Rush Street Interactive, Inc. Q1 FY2025 Earnings Call

Good day, ladies and gentlemen. Thank you for standing by. Welcome to the Rush Street Interactive First Quarter 2025 Earnings Conference Call. All participants are in a listen-only mode. A question-and-answer session will follow the formal presentation. Please note that this conference call is being recorded today, April 30th, 2025. I would now turn the call over to Kyle Sauers, Chief Financial Officer.

Thank you, operator and good afternoon. By now, everyone should have access to our first 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 one-time or non-recurring items, and other adjustments that are either non-cash or are 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 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 for our first quarter 2025 earnings call. We have started the year with strong momentum, continuing to build on our success from last year. Our first quarter revenue was $262 million, up 21% year-over-year, and adjusted EBITDA was $33 million, almost double compared to the same period last year. We continue to achieve strong results by prioritizing innovation and the quality of our player experience, while at the same time, excelling in the efficient acquisition and retention of high-value players. In essence, we are consistently adding more players to our platform, these players are of higher value, and we are acquiring them as efficiently as ever. This growth is driving significant profitability and reinforcing our strong momentum. During the first quarter, we continued to experience solid growth in both our online casino and online sports verticals. Online casino grew by 25%, while sports betting grew by 11%. The growth in sports betting occurred despite player-friendly outcomes throughout March Madness as well as the Philadelphia Eagles' Super Bowl win, which impacted us because of our large sports betting player base in the Delaware, South Jersey, and Pennsylvania areas. The balanced expansion across product verticals is a proof point to our persistent efforts to enhance the user experience across all product verticals and customer touchpoints as we attract and retain high-value players. Our strategy of differentiating our offerings continues to pay off, driving engagement and retention on our platform. In North America, MAU growth for the quarter was 17% year-over-year and in Latin America, our MAUs continued to expand at a high rate, growing 61% year-over-year compared to last year's quarter. In fact, March was the second highest level of MAUs in LatAm despite the tax situation in Colombia, trailing only last July when Colombia played in the finals of the Copa America. I will touch more on the tax situation in Colombia in a few minutes to provide an update from our last call. First, a few takeaways worth noting that underlie the strong results. Domestically, we saw very solid growth across the board with year-over-year revenue growth in 15 out of our 16 North American online markets. This despite the challenging sports hold in Q1 of this year that I referenced earlier. Our markets with both online casino and online sports betting, such as Michigan, Delaware, and New Jersey continue to perform exceptionally well. For example, in Michigan, we demonstrated impressive growth with revenue up 40% during the quarter. In Delaware, this was our first quarter with year-over-year comparisons and the revenue growth exceeded 80%. While we anticipate facing tougher comparisons as the year progresses, these Q1 results underscore our continued enthusiasm for this market. New Jersey also remained a strong contributor, growing 27% during the quarter. As the industry approaches the 12th year of legalized online casinos in the State of New Jersey, the market has shown consistent year-over-year revenue growth, and we believe it serves as a prime example of the long-term prospects and durability of the online casino industry. Internationally, we continue to generate strong results. In Mexico, growth accelerated from Q4, and we are seeing year-over-year growth near 50% as we begin our third full year. In Colombia, our GGR was up 55% in local currency, while we've been navigating the temporarily imposed 19% value-added tax on player deposits. On our last earnings call, we were only a few days into the new Colombian VAT tax, and we were uncertain about how we'd approach the change and the impact on us and the broader market. In response, at least up to this point, similar to others in the market, we have been absorbing