The U.S. commercial gaming industry reached a record high in 2025, generating $78.72 billion in total revenue. Within this, legal sports betting was a primary driver, surging 22.8% year-over-year to hit $16.96 billion. Americans legally wagered a staggering $166.94 billion on sports throughout the year, an 11% increase from 2024.
The “Prediction Market” Controversy
Despite the record numbers, the AGA has issued a stern warning regarding prediction markets (such as Kalshi and Polymarket). These platforms allow users to trade on the outcome of sports events using “event contracts,” which are regulated as financial derivatives rather than gambling.
- Tax Revenue Leak: The AGA estimates that these markets diverted over $500 million in potential state tax revenue in 2025.
- The Loophole: Because they are regulated by the federal CFTC rather than individual states, these platforms operate in all 50 states—including major markets like California and Texas where traditional sports betting remains illegal.
- Industry Pushback: AGA President Bill Miller emphasized that “sports betting belongs under state and tribal regulation,” arguing that prediction markets bypass the consumer protections and integrity fees paid by licensed sportsbooks.
2025 Market Performance
- Top States: New York, Illinois, New Jersey, and Ohio remained the four largest sports betting markets.
- Online Dominance: Online sports betting accounted for 96.5% of the total market share.
- Tax Impact: Regulated sportsbooks contributed $3.71 billion in state taxes, a 32.4% increase from 2024.