Great. Good morning, everyone. Thank you for joining us. My name is Bernie McTernan, one of the internet analysts here at Needham & Company, and my pleasure to once again be joined for a fireside chat with the team at Rush Street. We have CEO Richard Schwartz, CFO Kyle Sauers. Thank you both for joining us.
Thanks for being here, Bernie. Good morning.
Maybe just to start, you know, it's always helpful at the start of each year to reflect on the year past. So as you think about, you know, some of the major achievements for Rush Street in 2024, what were they?
Sure. Well, first of all, we had a record financial year, record revenues, record EBITDA, cash flow, records really across the board. Improved efficiency is the second thing I'd point to. Not only did we achieve records, but we did it with a declining marketing investment. So we've been able to achieve first-time record global records for our company and first-time depositors as well. Monthly active users, which also accelerated quarter after quarter throughout the year. So we were able to achieve stronger results with less investment, which often is rare in this industry to decrease marketing, increase revenues at the pace that we did, and at the same time increase profits the way we have is a rare achievement. I would also point to our successful new market launches.
You know, we launched in Delaware and Peru, and Delaware has sort of been an incredible result for us, where the prior operator was generating about $14 million at the top end for a year. We're, you know, approaching $100 million. So amazing result that I think is attributable to the quality of the product and the service that we offer. And then something that I think is hard to ignore is really our enhancements we made on the user experience side. Product innovation continues to be the key reliance for our business. We've done it from day one, and we have a lot more planned ahead for the next year. So I think the best part of 2024 really might just end up being how well it sets us up for 2025 and beyond.
Yeah. No, that's great. Well, and Richard, certainly one of my goals for 2025 is to have my background look as good as yours next year. Pretty contrasting right now. Great, and then so just wanted to dive into recent trends. You know, December and November headwinds for OSB hold, well known at this point in the market, especially with FanDuel coming out or Flutter coming out and lowering their guidance. Anything to call out that Rush Street saw specifically?
Yeah, Bernie. So I think the first part is we like, and I think investors like, that we have less volatility in our revenue results because of our focus on iCasino, which, you know, with 70% of our revenue coming from iCasino, certainly you can have some variability in hold and results, but it's a far tighter range. So NFL results that are well known at this point in the industry aren't as impactful for us, and probably in either direction. But the other piece is that a good chunk of our sports revenue comes from Latin America. So not only do we have diversification between iCasino and sports, but then within sports, we have more diversification on global sports. So a lot of exposure to soccer and other sports in Latin America.
The reality is, while December outcomes for NFL have been pretty rough, December outcomes for soccer were actually fairly book-friendly. That's a good offset for us.
That's great. And so one of the questions we get from investors a lot is, like, is this just bad luck, or is there some structural reason why we're seeing this underperformance, you know, versus structural hold and versus expectations in the industry? Do you guys have any thoughts?
So, you know, I don't know the underlying math behind how everyone comes up with their structural anticipated hold. I don't think that the outcomes in December are because of, you know, large-scale mispricing in NFL. NFL has been around a long time, and there's a lot of really smart people, a lot of data, a lot of good technology in this industry. So I don't. I think it's more about the outcomes. I mean, the reality is you could probably find a small handful of games during the season. If they would have flipped the other direction, December and October would have looked a lot different. So I don't think that it's a structural issue.
Right. I mean, I know FanDuel called out when they lowered their guidance that it was the best, I think it was the best, the favorites down in 20 years.
Yeah. Yeah. So I think the question investors have been asking is, should all of the lines be pushed more towards the dogs, and should the over-unders be a little bit higher? I think it's more about just the actual results and less about pricing.
Okay. Understood. Also want to touch on tax increases. You know, the news from Maryland yesterday. So wanted to, that the governor proposing going from 15%-30%. So A, just wanted to get your thoughts there. And then B, wanted to get your thoughts on how Illinois is going in terms of how you guys are working to mitigate those, the higher taxes that you pay. I know it's a progressive tax, so it's not as burdensome to you guys, but just how it's going to mitigate those, albeit modestly higher taxes.
Sure. Yeah, I'll start there. Then Kyle, feel free to add anything else you want in here. It's really tough to predict accurately any of these legislative outcomes, you know, in terms of what we saw in Maryland. Maryland, what we do know is that what we do share is that, you know, states will generate far more taxes from regulating iGaming than from raising sportsbook tax rates. Plus, when you raise sportsbook tax rates, you'll see fewer players playing on licensed sites over the longer term. This hurts the states over the longer term. You're not just impacting taxes, but you're going to have less protection for consumers and lower overall operator investments in those markets, which is what you're going to start to see in Illinois.