the tax through higher bonusing rather than passing the cost on to our players. This approach has allowed us to retain our market share, maintain strong player activity, and keep GGR levels near all-time highs, albeit with lower NGR. To provide clarity on the upcoming timeline, recall that the Colombian President issued two emergency decrees, one declaring a state of emergency in the Catatumbo region due to increased guerrilla activity, which would be the basis to institute emergency tax increases and another imposing the actual 19% VAT tax to fund efforts against the guerrilla threat. Just recently, the President chose not to renew the state of emergency decree as of April 24th. Both decrees are under automatic review by the Colombian Constitutional Court. A summary of the court's ruling on the first decree was released yesterday, providing that the first decree was declared constitutional in limited part. We will review the court's full opinion on this decree once available. Regardless, the court must separately and independently rule on the second decree's constitutionality, which is likely by late May or June. Depending on these court rulings, we and our competitors may adjust the bonusing strategies to better suit operators. Regarding legislative activity, there has been exciting progress in online gaming legislation in Alberta. The iGaming Alberta Act, known as Bill 48, has advanced to the third step of a five-step legalization process, moving to the committee stage. This bill aims to establish an open market for online sports betting and online casinos in the province of Alberta, transitioning from the current monopoly model operated by state-owned Play Alberta. The bill proposes creating the Alberta iGaming Corporation to manage contracts with operators, while regulation will be handled by the Alberta Gaming, Liquor, and Cannabis Commission. These changes are designed to bring unregulated operators under a regulated market, similar to Ontario's model. We are excited about the progress made and expect to be operating online casino and sports betting in this market next year, leveraging our success in online casino markets in North America. We continue to monitor sessions in various U.S. states. The increasingly challenging economic realities faced by states, combined with the proven financial and consumer protection benefits of our regulation and the fact that unregulated online casinos in the form of online casino sweepstakes and offshore casino sites already exist in the states, creates a compelling case for the legalization, regulation, and taxation of online casinos. The reality is that legalizing online casino remains one of the best options for state governments to make up any near or long-term budget deficits. It's reliable, proven, and straightforward for states to implement. In short, legalizing online casinos would be an additive contributor to state budgets, generate large and meaningful tax amounts for states, and in states where land-based casinos already exist, grow the overall pie of gaming revenues for those states. As more states recognize the dual benefits of protecting their citizens and generating substantial tax revenues, we believe the iGaming legalization will gain momentum in the coming years. Reflecting on the current economic macro situation, we are a well-positioned pure play in the online casino and OSB space. Our digital platform offers very high-quality entertainment, along with affordability and convenience. This makes it an attractive option for consumers, especially during challenging economic times. The accessible nature of our content makes it an appealing source of entertainment, positioning us as resilient and well-positioned among other consumer-facing industries. We believe that our focus on delivering consistent performance and driving value for our shareholders will continue to make us a strong performer. Our platform's ease of use, affordability, and innovation, combined with our award-winning customer service, are key factors that are helping us to excel during these challenging times and will contribute to us continuing to be an outperformer. I want to emphasize our unwavering commitment to delivering value to our shareholders and providing an unparalleled gaming experience to our users. Our success over recent years has set a strong foundation, and we are optimistic about building on this foundation going forward. Thank you for your continued support and confidence in Rush Street Interactive. With that, I'll turn the call over to Kyle.

