Rush Street Interactive - Earnings Call - Q2 2025

Executive Summary

• Record quarter: revenue $269.2M (+22% YoY), net income $28.8M, and adjusted EBITDA $40.2M (+88% YoY); ninth straight quarter of sequential revenue and adjusted EBITDA improvement.
• Guidance raised: FY25 revenue to $1.05–$1.10B (midpoint +16% YoY vs $924M FY24) and adjusted EBITDA to $133–$147M (midpoint +51% YoY vs $92.5M FY24), despite IL/NJ tax changes and Colombia VAT headwind included in the outlook.
• Margin and efficiency gains: gross margin ~35.3% (+~80 bps YoY); marketing $36.2M was <14% of revenue while delivering a record quarter for first-time depositors.
• Key catalysts: strength in iCasino (revenue +25% YoY) and sports betting (+15% YoY), multi-state poker rollout for cross-sell, and potential Colombia VAT sunset; watch H2 cadence as RSI plans higher marketing spend and normalizes sports hold tailwinds.

What Went Well and What Went Wrong

• What Went Well

  • Broad-based growth: online casino revenue +25% YoY; online sports betting +15% YoY; NA iCasino markets saw MAUs grow >30%.
  • Efficiency and margins: gross margin ~35.3% (+~80 bps YoY); marketing at <14% of revenue with record FTDs; adjusted EBITDA a record $40.2M.
  • Strategic product expansion: launched multi-state BetRivers Poker with shared liquidity across four states to bolster cross-play and engagement; CEO emphasized 9th consecutive quarter of sequential improvement.
  • Quote: “We’ve delivered another exceptional quarter… our 9th consecutive quarter of improving both revenue and adjusted EBITDA from the preceding quarter.” – CEO Richard Schwartz.

• What Went Wrong

  • Colombia VAT headwind: LATAM ARPMAU fell to $30 from $38 YoY; net revenue there roughly flat despite GGR up >70% YoY due to increased bonusing to offset VAT.
  • Regulatory/tax overhang: Illinois and New Jersey tax changes included in guidance; strategy still evolving (e.g., minimum bet raised to $1 in IL).
  • Cadence/normalization risks: RSI plans higher marketing in Q3 and Q4 versus Q2; Q2 enjoyed ~$5M revenue tailwind from favorable sports outcomes that may not repeat.

Transcript

Operator (participant)

Good day, ladies and gentlemen. Thank you for standing by. Welcome to the Rush Street Interactive second 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, July 30th, 2025. I will now turn the call over to Kyle Sauers, Chief Financial Officer.

Kyle Sauers (CFO)

Thank you, operator, and good afternoon. By now, everyone should have access to our second quarter 2025 earnings release. It can be found under the heading Financials Quarterly Results in the Investors section of the Rush Street Interactive 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 second quarter 2025 earnings release and our investor deck, which is available in the Investors section of the RS 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. With that, I'll turn the call over to Richard.

Richard Schwartz (CEO)

Thanks, Kyle. Good afternoon, and thank you for joining us today. I'm excited to report that we've delivered another record quarter across the board, with new highs in revenue, profitability, EBITDA margins, and active player counts. This marks our ninth consecutive quarter of improving both revenue and adjusted EBITDA for the preceding quarter, underscoring the consistency and strength of our business model. Notably, adjusted EBITDA grew 88% year-over-year, driven by strong performance across our business, growing revenue 22% versus a year ago. This is an acceleration in growth compared to Q1, which is particularly notable given Q2 had a full quarter of Colombian bonusing headwinds, and we launched the Delaware launch at the beginning of this year. This impressive growth was driven by strong, broad-based performance across our business.

Online casino revenue grew 25% during the quarter, while online sports betting grew 15% compared to the same period last year. This consistent, balanced momentum across product verticals underscores our ability to create engaging, high-quality experiences that attract and retain high-value players. In North America, our emphasis on markets that include online casino continues to drive exceptional performance. MALs in these markets grew by over 30% in the second quarter. Even when excluding Delaware, we still saw growth in the high 20% range, which marks our highest growth rate since 2022 for all of our other iCasino markets in North America. This strong momentum reflects the effectiveness of our focus on markets where we can deploy our full suite of gaming offerings and maximize player value.