Although the progressive tax rate here maybe doesn't impact everybody the same way, so you're going to see more of an impact for those that are paying the highest tax rates. You know, I think at the end of the day, what you are going to see and what you are seeing is that there's less in Illinois, as you referenced. You know, it's hard to know exactly what others are doing, but you get a pretty good sense that others are investing less in marketing. But what you also see is more and more players are going to be attracted to the unlicensed sites like the sports sweepstakes sites and the offshore books, where the state loses on all accounts. There's no benefit when you have no protections for consumers. You're not generating taxes, and you're not getting that same level of investment from regulated transparent companies.
So I think over the long haul, you're going to realize, as Europe did, there's a lot of negative things that come from this. It's not a quick fix solution. And really, what it comes down to is iGaming is going to generate multiples more in taxes and protect consumers as well. Players are also playing on these sweepstakes sites that are unregulated and unlicensed. So, specifically in Maryland, we're less impactful for a company like us. We don't have a significant revenue coming from sports from that market. But nonetheless, I think over time we're going to see that there's an opportunity to realize that the growth in this industry is going to come from channelization, having a higher percentage of players in a state playing a legal licensed regulated site versus the alternatives.
When you tax higher, you do drive players to those sites, which is something that hasn't been seen yet in the U.S. because it's too new of a development. But you have over 20 years, and many research reports show what happens in Europe when you raise the taxes too high. So that's another discussion for another day. But I do think there's something we are closely monitoring. And we do think when you talk about taxes being raised for sports, that we, you know, the opportunity is to say, hey, instead of driving these traffic to these unlicensed sites, let's generate iCasino revenues and turn the conversation away to how the state can do better to protect their consumers and generate the taxes they're looking for.
Yeah. No, and that's a great segue to where I wanted to hit next is just iGaming legislation or iCasino legislation. We've seen a handful of bills early on this year. What's your hope that we could, that this could be? And we've been waiting for a while for greater iGaming legislation. I mean, Connecticut's been the only one who's gone recently, and that was even a couple of years ago. So what's your latest thoughts on the potential this year that we could see a state get over the goal? And especially in New York. I mean, New York's the big one that, you know, I think could make a lot of sense, but we'd love to get your thoughts.
First, it feels like momentum is now in our favor, which hasn't always been the case in terms of legalizing iCasino. We get an outsized benefit as well when iCasino does get legalized because of our heavy emphasis and capabilities in the iCasino space in particular. You know, going back to the same positions, and I'll address New York in a minute, states want more taxes. They want to protect their consumers. Same notion I just shared a few minutes ago. Knowing the sweepstakes sites, these sweepstakes casino sites have proliferated everywhere, and they're generating literally billions of profits for the offshore owners who are not paying casinos, not paying taxes, not protecting consumers. You have underage gambling issues as well with many of those sites. That's something we feel operators and legislators are rallying around that concept of actually generating taxes from these activities.
That is going to be increasing this opportunity to increase the pace of iGaming legalization. You referenced, you know, a couple of some states, but don't forget Alberta is very well on its path to legalizing iCasino later this year. So that's an exciting development. In terms of New York, you know, I recently was on a podcast co-hosted by Senator Addabbo. Although the episode I was on, it hasn't yet published, it was clear from the interview and my prior conversations with him that he really understands the iGaming industry well. The opportunity, if New York legalizes it, is understood, and he's going to make another strong push this year, and I think there's excitement there.
We also have to mention that for the first time recently, in the last week or two, Governor Pritzker of Illinois also came out publicly and said, "We have to look at iCasino," essentially. I'm paraphrasing, but that was a really nice development as well. So again, if you have states like Illinois and New York, where we have a really, really strong opportunity in both those jurisdictions, if either one of them were to legalize, it'd be tremendous for our company. So I think there's just a lot of progress being made and some stronger arguments being made. And I do think that proliferation of this unlicensed gambling is really going to help drive that issue in a way that perhaps hasn't happened in the past. At the end of the day, you could tell a legislator it's already happening in your state, which is 100% true.
It might as well protect your consumers and generate taxes and understand and have really high-quality players involved in the process than just sort of have it a free-for-all.