Thanks Richard. First quarter revenue was $262.4 million, up 21% year-over-year, driven by strong growth of approximately 25% year-over-year in online casino and approximately 11% in online sports. It was very encouraging to see that our first quarter results were also strong across market vintages and geographies. In the first quarter, North American MAUs were 203,000, up 17% year-over-year, while ARPMAU in North America increased to $368, up 3% year-over-year. The fast growth in players, while maintaining and even increasing our leading ARPMAU level is a testament to our underlying strategic focus on user engagement and retention. As you would expect, our player growth is faster in the higher-value markets that include iCasino since that's where we invest more of our resources. In Latin America, as Richard mentioned, we continue to experience high levels of player growth with our MAUs increasing year-over-year by 61% to 354,000. This player base is a new quarterly record for LatAm in total, but also a new quarterly record for Colombia, even in the face of the temporary VAT tax implementation. Our ARPMAU in this region was $36. As you would expect, ARPMAU in LatAm was impacted by the higher bonus in Colombia that Richard explained earlier. For those that track our MAU and ARPMAU trends closely, we've added a table in the back of our investor deck that shows historical trends. I'll point out that we've made some immaterial changes to the historical numbers to be consistent in all markets by only including players who have placed real money wagers in that data, essentially excluding players who have only placed wagers with bonus money. Moving to gross profit margins. In the first quarter, they increased by 125 basis points compared to last year to 34.9%. This improvement was driven by ongoing trends in revenue diversification and higher revenue growth in our more profitable markets. On the marketing front, we remain disciplined and deliberate with our spend. We are allocating more resources to markets with better return opportunities while maintaining flexibility in our investments. In the first quarter, we increased marketing spend by 3% compared to last year, yet achieved leverage over our marketing spend and delivered another record EBITDA quarter. First quarter marketing spend was $38.8 million or 15% of revenue compared to 17% of revenue during the first quarter last year. Our cost to acquire players in North America continue to be near the lowest they've been since going public and just as important, our first-time depositors in North American iCasino markets, even when we exclude our newest market, Delaware, continue to grow nicely year-over-year, even while the markets become more mature. A testament to the expanding size of these markets, our ability to refine our marketing approach, and success continuing to find new valuable players. For the full year, we plan to continue our disciplined approach, making investments where we see opportunities and expecting incremental leverage over our marketing spend again in 2025, with marketing spend continuing to grow at a lower rate than revenue. G&A expenses for the first quarter were $19.5 million or 7.4% of revenue compared to 8.4% last year. For the full year, we continue to expect to achieve modest leverage over our G&A expense. Adjusted EBITDA for the first quarter was $33.2 million, reflecting the revenue growth and the increased leverage over expenses, partially offset by the increased bonusing costs in Colombia. We ended the quarter with $228 million in unrestricted cash and no debt. We generated approximately $25 million in cash during the quarter, excluding stock repurchases and stock withheld for employee tax obligations on vesting. During the quarter, we repurchased approximately 500,000 shares at an average price of $10.35 under our previously announced $50 million share repurchase program. Subsequent to quarter end, we purchased an additional 234,000 shares at an average price of $10.55, leaving approximately $42 million remaining on our repurchase program. We are reiterating our full year revenue and adjusted EBITDA guidance for 2025. We continue to expect 2025 revenue to be between $1.010 billion and $1.80 billion with a midpoint of $1.45 billion, representing a 13% year-over-year increase. For the full year, we anticipate adjusted EBITDA to be between $115 million and $135 million, which represents $125 million at the midpoint, up 35% year-over-year. With regard to how we performed relative to guidance since our last call, while Colombia is actually performing above our base expectations for player counts, handle, and GGR, it's below our base expectations for net revenue due to the higher bonuses. This has been offset by the continued outperformance in North American iCasino markets and the positive trends in players and revenue in those jurisdictions. Our guidance ranges for revenue and EBITDA continue to include a range of potential outcomes from the recent tax changes in Colombia with the assumption that the tax lasts through the end of the year. Given how strong the volumes have been in Colombia, should the temporary tax go away prior to year-end, we could see meaningful upside to both revenue and EBITDA. 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.

