platform and operational capabilities to support our growth. As a percentage of revenue, G&A remained well controlled at 7.3%, and we continue to expect modest leverage over this line item as we scale.

Adjusted EBITDA of $36 million increased 54% year-over-year, representing a margin of 13%. This demonstrates the significant operating leverage in our business model as we continue to scale. The strong flow-through from revenue growth to profitability underscores the quality of our revenue streams and the efficiency of operations.

Looking at our key operating metrics, the strength of our performance becomes even more apparent. North American MAUs of 225,000 users with 34% year-over-year growth, our strongest quarterly performance in over 4 years. And more importantly, this growth is concentrated in our higher-value online casino markets.

North American ARPMAU of $365 was down 5% year-over-year, which is expected given the impressive growth in the user base. As we've seen consistently, newer player cohorts start with lower spend levels and more bonusing before increasing engagement and player value over time. This is exactly the dynamic we want to see, rapid customer base expansion that will drive long-term value creation.

In Latin America, MAUs reached 415,000, up 30% year-over-year despite the challenging Copa America comparison in July, the acceleration we saw in August and September with both months delivering over 50% growth and demonstrating the underlying strength of our LatAm operations.

Our balance sheet remains exceptionally strong. We ended the quarter with substantial unrestricted cash of $273 million and no debt, providing significant flexibility for both organic growth investments and potential strategic opportunities. Our strong cash generation continues with meaningfully positive operating cash flow throughout the quarter. I'll also note that we have begun including our balance sheet and cash flow statement in our quarterly press release starting this quarter.

Regarding our outlook, we remain confident in the momentum we've built and the opportunities ahead. The acceleration we've seen in North America online casino markets every month since March gives us confidence that this growth is sustainable and not merely seasonal. We continue to expect to maintain marketing leverage for the full year with marketing expenses growing at a lower rate than revenue.

Our G&A investments are focused on areas that directly support our growth, particularly technology and product development capabilities that enhance our competitive differentiation.

Looking at the fourth quarter and beyond, we believe we're well positioned to continue delivering strong performance. The seasonal strength we typically see in Q4, combined with our accelerating market trends positions us for a strong finish to 2025. We remain excited about our expansion opportunities, particularly in Alberta, where we expect to launch when that market opens. Our success in similar markets gives us confidence in our ability to capture meaningful market share quickly.

In summary, Q3 represents another quarter of exceptional execution across all aspects of our business. We're growing faster, more profitably and more efficiently than ever before while building a foundation for sustained long-term success.

Based on this continued strong performance, we're raising our full year revenue and EBITDA guidance. We expect 2025 revenue to be between $1.1 billion and $1.12 billion, up $35 million at the midpoint of $1.11 billion and representing a 20% year-over-year increase. For the full year, we anticipate adjusted EBITDA to be between $147 million and $153 million, up $10 million at the midpoint of $150 million, which is up 62% year-over-year. And one last reminder, our guidance includes only those markets that are live as of today.

And with that, operator, we can open the line for questions.

[Operator Instructions] Our first question comes from Dan Politzer with the company, JPMorgan.

This is actually [ Sam ] on for Dan. First, I think if we think about your updated guidance, it implies fourth quarter incremental margins at the midpoint of around 20%, which is below recent levels. I think you talked about some increased marketing in the fourth quarter, but is there any other color you could provide around puts and takes, maybe like a sports betting unfavorable holds from sport outcomes?

Yes. Thanks for the question, Sam. I think I'd point to, yes, the increased marketing spend. As we've pointed out in our prepared remarks, we've been having really good success bringing on a lot of new players and at attractive rates. So that's part of it.

I think the other piece that I would put in there is just the ongoing VAT tax that goes through the end of the year in Colombia that's impacting gross margins and revenue growth down there a little bit.

And then there's some recent news coming out of Mexico, they're considering a potential increase in gaming tax rates. Was this something you were anticipating going into the year? And how would you kind of think about increased tax rates impacting kind of how you operate in that market?

Yes. We've been tracking that. I wouldn't say it was something that we anticipated heading into 2025, but it does appear that in Mexico, the gaming tax is likely to increase from a current rate of 30% up to 50%.