I want to make sure I got you right. You think the sweepstakes, it's like billions of dollars of, like, effectively GGR that they're generating?
Yeah. A couple of them are generating north of $500 million of profits. So yeah, it's not just revenue. It's a very, very profitable lucrative business because you're generating essentially running online casinos, which have chance. You know, the definition of gambling is, is there consideration? Is there chance involved? And is there a prize? And those, you know, sites essentially meet all three of those criteria. And yet, you know, they're operating across almost all the states. A couple of states have asked them to leave. Regulators have written some letters. Attorney generals may start to enforce that. But the vast majority of states, these operators are still operating in. And if you don't pay taxes, you can generate a lot of profits, obviously, much easier.
Understood. And then and so we've written about in the past how we really think we're kind of in like the highest risk point for online sports betting or announcements on online sports betting taxes because this is when governors are submitting their budgets. When do we start to get? Is there a specific timeframe we should be thinking about when iGaming legislation would be more likely to happen?
We're starting to see some iGaming bills introduced, like you saw one in Virginia like a week or two ago. I think this is the time of the year when you start to do that. You still have some work to do with some states to build momentum across all the stakeholders in the state, and there will always be a stakeholder too probably opposed to it who wants to kind of sustain the status quo, not really digitalize their industry, but I think the momentum is so strong because in the states that have legalized iCasino, you know, almost 80% of the tax is coming from iCasino versus sports betting, referring to markets like Pennsylvania, New Jersey, Michigan, so it's become increasingly clear that iGaming is the best route to generate revenues, increase profits for a state, and protect consumers.
And by the way, it's really easy to add iCasino if you already have a sports framework in place because it really is a server-to-server connection. It's already been tested and proven by testing labs across other jurisdictions. You replicate the same thing. So you can add iGaming extremely quickly in a market where you already have licensed companies, licensed operators, already have a regulator managing, overseeing the gaming industry and the online sector. So it's a really, really quick and simple add to add iCasino, and it does fill budgets more effectively than almost any other method there is because you already have all the framework in place with minimal investment and cost to kind of add iCasino.
Understood. Wanted to move over to one last recent development. You recently signed on poker legend Phil Hellmuth as an ambassador for all verticals. In the past, I believe ambassadors have more focused on like the local sports heroes, so think like a Jerome Bettis or Bobby Valentine. Why does Phil make sense and how do you expect it will impact the business?
We're really excited about Phil because at the end of the day, it's a gambler audience that likes to play poker. And that same audience will play all verticals, not just poker. So I think a lot of people are sort of the impression that's all about poker, but truly it's about VIP customers. And those VIP customers are going to play sports, casino, and poker. And he's one of the most famous gamblers in the world, respected because of the skills that have allowed him to achieve the level of fame and success that he's had. And he's a very dynamic, high-energy personality that people want to watch. And whenever he's been on our Poker Night in America TV show over the years, his episodes are always the highest watched.
And it's pretty clear that he has an audience and people like to follow him because he's interesting and he is smart and he's, you know, developed a reputation, you know, that's enjoyable to watch. So at the end of the day, we're going to have a meeting with VIP customers, bringing our customers to the Super Bowl, to other fun events, playing poker with some of our VIPs. He'll be showing up at our partnership, land-based casinos. But at the end of the day, he has a great way of communicating with consumers. And we think our product's really amazing. And we think with him and the attention he draws, we can improve the brand awareness we have with the audience that matters most to us, which are gamblers.
You guys do have poker on the platform?
We do. Yeah. We built in-house a really outstanding poker platform that launched recently in Pennsylvania. It's really tough to build a poker platform. Many companies that start that effort don't finish it. We're very proud of the quality of what we deliver because it's rare to enter a market with a new platform in the first place. To have one that's at that level of respect that we've received is incredible. We have Phil Galfond, another poker legend who's very well respected in the industry, is also a part of our team because we had bought the source code to start the platform from a company that he had started. So he's also part of our, he's an ambassador to us and part of our strategy. So we have a really, really outstanding strategy with poker.
Again, even the poker platform is not about poker revenues in the way that maybe traditionally people looked at it. The poker revenues are relatively small, as we know. It's really about attracting a new audience, a player. Like I said, the same audience that likes to watch Phil Hellmuth on poker shows is going to be the same audience we're going to attract to online poker. And once they're playing online poker, we've created a mini game window that lets you, while you're waiting between hands, is letting you play table games and slot games and everything else. So we're really doing that cross-sell is our focus. And our number one goal is to attract new customers to the online poker platform because of having poker.
