Rush Street Interactive, Inc. Q1 FY2026 Earnings Call

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 one-time 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 accelerating year-over-year player growth in these markets, each of the last four 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 two 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 four 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 two and a half 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 four quarters and remain excited about the long-term opportunity and the 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 roadmap 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 four 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 five 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 zero 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. It's been a pretty impressive acceleration over the last five 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 obviously pretty impressive growth, so better understanding would be helpful.

Yes. Thanks, Dan. I'll take that one. We are very pleased with the progress there. 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, three straight quarters of record first-time depositors. The players we're acquiring — 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 may not be around for a full month; new players 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 casual player base that we're adding, but we're seeing only a 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 continues to track a lot of players. One of the benefits for us, even though we're growing much faster than the industry, is there are a lot of players who still don't know who 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 players who 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 you mentioned, I think it was implied, about a $10 million launch cost or EBITDA impact in the year. Can you talk about what you're underwriting there in terms of market share? Is it predominantly going to be iGaming? And then 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, piggybacking on the question on the strong MAU growth. What customer acquisition channels are working in particular? Is anything performing better? I know you brought in a Chief Marketing Officer not too long ago. The fact that we continue to see nice growth here on a sustained basis, what's working? I have a follow-up after that.

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. We're trying a lot of different channels, trying a lot of different things. 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. I'm assuming that you will see the impact greater in the financials in Latin America over the U.S., but 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. We are very excited about that and excited about the player acquisition that comes along with it. Hopefully, that will turn into a bigger impact than what we've modeled and what we've guided to. I'll say one point: during the Copa America in 2024, we saw our monthly active users in Colombia increase by an average of 170% year-over-year in June and July, which were the two months where that event happened. So that was a big driver of future growth for us in Colombia. 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 in that it is taking place in three countries, and all three of them are countries where we operate. We're excited that it's less than 45 days away from the first match, which will open on June 11 in Mexico City, a great market where we're operating and where Mexico will play a host game. There's a lot of excitement because of that. Also, the time zones for our players in the Americas will be the same time zones that are awake, which is rare compared to some prior World Cups that took place in Europe or the Middle East. 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 to casino.

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

I want to touch on your comments around Colombia and the fastest growth you've seen in the last four quarters. You talked about what you're doing and what's going right there. Can you explain what the exit rate is in the country exiting the VAT treatment? Do you think you're gaining overall share based on the adjustments you've made to the business model in recent quarters?

Yes. So we talked about it in the prepared remarks, but we're very pleased with how the strategy we used last year to combat the deposit tax for players worked. We had a lot of extra bonusing, which was painful in 2025, but it served us really well because we treated customers the right way. The business grew at a healthy GGR player count base 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, which has been impactful on growing player counts down there and driving faster growth. There's not good reported data from regulators in all the Latin American countries, but given our performance, it would be hard to imagine that we are not taking share in all three of those markets. So we're pretty confident 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 and monetization trends in Peru and Mexico at their stages of life cycle similar to what you saw in Colombia in its early days?

Yes. I'll say Mexico is ahead of Colombia in terms of where we were this quarter relative to the launch date. We're ahead in Mexico from that perspective on this quarter and in aggregate since launch. Mexico is a larger market, so we have a much bigger opportunity there. In Peru, it's probably a little bit behind where Colombia was post-launch. But all of them are still growing really nicely and we're very excited about the progress.

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., it 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 aggressively spending. I ask this every quarter, but how is it that things feel like they're getting easier for you while it's getting harder for everybody else?

Thanks for the comments. I wouldn't say it's getting easier, Ryan. 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 or two ago, but that doesn't mean there's not a lot of things we can keep doing better. We're acquiring players faster, bringing more of them in to fill the top of the funnel. We're doing it at lower rates per player. Retention is still really strong. We try to be really fair with bonusing and continue to optimize that to make sure players get a meaningful experience with their bonusing and promotions. 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 an experience as possible. We also have a great customer service team that takes care of players when issues arise.