There have been and should continue to be ways to reduce the effective rate below these amounts. But we'll keep you updated next year, assuming these changes get enacted and what that means for us and if there's any difference in the way we approach that market. Operator, I think we can go to the next question.

Our next question comes from Bernie McTernan with the company, Needham & Co.

Maybe just to start and keeping on the LatAm theme. What should we be looking for in terms of like next steps for what's going on in Colombia and the VAT tax? And maybe, Richard, just gauge your, I don't know, probability of it going through or not, if it's still a high degree of confidence or not?

Sure. Yes. So Colombia, it is a situation where the President's tax reform does require congressional support. I think there's been some articles published over the last few weeks that sort of sometimes don't convey that clear picture that it does require congressional support, and we continue to feel there is not sufficient support by Congress to pass that.

So you do -- if that doesn't pass, then the normal tax conditions should resume. That's sort of the state of things today, but November is going to be a very busy time in the political arena down there. The President remains unpopular and his party does. So it's still some work that's happening down there, but I certainly think that the current view is that the current tax reforms proposed will not be adapted.

Understood. And then, Richard, you also -- there was obviously the press release happened not too long ago, but then you mentioned on this call how there's the -- Kyle being promoted to President and allowing you to focus on more strategic, maybe bigger picture things. Just wanted to see if there's any commentary on maybe why now or if there's anything you could bring us under the -- like, the hood in terms of what you'll be focused on specifically?

Sure. First of all, I think Kyle deserves it, the opportunity -- he's done tremendous job for the company since he joined us and the support throughout the Board and colleagues, other executives and everyone in our community that follow our company, I think, has recognized how deserving it was.

But ultimately, I also for myself realized that the impact to our company of having additional states legalizing online casino is very profound and very significant. And I believe, as I shared on prior calls, that there are opportunities to improve how our industry lobbies and the narrative, the messaging and hopefully, the impact of the opportunity will be stronger if I'm able to spend more time working with other colleagues from our peers to try to align folks in a way that hasn't really been aligned as much as we'd like in the past.

So, I think, number one, online casino legalization requires a very strong and very dedicated effort to really try to move the needle in terms of accelerating the pace, and I think we'll be able to achieve some results with some additional time to focus on that.

In addition, as we know, we hired a new CTO earlier this year. He's off to a tremendous start. And what I'm excited about is working with him and the team to continue to deliver experiences that are fun that players want to play and they can't get anywhere else. So at the end of the day, we want to continue to improve the innovation of our business and the differentiation, which has been the source of a lot of our success and why you see our ARPMAUs at such a high rate relative to others is because we have a constant flow of new ideas implemented in smart ways that consumers really enjoy and appreciate. And we have a team that loves building these fun experiences, but we need to do more of that.

And I, as some of you know, have a long history in that part of the business on the product side, and I think it could be a great opportunity to kind of ensure that we have our next pipeline enhanced and coming through at a faster pace. So I'm really excited to focus on innovation as well.

And then as you can also imagine, there's all these strategic opportunities in the industry, and we want to make sure that we have a proper focus on those and make sure that when we evaluate how to direct capital to get the highest returns that we're comparing all the opportunities, and there's a lot of them. So, we have to sort of make sure we have the right focus on those to ensure that when we do find the right ones, we are able to act and have proper support to make sure it's successful. So those are the sort of the things that I'm hoping to focus on.

Certainly, we feel the similar sentiment towards Kyle.

Appreciated.

Thank you.

Our next question comes from Jordan Bender with company Citizens.

So the state reported data doesn't always tell the whole story, but it does look like you got a little bit more promotional on the sports betting side of the business later in the quarter, which we can kind of see in your handle accelerating. Curious as to what you're seeing in the market that's making you lean in? And are you seeing anything elevated from your end or the market's end as we head into the fourth quarter here?

Yes. Thanks, Jordan. I don't think I would highlight anything dramatic that's happening within the industry. Obviously, everybody has their own strategy heading into football season that they're trying to execute. And we're -- I think probably like all operators, we're continuing to refine our bonusing in all of our different markets, and each market might look a little bit different, but making sure the bonuses are getting to the right players. So really, no big change in strategy there for us.

