US Gaming Revenue Hits Record $78.7B Amid Prediction Market Battle

⏱ 3 min read

US commercial gaming revenue hit a record $78.72 billion in 2025, according to data released by the American Gaming Association on May 13, 2026. The 9.2 percent increase over the previous year drove $18.09 billion in state and local tax revenue, marking a 15.1 percent jump from 2024.

But the industry's record-breaking year is overshadowed by a regulatory battle that could reshape the sports betting landscape. The AGA estimates that prediction market platforms offering sports contracts have diverted more than $500 million in potential tax revenue from state-regulated sportsbooks. 16 states took enforcement action against these platforms in 2025, while 81 percent of gaming executives now label them a very significant threat.

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US Gaming Revenue Breaks Records Across All Sectors

All 38 commercial gaming markets reported annual revenue increases in 2025, with 34 states plus Washington DC setting new single-year records. The growth was driven by strong performance across traditional casinos, sports betting, and internet gaming.

Sports betting revenue reached $16.96 billion, a 22.8 percent increase, on total handle of $166.94 billion. Sportsbooks generated $3.71 billion in tax revenue, up 32.4 percent year-over-year. New York led all states with over $2.5 billion in sports betting contributions.

iGaming revenue climbed to $10.74 billion, representing a 27.6 percent increase and delivering $2.59 billion in taxes. Traditional brick-and-mortar gaming generated $50.94 billion, up 2.3 percent, while contributing $11.33 billion in tax revenue.

Sector	2025 Revenue	YoY Growth	Tax Revenue
Sports Betting	$16.96B	+22.8%	$3.71B
iGaming	$10.74B	+27.6%	$2.59B
Traditional Gaming	$50.94B	+2.3%	$11.33B
Total	$78.72B	+9.2%	$18.09B

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Pennsylvania iGaming Overtakes Land-Based Casinos

Pennsylvania remained the nation's largest iGaming market with $3.46 billion in revenue, representing nearly 28 percent growth from 2024. The milestone marks the first time annual iGaming revenue surpassed commercial land-based casino revenue in both Pennsylvania and New Jersey.

The shift reflects broader consumer preferences toward online gambling. Pennsylvania recorded three consecutive months exceeding $300 million in monthly iGaming revenue between October and December 2025, with December hitting a record $324.3 million. The state generated approximately $1.24 billion in iGaming tax revenue for 2025.

Michigan, New Jersey, and Pennsylvania combined for nearly 90 percent of the nationwide iGaming total. Maine became the eighth state to legalize online casinos after passing legislation in 2025 that took effect in early 2026, with launches expected later this year.

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States vs. Federal Regulators: The Prediction Markets Fight

While the industry celebrated record revenue, AGA President and CEO Bill Miller labeled prediction markets offering sports contracts a growing threat to state-regulated gaming. The platforms operate outside state oversight and avoid consumer protections and tax obligations that licensed sportsbooks must follow.

The conflict centers on jurisdictional authority. Commodity Futures Trading Commission Chair Michael Selig has asserted the federal agency holds exclusive jurisdiction over prediction markets under the Commodity Exchange Act. Multiple states disagree, arguing these platforms function as unlicensed sports betting operations.

Kalshi, a leading prediction market platform, faces legal battles in Massachusetts, Nevada, and Tennessee. The platform reported nearly $1.9 billion in college basketball wagers in February 2026 alone, demonstrating the scale of activity competing directly with state-regulated sportsbooks.

State enforcement actions in 2025 included:

• 16 states took action against prediction market platforms offering sports event contracts through cease and desist orders, lawsuits, or formal guidance
• 5 states (California, Connecticut, Montana, New Jersey, New York) targeted sweepstakes casino platforms
• 11 states introduced prediction market legislation in 2026 ranging from outright bans to taxation frameworks

Industry executives share regulatory concerns. The AGA survey found 81 percent of gaming executives cited prediction markets as a very significant threat, while 46 percent indicated federal regulatory concerns now limit operations, up from 29 percent in Q3 2025.

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What the Revenue Means for State Budgets

The $18.09 billion in gaming tax revenue supports state and local education, infrastructure, property tax relief, and senior programs across the country. The 15.1 percent increase from 2024 provides critical funding during a period of economic uncertainty that characterized much of 2025.

However, the AGA calculates that prediction markets have cost states between $500 million and $800 million in potential sports betting tax revenue since the start of 2025. This diverted revenue would otherwise fund programs like education budgets and responsible gaming initiatives.

The jurisdictional battle will likely determine whether states can recapture this revenue stream. Pennsylvania and Ohio have introduced bills in 2026 that would tax prediction market platforms if courts uphold state authority to regulate them.

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Sources

This article draws on official industry data, primary regulatory documents, and verified news coverage:

With 2025 marking another record year, the industry's performance reinforces a clear principle: Sports betting belongs under state and tribal regulation. That's how consumers are protected and how communities share in the benefits.

— Bill Miller, President and CEO, American Gaming Association · State of the States 2026 Report, May 13, 2026