In Latin America, we continue to see tremendous momentum, with MAL growth exceeding 40% year-over-year, even when comparing to the Copa America period last year, when we experienced higher player engagement. This growth continues to demonstrate the strength of our platform and brand in the region. Looking at some of the highlights and our standout market performances, in the U.S., Michigan grew 42% year-over-year, accelerating from Q1. West Virginia grew 47% year-over-year, the fastest growth we've seen in several quarters. Delaware grew 74% year-over-year, showing continued momentum in our sixth full quarter since launching. In Canada, Ontario grew 25% year-over-year, the fastest growth rate since 2023. In Latin America, Colombia continued its great momentum, with GGR up over 70% year-over-year, though net revenue was about flat due to higher bonusing in response to the temporary VAT tax.

Mexico grew over 125% year-over-year, and an impressive 40% sequentially from Q1. Looking ahead in the near term, we're excited about our expansion plans in Alberta, where we anticipate launching when the market opens next year. This market presents a significant opportunity for us to leverage our success in other North American online casino markets. Additionally, we recently launched multi-state poker with shared player pooling across markets. In a short period, we went from no presence in the poker space to establishing BetRivers as a high-quality competitor across four states, and we are very proud of our team and what they've accomplished. The product and operations are thoughtfully designed to deliver a great user experience, while serving as a valuable amenity that supports cross-sale and engagement to our casino and sportsbook offerings.

Our platform features unique functionality that encourages fluid cross-play, enabling our poker customers to play casino games and bet on sports without leaving the poker table. In addition, our partnerships with poker ambassadors, Phil Hellmuth and Phil Galfond, have generated significant brand recognition for BetRivers and created fun, authentic ways to connect with our customers. Looking ahead, we have great confidence in our business. The positive momentum across our markets is far outweighing any headwinds from increased taxes in the U.S. and Colombia. As a result, we are raising our full-year revenue and EBITDA guidance, which Kyle will cover in more detail. With that, I'll turn the call over to Kyle.

Kyle Sauers (CFO)

Thanks, Richard. As Richard mentioned, the second quarter marked another record-breaking period for RSI with revenue reaching $269 million, up 22% year-over-year. This top-line growth was fueled by strong performance in North America, where MALs grew to 197,000, up 21% from the same period last year. Our MAL also hit a new quarterly high since going public of $391. As highlighted earlier, our online casino markets led the way, with MAL growth exceeding 30%, reinforcing the strength of our strategy of prioritizing higher value opportunities. In Latin America, MAL has reached 403,000, up 42% year-over-year. It's worth noting that June and July of last year had higher player counts due to Copa America, making this growth even more impressive. Our MAL in the region was $30, which was impacted by higher bonusing in Colombia.

Moving down the income statement, gross margin for the quarter was approximately 35.3%, up about 80 basis points year-over-year. This improvement reflects our ongoing revenue diversification and higher growth in our higher margin markets, and partially offset by the temporary VAT tax impact in Colombia. Our marketing efficiency continues to be a highlight of our performance. Marketing spend for the quarter was $36.2 million, representing less than 14% of revenue, our lowest mark since going public. This is particularly remarkable, given that we achieved our largest quarter in history for first-time depositing customers, despite having not launched any new North American markets since the end of 2023. G&A expenses were $18.7 million for the quarter, up 1% year-over-year, continuing to gain leverage as we scaled the business. Adjusted EBITDA reached a record $40.2 million, demonstrating the strong flow-through from our revenue growth to the bottom line.

In fact, this is our highest flow-through in the past five quarters. Our balance sheet remains exceptionally strong. As the quarter ends, we increased cash to $241 million and remained debt-free. Year to date, we've generated approximately $41 million in cash, excluding stock repurchases and stock withheld for employee tax obligations on vestings. During the quarter, we repurchased $2.5 million of stock under our previously announced program, and year to date, we've repurchased 733,000 shares at an average price of $10.41, with approximately $42 million still available under our current authorization. You'll also notice in our financials this quarter, a couple of one-time non-cash tax-related items. Thanks to our strong financial performance, as measured by net income, and our expectations for continued profitability, we're now required under accounting rules to recognize a deferred tax asset of approximately $145 million.