And then if I can follow up in Colombia, if I caught it right, I think you said NGR down 27% in the quarter, which, if I heard that right, would kind of represent a pretty meaningful deceleration from what you saw in the first 2 quarters of the year. I guess, like is there anything structurally different from what you're doing in that market? Obviously, it ends here in a couple of months, but just curious on why the deceleration there.

Yes. So just to be clear, I don't think I would refer to it as a deceleration because the player count growth was still super strong. GGR growth was still super strong. This was about the bonusing that we're doing to offset the VAT tax on the players. And it was a bit more painful for us in Q3 in terms of the impact on net revenue. And part of that comes from better sports outcomes.

And then because of that, you have players who have a little bit fuller balances in their accounts. So there's a little more churn with deposits and withdrawals, which creates more bonusing. So that's really, how I would describe Q3 as it relates to Colombia, but not a deceleration. It was more about the bonusing.

And I would just add that the handle, the gross gaming revenues, the player volumes are generally in line with the growth we were experiencing prior to the VAT tax implementation. So we continue to see really healthy growth in that market.

Our next question comes from Ryan Sigdahl with the company, Craig-Hallum.

Really nice results. I want to start kind of in the U.S. and then we'll move to Latin America, like everybody else. But you announced some nice payment processing partnerships, Sightline Payments for an integrated debit solution. You have BurraPay for crypto. But you guys seem like kind of a leader, first mover on a lot of that stuff. Curious how those partnerships came about? Any metrics you're willing to give from a percentage of players that are using these or have adopted? And then kind of how you think about the cost savings versus potentially even customer retention features of these.

Right. Sure. I'll take that one, Ryan. Thanks for the comments on the quarter. Yes. So it really starts off with sort of a reputation that we developed over the years, I think, as a thought leader and an innovator in our industry. And when you have to pioneer new payment methods, in particular, it's extraordinarily complicated and requires not only engineering teams, but compliance, operations and every sort of partner and all stakeholders have to sort of align together and figure out really tough challenges and how to execute on them. And I think we've done it before as we have. We're a natural company that people want to partner with because we have a track record and a history of delivering new experiences to customers in a great way.

In the case of Sightline, their Co-Founder, CEO and myself have a relationship going back many years, since they launched their business, and our teams get along extremely well. And we recognize that together we could deliver an experience that is solving a need that industry has, especially for us. And so we had a very collaborative and terrific relationship, and we launched that product, and we're really excited for it. But it's still very early and I don't have any metrics to share on this call and at this time.

For BurraPay, other long-time executive industry approached us, again, for similar reasons, knowing that we have a great reputation, I think, and are able to pioneer new approaches. And similar to the Sightline experience, we were able to agree on a framework to work together and collaborate to deliver great experiences.

So payments are key to our industry. And when you can innovate and find ways to solve players' friction, deliver more efficient experiences for them, and -- it makes a difference. And so we tend to do that in Latin America very well, and we're doing that equally as well, I think, in the U.S. market.

Yes. And the only thing I would add, Ryan, I think you hit on it, but there's 2 reasons for these types of innovations around payments. The first is, obviously, to have a great player experience and a journey where it makes it very easy for players to feel comfortable, trust the platform, get their money on and off the platform when they want. And then the second piece is to make sure that it's improving our financials and reducing costs over time. So when we can accomplish both of those things at the same time, that's a big win for us.

Yes. Then switching down to Colombia. We don't need to debate or likelihood of tax reform, we'll kind of wait and see how that all plays out. But to me, it's a positive regardless, curious, your thoughts on that. There's a great outcome, obviously, that it doesn't continue into next year and you get an immediate uplift. The other option is it does in some form.

But my question is, do you expect operators to change strategies, behavior? I guess, to me, it felt like everybody was operating under a temporary -- this year absorbing the VAT tax because it was going to go away. But if it ultimately becomes permanent, people likely partially or stop doing that and actually results can improve next year regardless.

Yes. I think it's a good point. I think there's -- at either end of the spectrum for outcomes, it should be a better scenario for us next year. So I mean, if you just look at some of the numbers, for the year, GGR is up a little less than 60% and net revenue is about flat. But that includes the first couple of months of the year because the bonusing and the VAT didn't go into place until late February. So if you just looked at Q2 and Q3, GGR is up almost 65%, but net revenue is down almost 15%. So it gives you just kind of a decent perspective on the headwind from the extra bonusing that we're doing along with the other large operators.