We will now open the line for questions. The first question is from Bernie McTernan with Needham & Company. Your line is now open.

Great. Thanks for taking the questions. I'd like to start by discussing Colombia a bit more and understanding the investments the company is making. What is the competitive landscape like? Are other operators also absorbing that tax for consumers? Importantly, do you believe you are gaining market share in monthly active users and handle in the region? I also have a follow-up.

Sure. I'll respond to that and see if Kyle has anything to add. We are indeed offering higher bonuses, which we’ve mentioned, and passing those costs onto other operators, aligning with the approach taken by others in the market. As we also said, we are achieving record performance regarding GGR and volume handle. This gives us confidence that our strategy is effective in helping us maintain or potentially increase our market share. Although market share data isn't available in this area, we believe we are making smart management decisions. Ultimately, as I often remind our team, our focus should be on execution and the aspects we can control. I think we are effectively managing our business during this challenging time.

Understood. I wanted to discuss Delaware, which has been a significant success for Rush Street with considerable growth last year. How should we view growth in 2025 and beyond? It was a key factor in our overall growth last year. Will it slow down? Is it a difficult comparison? How should investors consider Delaware in 2025?

Yes, I'll take that. Appreciate the question. And you're right, Delaware has been a great win for us and it continues to be performing really well. Our expectation is that we'll continue to see really nice growth out of Delaware. As you point out, we've lapped now the launch of Delaware for us, which was right at the end of 2023, so call it the beginning of 2024. So, as the year goes on, it's logical that the growth rate will slow down in that market specifically. But we feel like there's a long road ahead for Delaware. We probably mentioned it before, but if you just triangulate around how other markets have performed that have iCasino, you look at adult population and income levels, this could be approaching a $300 million GGR market in a few years. And maybe there's a little discount off of that because there's not as much competition there. But that's a long ways from where we're running today. So, there's a lot of upside in Delaware still.

Understood. Thank you, both.

Thank you.

Thanks.

Thank you. The next question is from Jordan Bender with Citizens. Your line is now open.

Hey everyone. I want to stick with Colombia here for a second. So, net revenue coming in below your expectations, but are there any early learnings that you can use to adjust the business model as the year goes on to better tailor what you're doing in the market to improve those NGR results to be more in line with the range that you gave when you gave guidance last quarter? Thank you.

Thank you, Jordan. We are making ongoing adjustments. The competitive landscape and how our rivals engage with customers are crucial to our strategy, as we want to keep players engaged beyond the excellent platform we offer. The tax players are liable for, which we offset with a cashback bonus, applies to deposits. This creates a multiplier effect, especially with multiple deposits and withdrawals. One of our proud achievements has been our ability to adapt and minimize deposit turnover. We have slightly reduced our marketing spend in response to this situation. We will keep an eye on our competitors' actions. If this tax seems likely to persist until the year's end, we'll evaluate our response based on how our competitors react. Our focus remains on maximizing net revenue from a growing GGR base. One of the earlier questions touched on market share, and while Richard noted we can't definitively say we're gaining market share, GGR increased by 55% in Q1, and it's actually risen even more in April. Unless we assume the market is growing at that rate, it's reasonable to conclude that our strategy and product are effectively capturing market share.

Great. Switching gears here. Pennsylvania just joined the multistate Internet gaming agreement, which should help liquidity across your platform. I don't think poker is a huge driver of revenue, but curious to get your thoughts around another large state added to the agreement and how that could help cater to the segment of your database that participates in poker? Thank you.

Sure, we're thrilled about the successful launch of our poker platform in Pennsylvania. It's a noteworthy achievement, particularly because it's the latest platform in the industry, and we're very proud of what we have accomplished. Our primary goal was to ensure the platform could handle the increased player liquidity across multiple states, which we are fortunate to have now. We plan to expand into additional states in the future, as we mentioned earlier this week. Our poker strategy has primarily been to serve as an amenity, acting as a cross-sell to our casino and sports offerings. While it's simple to make that claim, actually delivering that experience can be challenging. We've introduced various appealing features to the platform, making it easy for users to engage with our other products and fulfill our objective of attracting poker players. Once they are playing with us, we aim to present them with our excellent offerings in other verticals and also retain our casino and sportsbook players when they choose to play poker. With our brand ambassadors, Phil Galfond and Phil Hellmuth, we’ve successfully reached a broad audience, generating considerable enthusiasm for our poker segment. We are excited about the prospect of expanding into more states soon.

Thank you very much.

Thank you. The next question is from the line of Ryan Sigdahl with Craig-Hallum. Your line is now open.

Good afternoon. This is Will on for Ryan. Thanks for taking our questions. Just a quick one on Colombia, and then I'll have a follow-up. Could you quantify how much the increased promotions to VAT tax impacted revenue and ARPDAU in the quarter?

