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Rush Street Interactive has targeted Brazil to launch its RushBet brand next year as it continues to try and extend the company’s presence in Latin America through new market opportunities.

“There are seven or eight countries on our radar that we think we’ll eventually launch in [over] the next several years,” Rush Street Interactive (RSI) CEO Richard Schwartz told the fourth annual Craig-Hallum Online Gaming Conference on Monday (December 2).

“We are going to start with Brazil,” Schwartz said. “We do expect to be there, but we are not racing in to be one of the first in January. If you launch in January, you’re not first; you’re still last because there has been a grey market there for many years.”

Schwartz explained that entering Brazil at launch is not really much of a competitive advantage, the way it would be in some other jurisdictions when a market legalizes, and all the companies are operating for the first time from day one, as has been the case in the United States. 

Other countries Rush Street is currently monitoring are Ecuador, Argentina, Chile and El Salvador. RSI is already licensed and live with its RushBet brand in Colombia, Mexico and most recently Peru.

As highlighted by 91����ԭ�� GamblingCompliance's Latin America Online Outlook report published last month, regulation is expanding rapidly across the region. Total gross gaming revenue from regulated online gambling in Latin America is forecasted to grow to $12.3bn by 2028, versus approximately $2.5bn this year.

“It’s a once-in-a-lifetime moment where all these countries are legalizing for the first time or roughly the same time,” Schwartz said. “So, for us, it’s about prioritizing instead of doing them all at one time. We expect to be successful in all these markets but are picking the ones that make the most sense first.

“Outside of Brazil, all of our other markets are relatively modest investments to make moving forward once they’ve regulated,” he added.

The Chicago-based online gaming company recently reported that its monthly active users in Latin America, which includes Mexico, were approximately 329,000, up 122 percent year-over-year.

However, average revenue per monthly user declined slightly to $39 in the third quarter, compared with $43 last year.

The company expects its total revenue for 2024 to be between $900m and $920m, increasing the midpoint by $30m, compared with the prior guidance. At the midpoint of the range, revenue of $910m represents 32 percent year-over-year growth when compared with $691m for 2023.

Kyle Saunders, CFO at RSI, explained Wednesday that Latin America has been “very incremental to the gross margins”.

“We expect that to continue to be true,” Saunders told Ryan Sigdahl, senior research analyst with Craig-Hallum Capital Group and host of the investor conference, in response to a question on the tax rates and financial implications of operating in Latin America.

“Our gross margins in total are around 35 percent,” Saunders said. “When you strip out Pennsylvania and Illinois, the rest of the markets are in the 45 percent to 50 percent range. And that’s with most of our growth coming from Latin America.”

Pennsylvania and Illinois have two of the highest gaming tax rates in the United States. Sports-betting revenue is taxed at a rate of 36 percent in Pennsylvania, while online slots are taxed at 54 percent and table games at 16 percent.

Illinois has a tiered tax structure for sports betting ranging from 20 percent to 40 percent, which was approved in July and increased from the initial 15 percent.

Currently, the headline online gambling tax rate in Peru is 12 percent, while Mexico taxes 30 percent of gross gaming revenue (GGR), in addition to 1 percent of turnover paid to the Secretary of the Interior (SEGOB) through the Directorate General of Games and Raffles.

The online tax rate in Colombia is currently 15 percent of GGR.

Saunders said Latin American countries, compared with the U.S., “have been better overall from a taxing perspective”.

Rush Street announced the expansion of RushBet into Peru in July, taking advantage of the country’s new regulatory framework. Peru’s online gambling law officially went into effect on February 12, with the country’s gambling regulator issuing a total of 120 licenses to 60 online gambling operators in August. 

In June 2018, Rush Street became the first U.S. gaming company to launch a regulated online gaming platform in South America when it did so in Colombia. That was followed in July 2022, when RushBet went live in Mexico in a partnership with Mexican media company Grupo Multimedios.

“We were the first ones to work with [Grupo Exito in Colombia] to get our brand into their stores to allow customers to deposit or withdraw through their systems,” and Schwartz noted that an initial strategic goal in Colombia was to enable deposits through retail channels.

“Payments is your biggest challenge in Latin America because every country has a different payment method,” Schwartz said.

“Some countries have no digital banking. Colombia, when we started, had very little digital banking and was a cash market where your players went to locations to cash in or cash out.”

Schwartz added that when it comes to payments, “it’s all about customization for each country”.