So then you jump to 2026, the VAT going away is obviously going to have a very solid impact on our revenue growth given that we've seen the GGR growing over 60%. And at the other end of the possible outcomes, as you point out, we think it's likely that all the operators would decrease the bonusing, take that bonusing away, which wouldn't be great for GGR, but it should be much better for us in net revenue and profitability.

And then the other piece of it is, by the end of February we're lapping the bonusing that we started doing because of the VAT tax. So both of those could be beneficial for us.

Our next question comes from Joe Stauff with the company, Susquehanna International Group.

I wanted to ask, Richard, on your comments about the sweepstakes market, what states that you operate in currently do you consider to have a pretty substantial headwind in terms of sweepstakes operators operating against you?

Well, remember, there's sweepstakes across poker and across sports and across casino. So, I guess a couple of large states have been fairly effective at having the regulators sort of issue cease and desist letters and removing some of the competition. I'll mention Michigan is one example and Delaware is another example. In other states where you operate with online sports betting and some efforts to legalize online casino in Virginia, a market that does still have sweepstakes, for example, Illinois still has it as well.

So it's really a mix across the country of states that have been able to sort of exit the sweepstakes and others that have not. So, it's not a very clear cut. In some cases, some of the larger sweepstakes operators leave, but there's others that still stay. So it's not a very clear image and a lot of confusion sort of what the status is in some of those individual states.

Got you. So for iCasino in particular, maybe of your more material states, Michigan, Delaware or maybe the states where it's a little bit cleaner, whereas the other ones, not so much.

Yes, I'm not actually familiar with the latest in a couple of those other states other than the ones I referenced.

Got it. And in terms of just the reinvestment you did in the third quarter and the reacceleration, for instance, especially like in a state like New Jersey, if we think about the first-time depositors, which you said was a record, was it heavier in certain states than not? Or is it more kind of across the board?

Yes. Thanks, Joe. So for sure, it is concentrated in markets that have iCasino available. So I would include Ontario and that in addition to the states that we're in. That's where we -- we haven't been shy about the fact that we feel like we have very differentiated product and an advantage there. And so that's where our marketing investments should go, and it's clearly paying off. I mean, I think our 34% growth in our monthly active users in North America is impressive. But when you get to just the iCasino markets, and it was 46% year-over-year. That tells you that's where we're investing and that's where we're having a lot of success.

Our next question comes from David Katz with the company Jefferies.

First question, Richard, I think you talked about prediction markets a little bit. But I'm not sure if you said whether you would be potentially looking into offering it if it became a legalized context to do so?

I don't think I addressed that, and I predicted you might ask this question. So the truth is, is that when it comes to prediction markets, the legality of it is being debated across the federal government and state jurisdictions right now. A handful of states, as you know, are actually pushing back against prediction markets as unauthorized offerings.

At RSI, our focus is on our core business, delivering sustainable growth while navigating the regulatory landscape responsibly, which means that we aren't going to be a pioneer. While we're very innovative in a lot of ways, we're not going to be a pioneer in this category. But certainly, we have to have a even playing field ultimately, depending on whatever happens.

But we're certainly monitoring it closely, aware of everything that's been happening and don't expect to be pushing any limits because we certainly respect the state gaming licenses and recognize that licenses are a privilege at a state level, not a rights. And so we have to be very cautious and make sure we're compliant with those stakeholders there that feel strongly on this topic.

Understood. And if I may, as my follow-up, Kyle, if I can still address you as Kyle. I noticed that there wasn't any share repurchase in the quarter. Just curious if there are sort of other uses there or what the philosophy was behind that.

Yes. Thanks, David. I'm still going to call you, David. Yes, we didn't do any buybacks during the quarter. I continue to think about future buybacks as being opportunistic rather than programmatic. So we're going to just remain flexible on how we use the buyback authorization and make sure that we're -- we've got a lot of dry powder for new markets that come along or other opportunities as well.

Our next question comes from Jed Kelly with company Oppenheimer.

Just on the iGaming growth in some of your more mature states, what -- can you kind of dig in more to what's driving that acceleration? Is it more product exclusive content or is it something you're doing on the bonusing or are you just getting share gains from other competitors?

