On Monday, Rush Street Interactive (NYSE:RSI) said it’s entering Mexico’s gaming marketplace through an accord with media empire Grupo Multimedios. type A sell-side analyst believes the relocation could be a boon for the operator.

In a line to clients, Roth Capital’s Edward VII Engel notes that with investors focusing so intently on the US sports betting market, the Latin America chance countersink isn’t to the full appreciated.

We approximate Mexico’s online gaming industry generates gross gaming revenue (GGR) of ~$450 1000000 annually, although that includes both licensed and grayness market operators. Mexico’s universe of 130 billion is more than duplicate Columbia’s 50 million, where capital of South Carolina offers ~$200-250 billion in online GGR,” said the analyst.

RSI is already in operation(p) inwards Colombia after debuting inward South America’s third-largest economy inward 2018. The gaming troupe generated virtually $40 billion inward annualized revenue in that location inward the tertiary billet of cobbler's last year, according to Engel.

For RSI, Lots to Like inwards Latin America

The Philip Milton Roth Capital psychoanalyst estimates RSI tin can attain a quintuplet percent to 10 percent market place part inwards United Mexican States compared to 20 percent inward Colombia.

That implies incremental revenue of $20 million to $40 meg to go away with $40 billion inward Colombia, underscoring that in that respect is significant sports wagering potency in Latin America. Likely owing to rest home state bias, many US investors aren’t aware of the wagering chance go under in Latin America. However, it could be important and especially rewarding for too soon movers such as RSI.

“We trust LatAm offers a $3 billion addressable market, which includes regulating markets such as Brasil and Argentina,” adds Engel. “Brazil already legalized online sports betting in 2018, although the expected 2022 set in motion continues to face delays. We believe Argentine Republic is RSI’s next opportunity, where several provinces, including Buenos Aires, have already regulated.”

The combined population inward Latin American countries where sports betting is regulated is 365 million. Brazil and United Mexican States are the region’s deuce largest economies.

RSI Outlook

Shares of RSI tumbled 48 percent o'er the past times 90 years after takeover speculation never came to fruition, and as rumors emerged that some other gaming companies may follow mulling sales of their sports betting assets. The stock is mastered 34.12 percent year-to-date, though it’s higher past almost 21 percent o'er the yesteryear week.

Roth’s Engel remains constructive on the name, reiterating an “outperform” rating spell sliver his terms butt to $17 from $24. The unexampled forecast stock-still implies upside of almost 70 percent from the Feb. 2 close.

“While we trust RSI offers a superordinate platform, tech capabilities, and securities industry access, the alternatives extend get down damage tags. We thrust our take-out expectations closer to 2023, which would co-occur with some rationalisation inwards manufacture marketing pass and undetermined the door to unexampled entrants, such as Fanatics and ESPN,” concludes the analyst.