The Future of U.S. Online Gambling

The Future of U.S. Online Gambling: Revenue Growth and Regulatory Barriers

According to forecasts, U.S. online gambling revenue will reach $26.8 billion in 2025, up from $23.4 billion in 2024. By 2028, this figure is expected to surpass $41 billion.

Leading Markets:

• New York: Surpassed $2 billion in annual mobile sports betting revenue.
• New Jersey, Illinois, Florida: Expected to generate over $1 billion annually from online betting.
• iGaming: New Jersey aims to exceed $2 billion in annual revenue, while Pennsylvania and Michigan continue to perform strongly.

Despite the growth of online betting, iGaming legalization remains a controversial issue. States like New York, Maryland, and Louisiana are still debating legislative proposals, while Colorado and Wyoming are exploring potential entry into the market.

Market Consolidation and Competitive Struggles

The U.S. online gambling market is becoming increasingly monopolized:

• Sports Betting: FanDuel and DraftKings dominate, leaving little room for smaller operators.
• iGaming: BetMGM, Caesars, and MGM are fighting for market share, facing pressure from digital-first platforms.
• Strategic Alliances: Partnerships between traditional casinos and tech firms could be the key to survival.

Smaller operators face significant challenges as rising taxes and strict regulations make the market difficult for new entrants.

Rising Tax Pressure and Its Consequences

States are increasingly using online gambling as a source of revenue.

Examples:

• Ohio, Illinois: Increased sports betting tax rates in 2024.
• New York: Sports betting is taxed at 51%, a rate that could be extended to iGaming.
• European Experience: High gambling taxes reduce competition and push players to offshore sites.

High tax rates could drive smaller operators out, slow down innovation, and make the legal market less attractive.

Payment System Challenges

Banking restrictions continue to create issues for online gambling operators:

• Visa, Mastercard: Blocking transactions, making deposits difficult.
• Alternative Payments: Digital wallets, cryptocurrencies, and prepaid cards are becoming popular but lack universal trust.
• Regulatory Risks: Lawmakers may tighten control over payment systems if they detect potential fraud loopholes.

Some states are exploring ways to integrate responsible gaming tools into payment platforms—such as deposit limits and warnings about excessive spending.

The Boom of Sweepstakes and Social Casinos

Regulatory hurdles for traditional online gambling have led to increased interest in sweepstakes and social casinos like Chumba and LuckyLand.

• Advantages: Operate outside strict gambling laws, allowing players to win virtual currency that can be exchanged for prizes.
• Risks: Regulators may impose tighter rules due to concerns about transparency.
• Industry Response: Traditional operators view sweepstakes as unfair competition, and some states are considering restrictions.

Conclusion: What’s Next for the Industry in 2025?

Major players like FanDuel and DraftKings will continue to dominate, leveraging their customer base to expand into iGaming. At the same time, tax pressures, payment issues, and potential sweepstakes restrictions create uncertainty. Operators that can adapt to changing conditions will have the best chances for success.

One thing is clear: the U.S. online gambling market is on the verge of major changes, and not all players will survive the race.

Source: SIGMA