So Jed, I'll start and maybe Richard will jump in here. But I think it's everything. So obviously, when you look at the monthly active user growth, that's not just about getting new people to the platform. That's having a great product and a differentiated experience and giving people a reason to come back every day.

When it comes to bringing, like, people to the platform, which obviously we're doing quite well given that this quarter was a record for first-time depositors at the company, I think 10% higher than our previous record, which happened to be last quarter, and we're not spending any more money doing that. I think that tells you a lot about the quality of our marketing team and our marketing programs. We've done a lot to continue to add resources to that team, and they keep getting better and better.

But the good news is that there's a lot of things we can still do better than we are today. But I think the fact that we're adding so many new users and then keeping them around says a lot about the momentum we have in the business. I think you probably heard it in the prepared remarks, but our year-over-year growth in monthly active users accelerated every quarter or every month sequentially since March through September. So that's -- I think that's pretty impressive, and we're very excited about that.

And just as a follow-up, what do you think is more of a catalyst for further iGaming legislation? Is it prediction markets or sweeps?

Sure. I think both have a meaningful role to play, because in one case, prediction markets is reducing the sportsbook revenues potentially that states will be obtaining from the sports betting statewide frameworks that exist. If that happens, certainly, online gaming is a safer, more protected category of casino revenues that would be sustained.

It certainly helps that online casino generates a 4x the tax revenues of sports betting. So as states have more financial pressures, and I think as the big federal bill starts to get implemented in the next couple of years, you're going to have increased financial pressures on states. And as we've seen some stakeholders in the discussion recognize online casino represents one of the very most available, accessible, proven, reliable opportunities for states to have a meaningful additional source of tax revenue.

So, it's a financial element on sweepstakes, certainly, the fact that the size of that industry is not to be underappreciated. It's a multibillion-dollar industry, and there's a whole large volume of customers that could be online casino regulated customers that are right now playing these sweepstake sites. And I think it's interesting that when you do have folks opposing online casino being regulated, you don't have the same effort usually applied towards operating the sweepstakes market that already exists today.

So certainly, the existence of it and the fact it's not taxed, and as I said in the prepared remarks, not tax doesn't protect consumers, really add no value to a state in any way. It just has a negative consequences versus the online gaming regulatory process and legalizing it adds a lot of value to states by protecting consumers and generating taxes and creating opportunities to fund resources to local causes and public services that need that sort of support.

So I do think that these things are going to help plus the financial needs of states. And as I said earlier, having better alignment in our industry is really important. And as I have more availability, I hope to be able to focus on these things, I'm hoping to be able to deliver some accelerated efforts in some of the key jurisdictions that are important for us in the future.

Our next question comes from Chad Beynon with the company Macquarie.

I feel like we covered everything on iGaming. For sports betting, maybe wanted to ask one just in terms of how the customers have reacted just with in-play. So we have heard that there was, obviously, customer-friendly outcomes for American football and for soccer, I think, in September and for October, so that probably hurt hold. But just in terms of the in-play percentage helping hold, does that continue to look or does that continue to grow from a year-over-year perspective? And if we see normal outcomes, that could lead to a year-over-year increase in hold?

Yes. Thanks, Chad. So we have continued to see improvement in the percentage of betting that goes both to parlays, SGPs and to in-game. That's been an initiative for us for quite some time. So those trends have been positive for us.

Interestingly on the hold, absolutely, there were some player-friendly outcomes, as you pointed out, and it's well publicized, particularly in September. So that did create some headwind. But I will point out that our sports hold in the U.S. actually hit its highest point in our history in Q3, even with those tougher outcomes. So I think that's a pretty good reflection of how our team has been able to continue to improve the product and the offering and drive players to a better mix of bets.

And then on Colombia, again, I think previously, you've talked about the VAT tax representing roughly a low double-digit hit to EBITDA. You're doing things to offset it and you laid that out for the third quarter. But as we think about the guidance increase and maybe the outperformance in Q3, is it fair to say that maybe the beat -- I guess, some of it is probably coming from the MAU growth. But was there any type of a beat against that originally expected VAT impact?