This asset reflects the expected future tax benefits from prior period cumulative net operating losses and our tax receivable agreement, both of which can be used to help offset future taxable income. This asset is partially offset by the tax receivable agreement liability payable to previous holders of our Class B shares in the amount of $114 million. It's important to note that this liability only results in cash payments when actual tax savings are realized over time. Both items are non-cash this quarter, and we have excluded them from our EBITDA and EPS calculations in the tables in our financial statements. Based on our strong performance, we're raising our full-year revenue and EBITDA guidance. We now expect 2025 revenue to be between $1.05 billion and $1.1 billion, with a midpoint of $1.07 billion, representing a 16% year-over-year increase.

For the full year, we anticipate adjusted EBITDA to be between $133 million and $147 million, which represents $140 million at the midpoint, up 51% year-over-year. Our guidance ranges for revenue and EBITDA continue to include a range of potential outcomes from the temporary VAT tax in Colombia, with the continued assumption that the tax lasts through the end of the year. One last reminder, our guidance includes only those markets that are live as of today. With that, Operator, we can open the line for questions.

Operator (participant)

Thank you. We will now begin the question-and-answer session. If you would like to ask a question, please press star followed by one on your telephone keypad. If for any reason at all you would like to remove that question, please press star followed by two. Again, to ask a question, please press star one. The first question comes from Bernie McTernan with Needham & Company. You may proceed.

Bernie McTernan (Senior Research Analyst)

Great. Thanks for taking questions. Maybe just to start, we'd like to just make sure we understand what's going into the guides in terms of taxes. Given the higher state taxes in a variety of states in the second half, what are you guys assuming? Any specific comments on what your strategy is going to be in Illinois? I have a follow-up as well.

Kyle Sauers (CFO)

Yeah, thanks, Bernie. I'll take that one. In terms of the tax changes that have happened in Illinois and New Jersey, obviously we've raised the guidance pretty significantly for both revenue and EBITDA, but those full impacts are included in the guidance. We've also included in our EBITDA guidance continued headwind from the temporary VAT tax in Colombia. For purposes of guidance, we've included that VAT tax being in place through the end of the year. On Illinois, just in terms of the strategy there so far, we haven't shared plans yet on exactly what we plan to do. We're trying to make sure that we're blending goals of a great player experience, but also appropriate economics for us. What we have done to date is we've moved the minimum bet up to $1.

That's the move thus far, but we're remaining flexible to figure out the right way to approach it as we get towards NFL season.

Bernie McTernan (Senior Research Analyst)

Understood. That's really helpful. I just wanted to move over to LATAM. The growth rates that you described in Mexico were quite impressive. I just wanted to maybe understand where you see the glide path is to revenue and the opportunity to continue to scale, just given the population, GDP per capita there, you know, relative to Colombia.

Richard Schwartz (CEO)

Sure, I'll start here and Kyle can add in. You know, we expect Mexico over time to be one of our largest markets, certainly in Latin America, and one of the largest markets we have, given the population size being multiples of Colombia. We continue to be ahead of where Colombia was in terms of revenues for the same period of time after launch. We continue to really be able to grow our casino business in that jurisdiction. We are very unique in our user experience, and I think it resonates very well with the players down there who are looking for something different and exciting and differentiated and high quality, compared possibly to what you see in the market. We are very optimistic and continue to believe that's going to be a very significant market for us for many years to come. Do you have anything else?

Kyle Sauers (CFO)

Yeah, no, I think Richard said it all. I mean, we've had growth that's accelerating there. Obviously, there's good competition down there, but we're doing very, very well. We've got a great partner in that market that helps us out. There's a lot of opportunity. Richard said the market size is multiples of what Colombia is. If we get anywhere close to the success that we've had in Colombia over the years, that's a really, really big opportunity for us. We're very, very excited about it.

Bernie McTernan (Senior Research Analyst)

Yep, makes a lot of sense. Thank you both.

Operator (participant)

Thank you. The next question comes from Jordan Bender with Citizens. You may proceed.

Jordan Bender (Senior Equity Research Analyst)

Hey, everyone. Good afternoon. I'll ask a question we often ask on these calls, and that's the use of cash. The share repurchases have been somewhat minimal year to date. Is there any change to the thought around just using your capital to invest back into the business, or are there any external opportunities through M&A or just new markets you would look to do, given the trajectory of different cash flow?