Sure. I mentioned earlier a couple of statistics that I'll elaborate on. In the first quarter, our gross gaming revenue increased by 55%, and I noted that the growth rate in April is even higher. This growth rate aligns closely with trends we've observed in Colombia over the past few years. During this time, both our gross gaming revenue and net revenue have increased at a comparable rate, indicating that the overall bonusing has remained relatively stable. However, to address your question, our net revenue growth was significantly affected in both March and April. In March, our net revenue in U.S. dollars saw a slight year-over-year decline, and in April it has remained roughly flat compared to last year. Therefore, we are facing a market that might have otherwise experienced over 50% growth, but is now fairly stagnant year-over-year due to this temporary VAT tax. There are a couple of takeaways from this situation. First, the elimination of the VAT tax should drive significant growth for us once it is lifted and we have comparable periods without the tax. Additionally, as stated in our prepared remarks, the rest of our business is thriving, allowing us to outperform in the first quarter and reaffirm our guidance for the year, despite increased bonusing in Colombia.

Got it. Thanks for the color there. Maybe a quick one on the constitutional decree. So, you said the first one was found partially constitutional and the second one, obviously, related to the tax is kind of up for debate right now. If we do see that continue out until the end of the year, could it be renewed? Or is it pretty much transitory until that point? Thanks.

Sure. The limitations of the emergency decree are that it can only be extended for a certain period. One of the court's decisions will be whether to extend it for six months or for the remainder of the calendar year. To go beyond that would require congressional support, which has been lacking in the past. Therefore, it seems likely that it will either conclude after six months, which is a few months before the year's end, or at the end of the calendar year.

Great. Thanks guys.

Thank you. The next question is from Jed Kelly with Oppenheimer. Your line is now open.

Hey, great. Thanks for taking my questions. Seeing really nice marketing leverage. We have seen kind of some of the larger land-based casino players start to grow their product too for iGaming. Can you just kind of expound more on what's sort of driving the marketing leverage even though the market remains pretty competitive because it continues to be pretty impressive.

Certainly. At the end of the day, it boils down to a straightforward business model focused on maintaining a reasonable investment rate for customer acquisition and allowing our experience to take precedence. The quality of our experience is what enables us to achieve our results, despite not having the most prominent brand, the largest budget, or a land-based property consistently directing traffic to us like some of the bigger casino groups. Our main focus is on creating unique experiences that differentiate us, encouraging players with multiple accounts to allocate a greater portion of their entertainment budget to us. We aim to provide an experience that is distinct, engaging, and enjoyable in ways not found elsewhere. So far, we have successfully offered something unique and entertaining that resonates with customers more effectively than most industry products, which typically just provide a game library. Our offerings include a variety of fun experiences such as community engagement, chat interactions, and promotional engines that encourage player participation in enjoyable promotional games. Ultimately, frequent players recognize these features, which keeps them engaged with us.

Got it. That's helpful. And then just real quickly on the guidance. I see you're maintaining your revenue guidance. However, I think Q1 was 21% revenue growth kind of implies a deceleration even though you have similar comps throughout the year versus Q1. So, can you talk about anything we should be watching for, for the balance of the year? Thanks.

Yes. Thanks Jed. So, maybe just to frame that, I think given the guidance that we've offered, if you're looking at the midpoint, it is likely that revenue would be lower in Q2 and Q3 than it was in Q1 and that then Q4 would be the largest revenue quarter of the year. I think the things to think about, one is that I mentioned on a previous question is just lapping Delaware. And while we still expect really nice growth out of Delaware, the growth rate in Delaware is likely to be slower as the year goes on. And then another piece just really, I'll say, kind of Q1 specific is that the VAT tax in Colombia went into effect about almost two-thirds of the way through the first quarter. So, we didn't have the headwind of that tax and that bonusing for most of Q1. And under the guidance that we've offered, assuming that the tax lasts through the end of the year, that tax burden will be there or the bonusing burden will be there throughout all of Q2 and the other quarters. So, that would be a headwind relative to Q1. And then maybe the last thing, just building in some potential changes in consumer behavior. I think Richard pointed out, we haven't seen anything in our data or our experience that's suggesting any consumer changes. But certainly, there's a lot of rhetoric and discussion around that topic. So, we just want to be mindful to keep that in mind and the thoughts and the guidance.

Got it. And then just real quick, what's the tax rate we should assume for your adjusted EPS?