And then, of course, keeping players with us because in the past, there were some players that really love our platform for casino and sports. When it came time for them to play poker, they would have to leave the competitor's site. Now we retain them with our site by having a poker platform.
Yeah. No, that's great. That's really smart. And what's the path for launching? You said it launched in Pennsylvania. Should we expect it to be going, you know, more nationwide over time?
Yeah, that's definitely part of the plan. So we haven't shared publicly what those are exactly, but you can imagine that ultimately the key is to have as much liquidity as you can across as many states as possible.
Right. Got it. Makes sense. Okay. We'll be on the lookout for that. Want to go back to online sports betting. So another key debate that we always, you know, have with investors is just on market structure. And so as a smaller operator, excuse me, smaller operator in the business, what do you think is the ultimate market structure of the U.S. OSB market? And probably more importantly for you, do you think it's different in iGaming structurally?
Sure. I mean, with our, you know, we share a 9% or 10%, let's say a little less than 10% on iCasino blended rate across the U.S., you know, I think that it's really clear that you don't have to be on the podium of, you know, to have a very successful, very lucrative opportunity for the business, so on the online sportsbook side, I do think you're likely to have fewer operators, you know, say 5-10 operators, and as I mentioned in the context of casino, but in the context of sportsbook, we've proven that you don't need to be on the podium on sportsbook to operate profitably in the United States. On iGaming, I do think it's slightly different in that you have more local operators who have land-based databases who can perform well.
So there's also more room on the casino side to innovate and differentiate iCasino, although it does take a unique skill set to do that, which we have. You know, we're evidence that without a big brand or a big database, that you can earn a significant share and, most importantly, profitability by offering a high-quality experience in the casino space. I think at the end of the day, when you're playing casino, people are on that device a long time, and they don't necessarily care as much about a brand as they care about what experience are you able to offer them. Are you able to offer them something that is fun that you can't get anywhere else? And the answer with us is yes, we do both. So I think that's part of why we've been able to have that success in the casino space.
Yeah. No, makes a lot of sense. What about the competitive intensity in the industry right now? You know, how competitive is this NFL season? Yeah.
It was competitive as usual. It's always competitive. Yes, our acquisition rates continue to be really strong through the end of the year. So we've had a great result despite the competition. As I've shared before, we've invested, you know, in our marketing team, developing that team further and enhancing it and the capabilities. We've invested a lot of marketing technology to help us make sure we're tracking all the data and can in real time respond to things when there are opportunities. So we expect continued success in our player acquisition strategies. But yes, it is competitive. It always has been competitive. I would say it's nothing different than historically.
Does anything change, though, when the player-friendly outcomes are happening? Like, or do you see operators maybe, you know, leaning less into promotion or sales and marketing or, you know, and FanDuel kind of alluded to that, but just like broader in the industry, do you think it becomes less competitive or it's really not that impactful?
We didn't see that it impacted the competitive environment in a meaningful way. I think there is a tendency in the industry to believe that, you know, executives in the industry, like such as ourselves, to kind of believe that the odds will bounce out over the longer term. So you don't see a really extreme, you know, behavior. But I do recognize that week by week, we all make our adjustments just like you would hope a coach would do during a football game. You got to make your real-time adjustments.
Can't wait to see what Mike Vrabel does next year for my bets. Okay. And then last one, just on market structure. Just so we talked about the U.S. where it's, you know, 5-10 operators for OSB. It makes sense that there's, it's more spread out for iGaming. What about in LatAm? What kind of, you know, when you're operating in some of these markets, what structure are you seeing?
Every country, so every market has their own set of competitors, mostly local, who really specialize in a single market, which is easier to achieve when you have a single operator focusing on a single market, especially when you have a large local ownership and local teams. While there are a few operators like us operating in multiple markets, it's really challenging to do so successfully in multiple markets. We're very proud that we've been able to achieve that. It helped that we got into that region early with a single brand that's used across that region. In particular, it really helps that we hired and maintained a very high-quality operations team covering all aspects of the business. It's not as if we are sort of running things from the U.S.