Kyle Sauers (CFO)

Yeah, I'll start on that, Jordan, and then if Richard wants to add anything, he can. I think on the buyback, you're right. We've used about $8 million out of the $50 million that's authorized. We'll continue to be opportunistic there rather than, you know, perfectly programmatic. I think the biggest opportunity for us in use of cash is when we have new markets open up, particularly iCasino-led markets. If we have more than one of those happening at the same time, we want to make sure we've got plenty of capital to invest because we know that returns are really, really strong. We've seen that time and again when we've launched iCasino markets. That's a real need for us to make sure we've got dry powder available.

Richard Schwartz (CEO)

Yeah, I would just add that we're committed to returning capital to shareholders as the cash flow grows in a balanced and opportunistic manner. I think, as Kyle indicated, we have a lot of emerging opportunities we think in the future are going to exist for iCasino. We want to make sure we're properly able to invest the maximum we need to kind of achieve the shares that we know is possible, given the quality of our experience. We're continuing to be balanced and optimistic when there's a situation that warrants it.

Jordan Bender (Senior Equity Research Analyst)

Understood. Thanks. Switching gears a little bit, going back to Colombia, have you noticed, we've seen, or you told us about the growth rates, pretty incredible growth, but have you seen any change in the customer? I guess what I'm trying to ask here is, as we exit the VAT tax at the end of the year into 2026, would you expect the market to look any different, or is it kind of business as usual from what you saw back in 2024? Thank you.

Richard Schwartz (CEO)

I think, you know, we're continuing to absorb the VAT tax for the players. The experience and the way they're interfacing with us remains the same. There's really no change that we would expect as we move into next year, other than we would have a much higher volume of players contributing a larger ARPMIL per player, given the reduction in bonusing.

Bernie McTernan (Senior Research Analyst)

Understood. Thank you very much.

Operator (participant)

Thank you. As a quick reminder, if you'd like to ask a question, please press star one on your telephone keypad. The following comes from Ryan Sigdahl with Craig-Hallum. You may proceed.

Ryan Sigdahl (Senior Research Analyst)

Hey, Richard, Kyle, really nice quarter. I want to stay on the last point you just said, Richard, just on Colombia, but overall, remarkable growth and margin expansion despite those headwinds from the VAT tax. As it relates to Colombia, just when that goes away next year, is it as simple as assuming that revenue will see an immediate uplift? You'll have higher GGR conversion to NGR in revenue, and then you'll have a disproportionate uplift to margins and free cash flow because there really shouldn't be much incremental cost attached to that incremental revenue.

Kyle Sauers (CFO)

Yeah, Ryan, I'll take that one. I think that's generally right. I mean, obviously, there's a lot of moving parts, and there's a lot that'll happen between now and the beginning of next year. I think if history is a guide, we're going to continue to grow our player counts and, you know, grow that player base. We're pretty confident in that. I think you're on the right point that, you know, we've been growing GGR over 50%. You're at 70% in Q2. It's actually higher than that in local currency. Prior to the VAT tax being in place, we were growing GGR and net revenue at similar paces. I think there's a big headwind for us here while this tax is in place. That obviously hits revenue and profitability. We're pretty excited for the time when that isn't in place any longer.

Ryan Sigdahl (Senior Research Analyst)

Maybe just any update from a market standpoint. I guess assume it goes away at year end, but any confidence that it won't be extended and/or could be repealed quicker?

Richard Schwartz (CEO)

Sure. I mean, the VAT decree expires, as you know, at the end of this year. Congressional action is necessary for the VAT to continue beyond that. The current president has tried in the past to get Congress to support this type of initiative, and he's been unsuccessful in that. In speaking to all the experts that we do speak locally down there with, there seems to be a low likelihood, but, you know, we always prepare for all the options. At the end of the day, the other thing to reference is that there was a case, a second hearing in front of the Constitutional Court about whether the emergency decree imposing the 19% VAT tax on online gaming to fund the effort that goes to increase growth activity near Venezuela in the border area. That topic is still pending before the Constitutional Court.