Let me get back to you on that, Jed, because there's some moving parts there. Part of it being that Colombia is changing pretty quickly. And at the moment, Colombia is the only market where we're paying any meaningful income tax. So I'll come back to you on that.

All right. Thank you.

Thank you. The next question is from David Katz with Jefferies. Your line is now open.

Hi, good evening. Thanks for taking my question. One of the areas that, I guess, we were obligated to discuss is the prediction markets. And on the one hand, is that something that you would contemplate engaging in, in some fashion? And second, if you have kind of any perspective on how you think that evolves in the U.S.? And whether it has any kind of meaningful impact on what you're doing on the sports betting side, that would be helpful? Thank you.

Sure. Hey David, I'll take that one. We've been very focused on wrapping up our education on that market opportunity, making sure we are aware of all possibilities should that market persist and grow into a legal market that us and others are able to participate in. Clearly, as others have noted, right currently today, there's a limited amount of liquidity and a limited number of markets that have enough liquidity to offer bets, but you would expect over time that, that could and would grow to a greater variety of options. So, it is something that we are, like I said, very aware of and very focused on understanding all the aspects of it. And should there be an opportunity where licensed operators like us on a state-by-state level are able to participate in that market, that's certainly something we would consider at that time.

Thank you. The next question is from the line of Chad Beynon with Macquarie. Your line is now open.

Hi, good afternoon. Thanks for taking my questions. Richard, Kyle, I wanted to ask about some of the other international markets, I guess, Mexico and Peru, specifically. Are the TAMs that we have been thinking about before, do you still believe those to be true? How are those markets ramping? And then also adjacent to that, are there other international markets that you have your eye on at this time? Thanks.

Sure, I'll begin and Kyle can add some additional context if needed. Regarding Mexico, we are experiencing significant growth in that market, which continues to excite us. We believe it will eventually become one of the largest markets in Latin America, surpassing Colombia. Specifically, after launching, Mexico's revenue trajectory is still ahead of Colombia's during the same post-launch time frame. We are very optimistic about Mexico. As for Peru, we haven't invested much in marketing yet, as we are still working on optimizing and localizing the experience. We remain positive about its potential, but we haven't scaled up our efforts there yet. We look forward to future opportunities given the country's sizable population. There are also other Latin American markets that we are evaluating for entry, but we haven't made any announcements yet. I can't share specifics today, but once we have a strong brand, platform, team, and localized knowledge in those regions, it will become significantly easier to expand successfully. We see great opportunities in this region, but we are being careful to ensure we do not rush our approach, as we still have ample growth potential in our current markets.

Okay, great. And then on OSB product growth, you mentioned the Eagles, March Madness, some of the pressure that you saw in the quarter there that put a ceiling on the OSB growth for the quarter. But just thinking about single-game parlays, hold rates, et cetera, were those up meaningfully for the quarter? And should we expect for those to be up as we look through the rest of the year? Thank you.

Yes. So, I can start and if there's anything you want to add, Richard, feel free. But our hold rates, Chad, as you mentioned, they've continued to improve, and it's because of the improvements in the product and merchandising and improvement in the bet mix towards parlays, same-game parlays, and our Prop Central Prop packs, all that drive the higher-margin betting. So, we have continued to improve our overall sports hold, and that can apply to both the U.S. and to Latin America. But as you point out, we had a little bit of a headwind here in the U.S. from the Super Bowl and March Madness.

Great. Thanks Kyle. Nice quarter guys.

Thank you.

Thank you. The next question is from the line of Joe Stauff with Susquehanna. Your line is now open.

Thanks a lot. Hello Richard and Kyle. I wanted to ask on the user growth in the quarter in North America, 17%. That's a strong number. I guess it's fair to assume a heavy portion of that is Delaware, but I was wondering if you can give us some idea of the concentration in terms of Delaware and maybe non-Delaware? And then the second question I wanted to understand, if I could, is, Richard, you had given the growth in Michigan, Delaware, New Jersey. And I was curious about Pennsylvania. That's a pretty big state for you guys. I was just wondering how that is growing in terms of, again, your 16 states?