You know, we give a lot of ideas and guidance, influence, and make sure that when there's things that are working in one market, one region, we share it with the other region, ultimately having a very strong, robust, comprehensive team down there across all the functions of operations and legal compliance, business development, product, all have a local presence in Latin America, which really helps to make sure that you are looking at the market from a local standpoint. So the benefits that these local operators receive from being in a single market and having a focus, we are able to replicate, which I think has been part of our success down there. It helps us in the U.S. market as well. It really helps us that in the U.S. market, we have to compete against really high-quality operators who invest very heavily in products like we do.
So we are able to bring those innovations and that enhanced user experience that we built for the U.S. market to our product in Latin America because we do launch our single platform in all of our global markets. And every two weeks, everything's updated globally. So we have an improvement for the U.S. We get that benefit in LatAm. So we stand out more in LatAm markets because of the quality of our experience.
Yep. Yep. Makes a lot of sense, and I should have said from the onset, but as for the folks on the webcast, if you do have any questions, please type them in and we'll make sure to weave them into the conversation, but wanted to just move over to U.S. I mean, the user growth this year has really been incredible, accelerating every quarter. Would love to get, you know, really just your insights in terms of what's driving these strong results year to date.
Yeah, I'll take that one, Bernie. You mentioned this year they've been accelerating. It actually goes back to the back half of last year as well and continued acceleration for, I think, six, seven quarters in a row here. So we're pretty proud of that. It really does, and Richard talks about this all the time, but it starts with the product and the player experience. You know, we're very, very confident. If we can get people to our app, to our website, we're going to keep them around. We've been bringing in a record number of new first-time depositors this year, and we've been doing it at, you know, 30%-50% lower than the year before. So similar type spending gets us a heck of a lot more players, obviously. But then the trick is you got to keep them around.
And I think that's evidenced through those increasing monthly active users. But also we're doing all that and keeping player values high, actually increasing our player values. So we're diluting our player base with all these new players, and we've been able to keep our player values up. And I think you don't see ARPMAU like ours if you don't have really, really strong retention. You know, at roughly $380 last quarter in average revenue per monthly active user, you know, that's multiples of what our competitors talk about. So I think it says a lot about the product and the player experience.
And if we think about those like cohorts for ARPMAU, I mean, are they continuing to grow or like just how should we think about, you know, that comment in terms of that, you know, it's not being diluted despite, you know, when you bring on a player year one, it's probably lower than the average.
Yeah. So exactly a very good point. So as players mature or the cohorts mature, we see retention continue to increase. So by the time a player cohort is three years old, the players that are still with us, super high retention, we're getting a larger share of their player wallet, if not all of that wallet. So that helps drive the average ARPMAU higher. And you're also right at the beginning of a player lifecycle, you're giving more bonusing. They may be moving around to multiple apps or multiple sites to see where they want to gravitate to. So those player values are lower. So that's the great thing about what we've been achieving here is we're adding so many players, diluting them with the ARPMAU with bonusing, but also players who aren't spending as much time with you.
Our expectation is that those players become more valuable over time as they continue to spend more time with us.
Got it. Makes a lot of sense. But so then I believe guidance implies a sequential step down in growth for the fourth quarter. You know, I know everything doesn't grow to the moon, but like anything contemplated here that we should be aware of and especially maybe how we're thinking about 2025?
Sure.
I tried to get 25 guidance from Kyle. I think that's a right guess.
Good luck.
Yeah. Yeah. I'll pass on giving Q4 guidance today, so if you go back to our earnings call at the end of October for Q3, that's when we gave Q4 guidance. So first off, we were coming off a Q3 that had a little bit of a revenue growth benefit from better than expected sports hold, so maybe adjust that down a little bit to compare Q4. But we also noted that in October, which we had under our belt mostly at that point, it was hurt. Revenues were hurt by player favorable outcomes in both football and soccer, so sports were working in opposite directions in Q3 and the start of Q4. And then the other thing we pointed out on that call was just that the strength of the US dollar had created some modest headwinds going into Q4 for Colombia and Canada.
So that was baked into that guidance as well. So since that time, since we had that earnings call, we've seen in the public data that, and we talked about it earlier, that NFL results were increasingly favorable to players in December. Soccer results were good for us in December. But also I'd point out the U.S. iCasino data for the industry that's come out. And then for the industry and also for, in particular, for RSI has been very solid during Q4 in those state reports. So that's a positive sign.