For legal procedural reasons, the court actually postponed recently its review of this decree, along with other emergency decree cases having nothing to do with our industry. We're still waiting for further information from the court as to, you know, when this year expects to issue a ruling on the tax decree. There is still a chance that they could shorten the duration of it from the rest of this year to a shorter period of time. Again, we don't have a lot of additional visibility beyond what I just shared with you.

Ryan Sigdahl (Senior Research Analyst)

Very good. Just for my follow-up, just curious any benefit or impact you saw from the Club World Cup, specifically in Latin America, but even across your business?

Kyle Sauers (CFO)

I wouldn't note anything particularly impactful there. One thing just to keep in mind, anytime we have events like that, a lot of the rest of the activity actually stops, even though you have some exciting things that can draw in new players and create a lot of attention. It actually has a negative impact on the other side.

Ryan Sigdahl (Senior Research Analyst)

Very good. Thanks, guys. Good luck.

Richard Schwartz (CEO)

Thanks. Thanks.

Operator (participant)

Thank you. The next question comes from Jed Kelly with Oppenheimer. You may proceed.

Jed Kelly (Equity Research Analyst)

Hey, great. Thanks for taking my questions. Two, if I may, just going to the growth in Ontario, I think you said it was 25% highest in a couple of years. Is that being driven more by you're taking some share from gray market operators or anything you can explain there? Just on the guidance, it kind of implies the back half EBITDA is in line with the first half. If I look historically, every year your EBITDA grows incrementally each quarter. Can you just give us a little more update on how we should be thinking about the back half and potential investments there? Thank you.

Richard Schwartz (CEO)

Hey, Jed. Yeah, so I'll take the first question. I think Kyle probably the second one. You know, we've invested a lot of focus and energy on Ontario, as we've mentioned before. We believe, given the size of the population, the market size, and it being a market that appeals to us, given the existence of both sports and casino, it's an area that we've been focusing on. I think it's hard to tell, though, whether our growth is at the expense of the gray or black market operators that compete in that market. Obviously, those numbers aren't as published, so it's hard to really track exactly how they're being impacted. All we can do is focus on the fact that we're in a really large market with upside for us and making sure we continue to innovate and find ways to grow our player base in that jurisdiction.

Kyle Sauers (CFO)

Jed, I'll hit your second question here on just the kind of EBITDA cadence. One thing we did highlight in the prepared remarks is just how successful the marketing team has been in bringing in great players, particularly in our iCasino markets, and doing so very efficiently. Having said that, we've got a lot of opportunities to do more there. We do expect marketing spend to go up in Q3 from where we were in Q2, and then likely up again in Q4 from Q3. I think that impacts some of that EBITDA cadence. Obviously, this quarter was fantastic. We had lower marketing spend. It was relatively flat year over year. It's the lowest marketing as a percent of revenue mark that we've had, even though we had our largest number of first-time depositors ever.

I expect that the absolute dollar amount of marketing to go up in Q3 and Q4. We'll still get leverage over the marketing line in Q3 and Q4. It would certainly be my expectation, but we will spend some more. That's probably the biggest driver.

Jed Kelly (Equity Research Analyst)

Was there anything to call out in the second quarter from higher holds in sports betting for a positive impact on EBITDA?

Kyle Sauers (CFO)

Yeah, so it's probably pretty well published. The sports outcomes were certainly better in Q2 for operators than they had been for a few previous quarters. In North American hold in sports, probably it picked us up around $5 million in revenue during Q2.

Richard Schwartz (CEO)

Thank you. Good call.

Kyle Sauers (CFO)

Thanks, Jed.

Operator (participant)

Thank you. The following comes from David Katz with Jefferies. You may proceed.

David Katz (Senior Equity Research Analyst)

Hi, afternoon, everybody. Thanks for taking my question. And congrats on a very strong quarter. I really would like your perspective on the prediction markets. It comes up consistently, not just in our conversations with investors and with some of peer operators, etc. Not a will you or won't you question, but what do you make of all this?

Richard Schwartz (CEO)

Yeah. David, good question. Thanks for it. We're monitoring very closely, like everybody else is in the sector. There's a lot of moving parts, as I've referenced in a lot of prior discussions with other folks in our industry and other earnings calls. At the end of the day, for us, we are a casino-first company. We don't see the same risks to our existing business as others do.

