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The US gaming sector expects another year of growth, but prediction markets now sit near the center of industry concern.
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Gaming executives sound more confident than they have in recent quarters, yet sports event contracts now sit high on the risk list for the regulated betting sector.
The American Gaming Association said Thursday that the latest Gaming Industry Outlook showed the strongest positive sentiment since Q3 2023. More than 60% of surveyed senior executives expect revenue growth, stronger balance sheets, and more capital spending over the next 12 months.
That confidence comes despite inflation, higher gas prices, tariff concerns, geopolitical risk, and the war with Iran. Economic activity also improved. The AGA said the Gaming Conditions Index rose 1.5% year over year in Q1 2026 and grew across the past two quarters.
AGA president and CEO Bill Miller said:
“The legal state- and tribal-regulated gaming industry continues to demonstrate resilience and adaptability in a dynamic economic environment. Operators are focused on investing in innovation and delivering world-class entertainment, while also navigating an evolving competitive and regulatory landscape.”
Still, prediction markets changed the tone of the report. Kalshi, Polymarket, and similar platforms have added sports event contracts in many US states, including markets that look close to sportsbook products. Many now cover spreads, totals, and moneyline-style outcomes for the NFL, NBA, MLB, NHL, NCAA, and other leagues.
That growth worries regulated gaming leaders. The AGA said 81% of executives surveyed called prediction markets a very serious threat. Miller noted:
“Illegal sports betting through sports event contracts is increasingly encroaching on legal, state-and tribal-regulated operators. It’s clear the legal, regulated industry views this is a threat, and will continue to fight back and protect the integrity of our industry.”
The split comes down to regulation. Prediction markets operate under the Commodity Futures Trading Commission, while sports betting and iGaming operators need state or tribal approval. That federal structure has allowed event contract platforms to reach states where online sports betting remains illegal.
Tribal gaming leaders have already pushed back, and more than a dozen states now have legal fights involving trading exchanges. Meanwhile, FanDuel, DraftKings, and Fanatics left the AGA after deciding to build prediction market products. Those companies do not offer event contracts, also called swaps, in states where they already run legal sportsbooks.
AGA members still include sports betting operators that have stayed out of prediction markets, such as Caesars, MGM, Rush Street, and PENN Entertainment.
Executives also flagged more traditional cost pressure. The survey, conducted from March 23 to April 8, found 54% viewed employee wages as the top expense issue, followed by tax and regulatory policy. Competition from new gaming formats also rose as a concern, with 42% citing it, up from 25% in Q3 2025.