Yep. Yeah. No, that's great. And if we think about kind of your, I mean, if I'm trying to dissect your revenue growth between handle, hold, and promotion, if we think about iCasino, I mean, the hold's not moving, you know, promo probably helps over time. But we'd love to get your thoughts on more of the OSB side in terms of the major drivers there if you can break down the three. And if I'm characterizing the iGaming correctly?
Yeah. And I think I can, there are opportunities to improve hold in iCasino, but it's not as meaningful as you point out as changes you can make in sports. So if you think about the handle, the hold, your hold rate, promos, the reality is all of those were contributors for us in 2024. We grew handle really nicely. That translated to even higher GGR growth because we did improve hold for the business during the year, even despite the NFL challenges in Q4. And I'm assuming this is true for most of the industry, but we continued to refine our bonusing to make sure that the right players are getting bonused in the right way and it's not going to those that maybe aren't as valuable or aren't as sticky for us.
But then the other part I think is, and back to those player values, as markets continue to mature, you should naturally see less bonusing. You're not diluting with new player bonuses as much relative to the size of your revenue pool. So all that means we, you know, we converted more of our GGR to NGR during 2024. So I think the answer is it's all of those that you asked about that are impacting the business positively.
Yeah. And so you mentioned, you know, right bonuses to the right players at the right time. I mean, when the industry first started, it was that shotgun approach where, you know, everyone would get the same bonus. Then, you know, it felt like it took a while, but then companies started talking about player segmentation. Has there been any, you know, further advancements just as, you know, Gen AI and other machine learning technology has gotten better where you're really able to personalize and go deeper and segment even more than you were, say, two years ago?
For sure. I'll tell you, we always felt like we've been pretty good at it. We've gotten much better at it. We're using data a lot better to decide where those bonusing, that bonusing should go, when it should go to them. Richard could talk for, we could use the rest of the time, Richard talk about our promotional engines and when that bonusing gets to people and doing it in real time and different ways to bonus people. But we've gotten better, but there's still so much room for us to continue to get better at. So that's one of the things that's kind of exciting going in the next year is that's an area for us to improve upon. So it doesn't necessarily mean less bonusing or less good things for players. It's just making sure you're fine-tuning it.
Fine-tuning it can turn into a lot of improvement in that, you know, generating, turning that GGR into actual revenue.
Right. Okay. Makes sense. Wanted to skip down toward, talk about technology. I mean, product has been the answer to a lot of the questions here. So just maybe a general question. What were some of the new products and innovations that you launched in 2024 that were most impactful, and what's the focus as we turn the calendar to 2025?
Sure. New cashier system. Player depositing and the ease of depositing and the smart way to ensure that a depositing with less, with least amount of friction, really important improvements we made in the last year. New game lobby, players faster, smoother, easier to navigate, how players can find the games they want, and it kind of hits on the personalization topic that you raised previously. Really nice improvements there. On the features itself for Casino, what's made our experience so completely unique compared to others is that when you're playing a slot game with us that's available on 20 other sites, we have pop-up experiences where the game just invites a player to do something else, which is basically have another chance to win a reward, and so we keep building new features like this.
The latest one was a sitewide jackpot system where you're playing a, let's call it a monopoly game, a slot game that's available on 30 sites or 20 sites. Same experience. For everyone else, there's nothing else that happens in that game besides just playing that monopoly game the way the supplier built it, but in our case, we say intervening real-time moments, we invite the player to come play a jackpot game that we built ourselves for a chance to win a life-changing jackpot. This feature we launched was hugely popular. In fact, it's our most used new feature ever, so really just came out about a month ago to all of our sites. We've had it working on a fewer number of states initially, and then we expanded it to everywhere, so really excited about that. Another major launch we did this last year was a trivia module.
We pioneered community in online gaming. Players chat with each other. They also chat with our team that are acting as moderators in the chat room, and so we said, hey, these players love to do manual. We would run manual trivia questions. Now we've automated it to make it much more engaging, more fun, more elegant, and so players are loving that. In sports, we did this Prop Packs for the NBA, which is where you give away players, get extra digital player cards for players who are betting on in a game, and if those players, they get a card for like a basketball card, if they perform better than expected on the points in that game, they win an extra bonus.
It's almost like player props in the form of a very exciting delivery method of delivering it in the form of a basketball card for a player. Poker platform we talked about earlier. So those are some really big things we did in this last year. In terms of what we're looking forward to next year, we're really this year, really improving our core platform, always doing that. You can never stop doing that, which I think some of these companies feel like they get to a certain point and then you're going to kind of just focus on other things. It's perpetual investment needed for that, but enhancing the functionality, reducing friction, increasing speed, and of course, new innovations, right?