Clearly, when you're offering products that are both sports-related in similar ways, and you have your state regulators sort of in part of lawsuits against the federal approach, it's a very delicate situation to balance between retaining your existing sportsbook infrastructure at a state level and perhaps having a national approach through a prediction market approach. I would say that for us in particular, it doesn't have the same risks as others. On the contrary, if prediction markets increase the chances of tax dollar erosion for states that have legal online sports betting, I think a very real possibility is that it could accelerate the legalization of iCasino, which doesn't have the same level of risk. It provides a more protected category for states who want to have some meaningful revenue upside for the taxes for those states.

I think it could work out well for us ultimately in the sense that our top priority is legalizing more additional iCasino states and opportunities for online casino legalization. I think this could give a nod towards that being another reason why states should do it.

David Katz (Senior Equity Research Analyst)

Understood. I know I've asked this question a bunch of times in meetings and not so much here, but scale always seems to be a critical element. To some degree, it's part of your strategy in combining iCasino and sports in states where you have it available. Do you think about strategies to sort of add scale to what you have and what benefits that might bring, obviously, at some cost? Any perspectives that you can share, obviously, in an unspecific or qualitative way?

Richard Schwartz (CEO)

Yeah, sure. I'll take that one. We've been working on this platform for over 12 years. Our focus from day one has been on high quality and differentiation. If you can execute on differentiation, which is a difficult thing to do in our industry where a lot of the content is commoditized in some ways, if you can build things that are truly unique and offer a high-quality user experience, you can generate industry-leading economics like we do. I think the best way of reflecting that is in our industry-leading ARPU, which continued, as was referenced earlier, was the highest it's ever been for us in North America this quarter since being public.

At the end of the day, our goal is to build a great experience and constantly reinvest and create first-impression experiences that other products and platforms haven't designed or haven't thought of in many cases, with the idea that if a player experiences it, you can create a wow impact for them, and they're going to stay loyal to you and generate that incremental revenue that we talked about, the leading economics. The answer to your question is, yes, we think about how can we get a larger volume of players engaging and using our user experience because we truly feel that we've demonstrated the quality of it. I think you could just look at the Delaware example where we are 7x what the previous operator achieved in their best quarter at this point from the casino based on our revenue from a run rate.

I think that's not an accident. The answer to your question is we're always looking for ways to get a higher volume of customers through our platform because we do think, based on our experience and the data that we do share, that it's pretty evident that it works at a very high level.

David Katz (Senior Equity Research Analyst)

Appreciate it. Congrats again. Thanks.

Kyle Sauers (CFO)

Thanks, David.

Operator (participant)

Thank you. The following question comes from Chad Beynon with Macquarie. You may proceed.

Chad Beynon (Senior Analyst)

Hi, good afternoon. Nice quarter, gentlemen. Thanks for taking the question. I wanted to ask about, maybe let's start with Live Dealer, how you're thinking about that market going forward. It's grown a little bit in a few of the states where it's permitted, still well below what we're seeing in other markets. I'm wondering if you could kind of touch on how you're thinking about this business short and long term. Thank you.

Richard Schwartz (CEO)

Yeah, sure. Live Dealer has a meaningful part of the business segment. It obviously has a lot of room for growth, and something we've been focusing more and more on is making sure we have a high variety, not just high-quality offerings, but make sure we have a really diverse set.

We've done some things to improve the user experience by aggregating a lot of the games under a single lobby, whereas most of the game suppliers that provide that product really like to keep their games within their own sort of encapsulated protected area. Players kind of switch between the library games from the single vendor, where we, of course, want to offer our players the greatest flexibility to play the greatest variety of games that we have available on our site for Live Dealer. We also focus and invest in having exclusive content and having exclusive tables as well, integrating some of the tools available from the vendors to ensure that we can offer some fun kinds of contests and rewards to our players at the tables.

I think that as a company that has focused very heavily on casino in recent years, there is a chance that some of the sportsbook-first brands have a higher percentage of players they can cross at a table game than we do because we are not having as much of a focus on the sportsbook player as perhaps others are. That just means that we have to make sure that we develop an experience for the core casino customer that really likes that type of product. At the end of the day, the product is here for a reason.

