Prediction Markets Drain Sports Betting as Tribal Casinos Hit Record $46B

⏱ 3 min read

Prediction markets are draining US sports betting revenue at an accelerating pace, even as the broader gaming industry posts record-breaking numbers. The National Indian Gaming Commission (NIGC) confirmed on 15 July 2026 that tribal casinos generated $46.2 billion in gross gaming revenue during fiscal year 2025 — the highest annual total in the history of Indian gaming and a 5.3% jump over the prior year's previous all-time high of $43.9 billion.

On the commercial side, the American Gaming Association (AGA) reported that US commercial gaming revenue hit $7.06 billion in May 2026 alone, up 4.6% year-on-year, with iGaming receipts up 15% in the same month. Yet those headline figures mask a deepening structural problem: sports betting revenue fell 1.8% in May to $1.34 billion, marking the second monthly contraction of the year — and the AGA squarely blames the explosive growth of federally regulated prediction markets.

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Tribal Casinos Break the $46 Billion Barrier

The NIGC's FY 2025 GGR Report, drawn from audited financial statements submitted by 545 gaming operations across nearly 250 Tribal Governments in 29 states, shows growth in seven of the agency's eight geographic regions. The lone exception was the Rapid City region, which dipped by a negligible 0.9%.

The fastest-growing region was the DC market — which covers New York, Connecticut, North Carolina, Florida, Alabama, Mississippi and Louisiana — where revenues surged nearly 10% to $11.2 billion. California retained its position as the single largest tribal gaming market at $12.6 billion, up more than 4%. The Portland region (Oregon, Washington, Idaho and Alaska) hit $4.9 billion, also up 5.3%.

• NIGC Associate Commissioner Sharon Avery described 2025 as "another strong year" for tribal operators, noting compacts had "done well."
• Only 9% of tribal gaming operations reported more than $250 million in annual GGR, yet that group accounted for more than 56% of the total revenue pool.
• Multiple new tribal casinos opened in 2026, with further launches planned, adding incremental handle to future NIGC reports.

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Commercial Gaming Keeps Growing — Except Sports Betting

The AGA's Commercial Gaming Revenue Tracker, updated on 16 July 2026, shows US commercial gaming revenue reached $34.0 billion through the first five months of 2026 — a 6.4% year-over-year gain. Traditional casino floors expanded 4.5% in May to $4.68 billion, with slot machines alone generating $3.39 billion and table games adding $933 million. iGaming continued to be the fastest-growing vertical, adding $1.03 billion in May revenue, a 14.7% improvement versus the prior year.

Sports betting, however, is the outlier. May handle fell to $12.06 billion (-0.4%), and when the newly launched Missouri market is stripped out, the underlying handle decline widens to -2.7%. State gaming taxes tied to sports betting dropped 2.4% in May. The AGA attributed the softness directly to prediction market competition, noting that Kalshi alone handled nearly $15 billion in sports-event contract volume in that same month.

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Prediction Markets: $1.21 Billion in Lost Tax Revenue

The AGA's public tracker estimates that prediction market platforms have cost state governments more than $1.21 billion in foregone gaming tax revenue since early 2025. The trade group frames sports-event contracts offered by operators such as Kalshi, Polymarket and Robinhood as illegal sports betting conducted outside state licensing and tax frameworks, and has urged Congress, federal courts and the Commodity Futures Trading Commission (CFTC) to restrict their sports-related products.

The CFTC, under Chairman Michael Selig, disagrees. Selig argued in early July 2026 that prediction platforms are regulated financial exchanges, not gambling operators — a position that has fuelled parallel lawsuits across at least seven states, including Nevada, New Jersey, Maryland, Washington, Minnesota, New York and New Mexico. A Washington state court issued a preliminary injunction against Kalshi on 21 July 2026, finding the state was likely to succeed on claims that sports-event contracts violate state gaming law. More than two dozen federal bills are now in play, with no clear resolution in sight.

• James Siva, chairman of the California Nations Indian Gaming Association, warned tribal operators could lose as much as 25% of gross revenue within a year if prediction markets continue to expand unchecked.
• Tribal organisations have filed or joined lawsuits arguing that sports-event contracts violate exclusivity provisions under the Indian Gaming Regulatory Act (IGRA).
• Illinois sports betting handle fell more than 10% year-on-year in May — one of the sharpest state-level declines — in a market where prediction market penetration is high.

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World Cup Betting: Records for Books and Exchanges Alike

The FIFA World Cup proved both the resilience and the vulnerability of US regulated sportsbooks. DraftKings reported the tournament final was the most-wagered soccer match in its sportsbook history, drawing more than 2 million bets on that single game alone, with total World Cup wagers up 650% versus the 2022 tournament. Geolocation provider GeoComply logged 160.6 million location checks in the opening week, nearly double the volume of the 2022 final week.

Prediction markets saw an even more dramatic surge. Estimates from Macquarie Research and H2 Gambling Capital placed total prediction market sports volume at more than $50 billion in June, with the World Cup as the primary driver. H2 estimated that prediction platforms captured roughly 27% of comparable US sports betting activity during the tournament — up from approximately 9% at the start of the year. Bloomberg reported that much of this growth came from states where licensed mobile sportsbooks remain unavailable, giving prediction exchanges access to bettors that regulated operators cannot legally reach.

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Regulated vs. Prediction Market: Key Figures Compared

Metric	Regulated US Gaming	Prediction Markets
Tribal GGR FY2025	$46.2 billion (+5.3% YoY)	Not applicable (separate sector)
Commercial GGR Jan–May 2026	$34.0 billion (+6.4% YoY)	Not separately reported
Sports betting revenue May 2026	$1.34 billion (−1.8% YoY)	N/A — not taxed or reported to states
Kalshi sports volume May 2026	N/A	~$15 billion (AGA estimate)
Total prediction market volume June 2026	N/A	>$50 billion (Macquarie est.)
State gaming tax revenue May 2026	$1.53 billion (+0.7% YoY)	$0 — prediction platforms pay no state gaming taxes
Est. state/tribal tax revenue lost since 2025	—	>$1.21 billion (AGA tracker)
Regulatory oversight	State gaming commissions + NIGC (tribal)	CFTC (federal); no state gaming licences required
Active legal challenges	7+ states pursuing litigation or enforcement	Washington court injunction issued 21 Jul 2026

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Sources

Primary regulatory filings and official trade association data were the foundation of this report, supplemented by specialist industry coverage published within the past 24 hours.

While overall revenue may have went up, many tribes and different regions are experiencing losses. The increase is nowhere near the explosive increase we've seen in prediction markets in the last 18 months.

— David Bean, Chairman, Indian Gaming Association · House Agriculture Subcommittee hearing on prediction markets, July 2026