Like I described, some really exciting ones come up down the path in casino that we think are things that have never been seen before in the regulated online casino industry. So we're excited for those developments. And then other thing we have to talk about for 2025 is just new market opportunities. We talked about Alberta. There's another couple of other new markets opening, likely opening up for us in other jurisdictions. So, you know, when you have a new market that you have to expand, that does take some, it's exciting, but it does take some resources to support those launches properly.
Yep. That all makes sense, and great to hear. Excited to see some of those innovations hitting the platform. Maybe I know we're only a couple of minutes left. I want to make sure we dive in on LatAm at least a little bit more, and really, you know, Colombia has been such a strong grower. I want to focus on Mexico and really like the path for Mexico being the next Colombia. I know you expected to have second half acceleration in 2024. Has that borne out? And then what's the path for Mexico to be a larger revenue contributor or at least to the LatAm part of your revenue in 2025?
Yeah. You're right, Bernie. Mexico is a really big opportunity for us, and we're trying to capitalize on that. It was a great year in 2024, and the second half was also a great force in Mexico. So it's a much bigger market. So, you know, if our success in Mexico comes close to mirroring what we've done in Colombia over the next several years, that'll be a huge win for us. So of our growth, maybe I'll just segment a little bit just to give a little more detail, you know, about 85%-90% of our revenue in LatAm is still coming from Colombia, but we're having really strong growth in both of those markets. Peru, as you know, just came online. I thought I'd throw that one in there, but that's another nice opportunity for us.
When you look into 2025 on Mexico in particular, it'll be a bigger absolute contributor to growth in 2025. We've done a lot of the heavy lifting down there to make sure that we're in good shape with the product. We're seeing a lot of momentum with player counts. The brand is building. So we're very confident that we've got the right user experience and the right team in place to see a really nice 2025 out of Mexico.
Okay. Great, and then wanted to make sure we hit on capital allocation, you know, with all this EBITDA that you guys are generating and leading to free cash flow, you know, cash building up in the balance sheet. There's no debt. Just how are you thinking about, you know, the priorities, whether it's, you know, reinvesting back in the business, buying back? Is M&A something that you're thinking of? We'd love to get your thoughts.
Yeah. Go ahead.
No, I'll just start. Yeah. We have, you know, very little in the way of capital investments. And as you know, we have a strong, very strong cash conversion. So we continue to look at tuck-in M&A opportunities or other M&A opportunities. You know, we need to have dry powder for new market launches with the capital that we expect and hope to see in the U.S. over the coming years, as we referenced earlier. We just announced our first buyback a few months ago. You know, we are expected to continue to generate significant cash in the coming years. And so we'll continue to keep you updated on plans to use it. But, you know, acquisitions are certainly an area we look at. We look at Latin America quite a bit. Why? Because we have a great platform, great service team.
And if there's a company down there that has an existing presence in a market that maybe doesn't have the quality of the product or user experience, we can add value to those types of acquisitions. Also looking at other product verticals and ways to continue to expand into a broader segment of the right type of verticals that we think our players would love to play as part of a cross-sell. So those are a couple of things that we're looking at.
Got it, and maybe just last question in the last minute here. Just what are, Richard, what's an item or two that comes to mind that would make 2025 a successful year for Rush Street?
I think more and more investors are really beginning to understand our business a lot better and the value of the iCasino strength that we had. You know, we're making our biggest investments where we see the biggest opportunity for success and the biggest opportunity to drive profitability. We've been, you know, acquiring new players at much lower costs as we've referenced in prior years. And we continue to expect that into 2025. We've been growing our user counts at a significant rate, as we shared, and we expect to continue to do that. We have industry-leading player values, as Kyle referenced earlier. We expect that to continue. And we are optimizing our margins by investing where it makes sense and using our resources in the right allocations and driving, you know, the growth in our business, also allows us to drive cost improvements, which we're doing as well.
2024 was an incredibly successful year for us, but we are counting on 2025 to be just as impressive.
Awesome. Sounds good. Well, let's leave it there. Thank you, everyone, for joining on the webcast, and thank you both for the time this morning. Really appreciate it.
Thanks, Marie.
Thank you.