It's because a lot of players will trust the experience of seeing with their own eyes the outcome through a live-streamed experience versus maybe them feeling like with a random number generator, they don't feel a trust is perhaps missing and why maybe the dealer ends up with a 21 when they have a 16. I think there's this trust element that Live Dealer really has done a great job with. We have some partnerships we've been working on with some key partners there as well to try to bring some innovation to that category. All in all, we are bullish on that, up on Live Dealer. We've made a lot of steps to try to make it a better experience for our customers, offered exclusive games, exclusive tables, and really making sure we offer a very robust offering and merchandise as well for our customers.

Chad Beynon (Senior Analyst)

Thanks, Richard. On the margin outlook, that was helpful. You know, talk about the back half as it relates to marketing certainly makes sense given the customer acquisition cost to LTV. G&A was down first half of 2025 versus first half of 2024. Wondering if there's anything to call out there and how should we think about that in the back half and how it feeds into the guidance. Thanks.

Kyle Sauers (CFO)

Yeah, sure. On G&A, last year in Q2, we had a little bit of a headwind in foreign exchange. The reverse was true in this year's second quarter, although a more modest amount. I'd say, beyond that, we're continuing to try to stay disciplined with the investments and driving efficiencies there. I think we've probably said this for some time, but we feel like we've got the right foundation in place to drive the business in the G&A area. We're starting to leverage that pretty nicely this year. I would expect G&A to continue to rise sequentially as the year continues here, but also get leverage over that line item in both Q3 and Q4.

Chad Beynon (Senior Analyst)

Great. Thank you both. Appreciate it.

Kyle Sauers (CFO)

Thank you.

Operator (participant)

Thank you. The next question comes from Dan Politzer with JP Morgan. You may proceed.

Dan Politzer (Analyst)

Hey, good afternoon, everyone. Thanks for taking my question. First, just to follow up on the guidance, I think the second half implied revenue growth is about 10%-12%, given where you fall in the range, which compares with the first half growing around 20%. What's driving that deceleration? Are you just being conservative with Colombia, or is it lapping very strong growth last year, or anything to give more detail on what's driving that?

Kyle Sauers (CFO)

Yeah, you hit on a couple of them. I think we talked about this a little bit on probably our previous call, but it probably makes sense that our revenue growth is a little bit lower in the second half. A couple of things. One is we lapped Delaware at the beginning of this year. As this year goes on, it's logical that the growth rate's going to be or could slow as the year goes on for Delaware. We've got, I guess it's five months of history now with the temporary VAT tax in Colombia. There's still some level of uncertainty of how our competitors might approach the market, how players might react. I think Richard commented earlier, we've seen really good player engagement. Obviously, that's proven out with the player growth that we've had. We want to leave some range of outcomes there.

The second piece on Colombia is we actually have a little bit tougher comps in Colombia in the back half of the year because of the Copa America last summer. We just had massive player acquisition. In Q3 last year, Colombia's player count grew well over 100%. We're starting to lap that. That means the growth rate will be a little bit tougher in Colombia. You know, obviously add the VAT situation on top of that. Just thinking about it sequentially, Q2, as I just mentioned on a previous question, we had a little bit of favorable help on sports outcomes. Maybe we'll get the same in the back half, but that was around $5 million. That's something to consider from a sequential perspective. I think we just want to be mindful that we're in some fantastic high-growth online casino markets in North America.

We're clearly very bullish about the opportunities, but we just want to leave room for the possibility of slowing growth as the markets mature. I think we've all seen these markets perform really well, New Jersey being the best indicator probably of how these markets will perform long-term. We just want to make sure we've got some level of balance built into the guidance there.

Dan Politzer (Analyst)

Got it. That makes sense. Just following up in terms of the cost structure, I think the cost of goods sold, it's around 65%± of your revenues. It seems like market access fees are increasingly commoditized. Is this something that could be a material driver as you maybe renegotiate some of these market access agreements in the coming years? I don't know if there's any kind of timetable or any parameters through which we could think about that through.