Ryan, I would add that one of our goals is to create a fun and fair experience for our players. When players consistently give feedback to our customer service team or in public comments on our apps that we are 'fun, fair and fast,' that reinforces that we're delivering the experience. A lot of this comes from an ideation process of having consumer insights, understanding the audience, having the technology capabilities to deliver leading experiences and translating those insights into products that players want to play. Combined with service elements that show players we're thoughtful and treating them fairly, that drives retention and long-term engagement.

Well done. For my follow-up question on Colombia — the Constitutional Court declared there needs to be a refund mechanism for VAT collected in 2025. Do you think you'll be entitled to refunds? Can you quantify that? Any detail on that process?

I think you're referring to payments that would have been made in 2026 related to the 19% emergency VAT that was declared at the end of December. The court did suggest 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 unconstitutional, so it's 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. Curious on Mexico. It seems like you're having tremendous success there. The market looks like it's nearly 10x Colombia. You're already a top-five share position in the market, but overall share is still pretty small given that one operator has the majority. What competitive dynamics are you seeing in Mexico and your ability, over time, to take meaningful share? How big could the World Cup be in supercharging that? It seems like given success in Colombia, you could do much more in Mexico.

Mike, I'll start and then Kyle can add. We really like Mexico for the opportunity to differentiate on the casino side. Many operators in Mexico historically focused more on sports. We're excited to invest and show casino players an experience that we believe is superior. That country has a very large legacy retail casino marketplace we can leverage to deliver an online experience that resonates. We're leaning into our casino experience, while relying on the sportsbook to acquire customers during high-profile events such as Copa America previously and the upcoming World Cup, which opens June 11 in Mexico City. The competitive situation there favors a casino-first operator like us, and we're continuing to do the small localizations and technology improvements needed to reduce friction for players in that market.

I won't confirm '10x' just yet — give us a little time — but remember we started later than others did in Colombia. We entered an existing market and secured ourselves as the #2 operator in Colombia while growing quickly. We're optimistic Mexico can bring really strong success over the coming years.

Quick follow-up: you teased before about maybe looking to open a new market in Latin America. What's your appetite this year or next to do that?

We continue to see a broad set of attractive growth opportunities across Latin America and are actively progressing those efforts. Given our strong performance in existing markets — the three countries we operate in cover a population of 220 million people — we have flexibility to be deliberate and pursue those opportunities with discipline. We continue to advance those opportunities but are not ready to share specifics at this time.

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

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

I want to make sure I'm understanding the question. You're asking if the decline in North America ARPMAU is driven by new users and bonusing? 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. Many of those players may come in late in the month, which affects that average. Most players have negative value early in their life cycle because they're moving through bonusing that we give them. That's the largest factor — a good problem to have. We're certainly not going to grow player counts 60% year-over-year forever. As that slows and players mature and retention improves, we'd expect that number to move back up over time.

Got it. And you mentioned favorable CPAs. Is that driven more by your marketing team innovations, maybe around AI and certain investments? Or do you think competitors might be focusing marketing dollars elsewhere?

Good question. I don't know that we've seen a big change in competitive intensity for the marketing assets we're after. Any one competitor might ebb and flow based on what they're doing. Could some be allocating marketing dollars to new market launches? Possibly. But I think a big factor is our team doing a great job and improving the player journey. It's not just getting people to the app store; they need to download, register, get through KYC and deposit. Those pieces seem simple but are complicated to do well. Our team is making those flows better and better. So I think it's more about what we're doing than a big change in competitive intensity for marketing assets.

Our next question comes from the line of Zach Silverberg with Wells Fargo.

Just one on Mexico. There was an article stating that a couple of your competitors had their gaming licenses blocked during the quarter. What are you seeing post that event? Is it an opportunity to take share from those operators?

Yes, Zach. The two operators you're referencing, including an operator branded as 365 and another operator, had their licenses closed earlier. Their absence from the market — both were meaningful market share contenders — has helped us acquire some customers who previously may not have been aware of our brand. In both those cases, those companies were primarily stronger in sports. As a casino-first operator, we continue to grow our casino player volumes, and those players tend to generate a larger revenue per active user. So we feel strong about the market opportunity and the benefit of those operators being out of the market.

And just for my follow-up: Next, in Colombia, there's an election coming up in a few weeks. Is there anything you guys are watching there, and how does the election influence the outlook for the 16% consumption tax?