Thank you, Joe. Regarding the MAU growth this quarter, Delaware contributed around 6% to the overall 17%. The rest of the growth was primarily from other North American markets, mostly those with iCasino, which comes as no surprise since we've focused our marketing efforts there. This growth from those markets includes higher-value players, significantly contributing to our revenue increase. As for Pennsylvania, we saw a year-over-year growth, but it was only in the low single digits, around 2% or 3%. This market has lower margins, which limits our investment there, and affects our overall revenue growth. However, the revenue growth we are seeing is primarily from our higher-margin markets.

Got it. Thanks a lot. Very helpful.

Thank you. The next question is from the line of Mike Hickey with Benchmark Company. Your line is now open.

Hey Richard, Kyle, thanks for addressing our questions and congratulations on a strong Q1. Kyle, could you provide details on the tax impact from Colombia that's included in your 2025 guidance, particularly regarding its effect on EBITDA?

Yes. We didn't quantify it in terms of EBITDA. I think the best way to consider it is that our GGR is growing in Q1, at least in local currency, where it grew 55%. That's slightly lower when measured in USD. In April, it's actually growing a bit faster. We've observed an acceleration in GGR growth. However, net revenue was slightly down in March, but it was up for Q1. In April, net revenue remained flat despite GGR exceeding 50%. This gap significantly affects our revenue. We have various scenarios, both higher and lower, built into the guidance for the year. Hopefully, this helps frame the impact. I want to reiterate that once this tax is removed, it will be a substantial driver of growth in revenue and profitability, especially when we compare it to the months with the tax in 2026.

And just to clarify, Kyle, it sounds like we don't know when it will end this year, but worst case maybe by the end of the year. However, it seems very unlikely that a similar tax scheme will extend into 2026. It would likely require another emergency decree at that point. Is that a fair assessment of your thoughts?

Yes, Mike, this is Richard. That is an accurate assessment.

Okay. Last question from us. You've highlighted before the strength of casino plus OSB. And I think in the most recent data, you're saying that the combo in terms of the player combo participating across both verticals, you get 16 times the GGR from OSB player alone. Curious what percentage, Richard, of your player base does participate in both verticals. Obviously, that necessitates a strong sports betting product as well as iGaming. But curious where you are in terms of mix, where it's trending and what strategies you have in place to sort of get that dual player just given how better the economics are? Thanks guys.

Hey Mike, if you noticed from our investor deck, the value from a player who engages in both casino and sports betting has improved over time compared to a player who only bets on sports. You're touching on a subject we're aware of, and we are strategically designing our products to facilitate cross-selling. To address your question about our efforts, we've created a mini game lobby to make it easy for sports bettors to access casino games. Initially, we launched games to allow this cross-sell, including icons on the sportsbook that enable players to open a game. More recently, we've developed a game lobby featuring a variety of games that are easy to navigate, ensuring we offer an optimal selection of casino game types. Players might prefer different options beyond just Blackjack; they may also want to play roulette or slot games. We've found that having a broader variety has been beneficial for us. While we haven't shared specific percentages regarding player participation between the two verticals, we do recognize the cross-sell opportunity and have built our product and platform to minimize friction for users. Our aim is to maximize the number of players who will engage in both areas, making it a differentiating factor between us and most of our competitors. We believe we can continue to leverage this focus on technology, enabling a unique experience for players to access multiple products simultaneously.

And Richard, is the cross-sell, is that starting primarily with iGaming, which is your core product to sports betting? Or are you actually reversing that and bringing in the sports betting and then crossing them into iGaming?

It's a little bit of both. Poker is driving a lot of the cross-sell in Pennsylvania, and we are working to ramp it up. We plan to launch multistate poker share liquidity across multiple states in the future. It works both ways; there is significant movement from sports betting to the casino and vice versa, with many players transitioning from poker to the casino. This process involves multiple paths for players.

Nice. Thanks guys.

Thanks Mike.

Thank you. There are no further questions in the queue. I'll hand the call back over to Richard Schwartz for concluding remarks.

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

That concludes today's conference call. Thank you for your participation. You may now disconnect your lines.