Rush Street Interactive is facing potential revenue decreases in Colombia due to a new 19% VAT on online gaming deposits, imposed by President Gustavo Petro amid an internal commotion decree. The temporary VAT is subject to review by the Constitutional Court, and the company is evaluating its impacts on operations, projecting a potential decline in customer demand and revenue.
Rush Street Interactive (RSI) has disclosed in a regulatory filing that Colombian President Gustavo Petro declared a state of internal commotion on January 24. This decree, prompted by violence in the Catatumbo region, grants the president emergency powers to issue financial decrees which can bypass the usual legislative approval process. Subsequently, on February 14, President Petro introduced a temporary 19% Value-Added Tax (VAT) on player deposits for online gaming operators in Colombia.
These presidential decrees will be subject to automatic review by Colombia’s Constitutional Court to ensure their constitutionality. Past similar decrees have been invalidated by this court. If the VAT is upheld, it may remain effective until December 31, 2025, unless limited by the Court to a maximum of 180 days. Conversely, if deemed unconstitutional, the decree would be rendered invalid.
Rush Street Interactive, which operates real-money gaming in Colombia, is assessing the potential financial impacts of the VAT decree. The tax may diminish customer demand for regulated online gaming services and subsequently decrease the company’s revenue from Colombian operations, which currently represent about 13.3% of overall income.
The company is proactively analyzing the decree’s ramifications on its financial performance. While the potential effects of the VAT remain uncertain, Rush Street is exploring strategies to mitigate operational and marketing expenses to alleviate possible revenue declines. They remain committed to growing their Colombian business despite these short-term challenges, leveraging their operational expertise and experienced management team to foster long-term growth in Latin America.
Rush Street Interactive is navigating potential revenue impacts due to a newly imposed 19% VAT on online gaming in Colombia. The company’s operations currently contribute 13.3% to overall revenue, and while they are assessing the risks posed by this decree, they focus on strategies to minimize costs and continue growth in the region. The company maintains confidence in achieving long-term goals despite regulatory uncertainties.
Original Source: www.tipranks.com
