Sports Betting Boom Continues In 2025 While New Rivals Challenge Tax Model

Legal gambling in the United States posted record financial performance in 2025, according to fresh data from the American Gaming Association. Strong revenue growth and rising sportsbook activity highlight continued expansion across regulated markets, even as new competition creates tension inside the industry.

Good to Know

• Commercial gaming revenue reached $78.72 billion in 2025, a new all time high.
• Legal sportsbooks handled about $167 billion in wagers during the year.
• Prediction markets may have diverted more than $500 million in potential tax revenue from states.

Celebration inside the industry has been measured. Despite headline numbers that suggest another banner year, leadership at the American Gaming Association signaled concern about emerging wagering alternatives operating outside the traditional state regulated structure.

“Overall, 2025 was another strong year, but at the AGA, we never take gaming success for granted,” CEO Bill Miller said Thursday during the industry group State of the Industry webinar.

Record performance appeared across multiple verticals. Commercial gaming revenue climbed 9.2 percent year over year, while gaming related tax contributions reached $18.09 billion, reflecting a 15.1 percent increase compared with 2024. State governments continue to rely heavily on wagering taxes as regulated betting matures into a stable fiscal contributor.

Sports betting remained a central driver. Revenue from sportsbooks jumped 22.8 percent to nearly $17 billion. Handle rose 11 percent, showing steady consumer demand even in markets that already launched years earlier. Licensed operators delivered more than $3.7 billion in tax payments to states, a 32.4 percent increase from the prior year.

Yet another storyline now shapes policy discussions in Washington and state capitals. Expansion of prediction markets tied to sports outcomes has created friction with traditional operators, regulators, and trade groups who argue those products function like sportsbooks without following the same framework.

“The battle against prediction markets is a defining fight for our industry,” Miller said.

Industry advocates point to a long standing model built around local control. Legal gaming expansion across the United States followed a state by state and tribe by tribe process, with lawmakers and voters deciding how wagering operates within their borders.

“Prediction markets threaten what I’ve long called the American blueprint for gaming,” Miller added. “This blueprint has been a key to gaming’s growth into a nationwide industry. It’s built on some ironclad commitments, including a state-by-state, tribe-by-tribe approach that gives local communities the deciding vote on gaming.”

Tension reflects a broader shift across the digital wagering landscape. Financial style event contracts, often overseen by commodities regulators rather than gaming commissions, sit in a gray area that challenges existing tax and compliance systems. Trade groups argue that difference creates an uneven playing field between licensed sportsbooks and newer platforms offering similar exposure to sports results.

Policy advocacy remains active alongside financial growth. Miller said the organization continues pushing for restoration of the 100 percent gambling loss deduction, a longstanding issue for bettors and operators that affects reporting and taxable income calculations.

Trust built through regulation and compliance, according to association leadership, remains a core advantage for licensed gaming companies navigating competition from alternative models.

“We’re not just protecting what we’ve built, we’re securing the foundation for continued growth and a better future for gaming,” Miller said.