Kyle Sauers (CFO)

Yeah, yeah, it's a good question, Dan. I think you'd have to look at that kind of sports versus iCasino. There may be a decent amount of open licenses in some of these markets for sports that had more licenses and have had some attrition to operators. That's not necessarily as true on the iCasino side. We may see some opportunities there over time, but I'm not sure that I would count that as a material driver. I think we've got a really good path to continuing to improve our gross margins fairly consistently here for the next several years. The revenue mix continues to trend towards our markets that are higher margin. Then just structurally, we're able to improve costs with a lot of our vendors.

As we get scale and more new vendors come into the market and the market matures a little bit, that's an area that we've got opportunity to improve. I feel very good about where our gross margins are going to continue to go. In that particular area, I wouldn't think about that as a big needle mover for us.

Dan Politzer (Analyst)

Got it. Thanks so much. Nice quarter.

Kyle Sauers (CFO)

Thanks, Dan.

Operator (participant)

Thank you. The next question comes from Joe Stauff with Susquehanna. You may proceed.

Joe Stauff (Senior Equity Research Analyst)

Thank you. Hello, Richard, Kyle. I wanted to ask you on Colombia, Latin America in general, in terms of your segment there, and just kind of revisit your approach to Colombia. Obviously, you had significant growth in GGR in the quarter and flat NGR. That was a similar case in the first quarter. I realize you're essentially paying the tax. I would imagine some of that user growth that you're generating there is because you're paying the tax. Could you just kind of revisit that strategy and as best you can, maybe explain it to us about what competitors are doing and what could shake out with that market stabilizing at some point later this year?

Kyle Sauers (CFO)

Yeah, Joe, just one thing I'll make sure is clear to you and others is that all of the market leaders are deploying the same bonusing strategy at the moment. From a competitive standpoint, we've felt like that's the right move to make, and it's allowed us to serve our customers very well and grow that customer base pretty significantly. I wouldn't suggest that our ability to grow GGR or grow our player base is because we're doing something particularly more aggressive than others are. I think it's about the product that we're delivering and the experience we're delivering for customers. We continue to evaluate the strategy there, and it is a temporary tax in place. We continue to monitor everything around that and what our competitors are doing.

This is what we feel is the right place for us to be at the moment for the long-term health of the business.

Richard Schwartz (CEO)

Those are a couple of things that we are.

Kyle Sauers (CFO)

Please.

Richard Schwartz (CEO)

Sorry, Joe. A couple of things that we are doing well there, I think, that are allowing us to perform well. Again, owning your own technology allows us to make changes and implement new concepts, new features, new programs to deliver custom experiences that maybe help us to address sort of the situation. What I mean by that is, for example, we've really focused on some payment methods that are unique and new to the industry that we've been able to bring forward after many years of work to try to bring a capability to our experience that the players there really value. That's one example. We've also been really focusing on ways to reduce the deposit turnover to allow ourselves to kind of optimize the performance of the players and minimize the impact of the VAT tax to reduce the amount of taxes we have to pay.

Again, using our technology and operational team, I'm embracing sort of novel ways to engage with customers to deliver results, incentivize customers in certain ways. We think some of that effort's really making a difference for us.

Joe Stauff (Senior Equity Research Analyst)

Got it. Kyle, you had mentioned in the previous answer that you have a tougher comp in the third quarter in terms of the 100% user growth that you had in Colombia. Would you expect this pattern and what it looked like in the first and second quarter to return in the fourth quarter?

Kyle Sauers (CFO)

I think you're specifically talking about the headwind in Colombia growth that I mentioned just because of the user growth. Keep in mind, we had a bit of a kind of a step change in our user counts really starting late June last year when Copa America came around. We just had really massive player growth, and that has continued. We've clearly been able to continue to improve on that. I think that the headwind for that particular piece is still there in Q4. I just want to be clear. We're expecting Q4 to be our biggest revenue quarter this year. Again, I don't want there to be any confusion about that.

Joe Stauff (Senior Equity Research Analyst)

Okay, thank you.

Kyle Sauers (CFO)

Thanks, Joe.

Operator (participant)

Thank you. There are currently no other questions queued, so I'll pass it back over to the team for closing remarks.

Richard Schwartz (CEO)

Thank you again for joining us today. We're excited about the road ahead and look forward to sharing our continued progress when we report our third quarter results this fall.

Operator (participant)

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