So not positive. I understand the question exactly, but I'm going to answer and you can tell me if I got you here. I think when you look at Q3 and the guidance raise, it's probably -- it's more about continued acceleration in MAUs, so more players, outperformance in North American iCasino, actually really good operational performance in Latin America, but more pressure from the bonusing in Q3 than maybe we would have anticipated, and that's partly because of those good player or the player-friendly sports outcomes, I should say. Did that get to your question?

Yes, answered like a President, thank you Kyle. Congrats.

Thanks. Appreciated.

Our last question comes from Mike Hickey with the company Benchmark.

Richard, Kyle, congrats on the quarter. And Kyle, congrats on the promotion. I dropped myself, guys early in the call. So this question seems obvious. But on the prediction market in states where you have market share, call it, Delaware, are you seeing any pressure from Kalshi, soon to be Polymarket in that state or states? And I have a follow-up.

Thanks, Mike. Yes, I'll answer that. No, the truth is we have not seen an impact to date from -- that we've noticed in those states where we operate the sports betting. So, we're still looking for that and certainly monitoring it, but we haven't seen much of an impact.

Richard, do you see anything on the prediction platforms in terms of innovation that you would potentially integrate into your online gaming products, OSB products?

That's a good question. We have people look at it closely. I think we're still just trying to appreciate that while it's often described as a peer-to-peer experience, what we're seeing is that there are some large companies that are taking positions on one side of the equation and essentially almost replicating what a sportsbook is from, I guess, the house.

I think when you start to -- I think the BFS industry had a lot of really smart pioneering things they did that sportsbooks could and should embrace as well in terms of how you communicate that propositions to players. And I think you're going to see which types of markets gain momentum in the prediction. And some of the things you might not expect will be the popular markets, and it's been up for companies like us to identify how we strengthen our own book.

So I think the things we'll be paying attention to. But I would say it's almost still premature to really see a lot because, so far, what's been happening is that the prediction markets are less regulated than we are. And so perhaps you will start and are self-certifying in many cases, you start to see things happening in the future maybe that are worth us paying attention to. But what you've seen so far is really that industry trying to replicate sports betting and starting to say, well, we have same game parlays, so how can they do same game parlays.

So I think right now, the direction is more of them trying to replicate what exists in our business. But at some point, I could see if that market was to exist, although obviously, it's a long way to know that's going to happen, then you certainly would start to see cross-pollination of ideas in the other direction, too.

Last question from us. Does the -- do you think the Trump fight with the Colombian President, does that -- is that creating more or less support in Colombia for the President in his potential tax change?

And then I guess, broadly speaking, kind of a mess in Colombia. I mean, does that sort of take down a little bit, I guess, your appetite to expand further? I mean, Brazil, Ecuador, Chile, Argentina, all really interesting regions, I think you're looking at maybe unlocking. But the sort of the mess in Colombia, I guess, sort of pull back in your desire to put capital to work in other countries in Latin America?

Yes. Maybe I'll take your second question first, and the answer is no, it doesn't really dampen our interest. It's a lot of effort to get experience right for Latin America. We believe those markets are at the infancy of growth. And as we see in our growth ourselves, there's lots of opportunity there, and it's a very large population across Latin America that are in the process of or will be legalizing online gaming in the future. So we certainly remain very excited for it.

And frankly, some of the things that are happening in these regions are also happening here in United States across the different footprints here. So I don't think anything is -- anything is possible these days, it feels like with anywhere in the world. So I think certainly, we are excited for the LatAm market and think we will be able to control the things that we can and execute where we can and influence when we're able to in terms of how we sort of want frameworks to exist in a way that's viable. But I think we're excited for the future in LatAm.

In terms of the Colombia question, we certainly haven't heard or seen any evidence of anything impacting us. Certainly, we've been a great citizen down there, continue to be very respected in that industry and feel really confident about the taxes we generate and the quality of the business that we run down there. So I think the answer would be no to your question.

At this time, there are no more questions registered in the queue. I'd like to pass the conference back over to our hosting team for closing remarks.

Well, thank you for joining us today. We're excited about the road ahead and look forward to sharing our continued progress when we report our fourth quarter and annual results next year.

That will conclude today's conference call. Thank you for your participation, and enjoy the rest of your day.