Thanks, Zach. We're watching the election closely. There's the initial round in a few weeks and the final election in June. We're not necessarily handicapping it. There's an opportunity because there's a mandated constitutional review of the emergency decree that allowed the 16% tax to be put in place and a review of the tax itself. Another point of review could be the next administration's view of the emergency decree and associated taxes if it remains in place. So there is potential upside for us depending on those outcomes.

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

Richard, can you comment on the state of product parity for iCasino? For OSB, everyone is approaching some level of parity. In iCasino, have others caught up in terms of offering jackpots, bonus spins, site features? What's your assessment of the industry today?

It's a big question. We continue to lead in creating innovative features. Others are investing more in the casino experience, but a lot of what we see is 'me too' — operators copying one another. If someone offers a free-to-play game upon registration, everyone does that. People improve the lobby; others copy that. Those are important but simpler improvements. We were one of the first to have a site-wide jackpot across our products. Others are doing some site-wide jackpots, but our execution remains very compelling to players. Our app store scores are validating: we're the highest-rated app in the store with a 4.9 out of 5, which is rare for a casino app. Players notice quality, and while many features can be copied, it's hard to copy the overall execution and quality of experience built over time. We've built technology since 2012, modernized along the way, and delivered dozens of features unique to the industry. It takes a long time to build and is hard to replicate at the same quality. We believe we have strong moats around our product experience in the casino space, but we're always pushing to improve.

Do you think those higher app scores are a function of your retention engine and mechanics, or is it a variety of factors including product depth? Do your retention capabilities differentiate you versus other iCasino products?

What's different about us is that from day one the #1 goal was to retain customers. It was less about acquisition and more about delivering an experience that encourages players to prefer us over other apps. Paying attention to details — a strong customer service team, innovative experiences, and systematically improving every touchpoint — drives retention. All those little improvements add up, and players notice. That focus on the full lifecycle and journey is a big part of why many players prefer our app and why retention is a key differentiator for us.

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 in favor, and it didn't get across the goal line. Do you think the progress sets Virginia up for higher likelihood in 2027? Would you have interest if that opened from an iGaming standpoint?

Thanks for the question. Virginia would be an exciting market for us, and we are very interested. We remain focused on expanding online casino into states that have shown interest, and Virginia is a key example. The legislation progressed as far as it did this year, with versions passing both the Senate and the House, which is encouraging. We are working in partnership with our land-based Rivers Casino there and view Virginia as a real opportunity potentially for next year.

To add to that, think about the opportunity: it's not dissimilar in size from Michigan. It's unclear exactly how many licenses they'll issue, but it's a market where we started off with mid-single-digit share in some markets and grew to high single-digit share over time. We did that with little brand awareness at launch and no access to a strong player database. We have advantages in Virginia that we haven't had in other markets, so it's very exciting as that moves along.

Okay, great. Lastly, on prediction markets: one other digital operator said CPAs had increased and they didn't grow users as much as you did. Are you seeing any pressure from CPAs? Could that change as other competitors develop their technology throughout the year?

Yes, we haven't seen pressure on CPAs from new entrants in marketing assets. Some competitors may be allocating spend to product development, but our CPAs are down and are the lowest they've been, which indicates we're not seeing significant pressure at this point. We're searching for different types of players in different places, which helps, and our team continues to optimize acquisition channels.

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

I wanted to finish with a discussion on flow-through and aspirational margins. The increase in guidance on the revenue side of roughly $100 million and EBITDA around $20 million begs the question of what aspirational flow-through could be. Do you have margin targets you can discuss for the future?

On longer-term margins, we still think we can get to the low-to-mid 20% adjusted EBITDA range. That assumes a couple more high-casino North American markets and some maturation. On flow-through for 2026, at the midpoint of our guidance, flow-through is very solid at mid-20%. Keep in mind that the removal of deposit-related bonusing in Colombia improves revenue more than operating margins because the revenue line benefits more than margins on the new revenue tax structure. Also, including Alberta in our guidance brings both revenue and launch costs, so that mutes immediate margin expansion. We don't expect Alberta to be profitable in 2027. We're always striving to outperform expectations and will continue to work toward those aspirational margins.

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.