America’s commercial casinos hit a record high last year, winning nearly $79 billion from gamblers.
This impressive total was largely driven by the surge in online gambling and sports betting, which played a key role in boosting industry revenues to new heights. According to the American Gaming Association (AGA), which represents regulated commercial gaming in the U.S., this success is due in significant part to the continued popularity and expansion of internet-based gaming options.
This makes sense since individual states, like the Garden State of New Jersey and the Keystone State of Pennsylvania, also saw record revenues last year that were fueled by online casinos.
The Numbers Behind the Success
In 2025, commercial casinos in the U.S., which are state-regulated and not run by tribes, saw a 9.2% increase from 2024.
Here’s a closer look at where this money came from:
- Traditional Casinos: These are the physical places where you can play slots and table games. They made $50.94 billion. Even though they grew by only 2.3%, it was still the best year ever for them. Slot machines were very popular and brought in $37.12 billion.
- Sports Betting: This area really took off! People bet $166.94 billion in total, and casinos earned $16.96 billion—a 22.8% jump from 2024. About 96.5% of the bets were made online, showing how important the internet has become.
- iGaming (Online Casino Games): This includes digital versions of slots and table games that people play on their computers or phones. It made around $10.74 billion. Online gaming is growing fast, with increases of over 20% in some areas.
When you add up the money from playing online games and online sports betting, it’s close to $27 billion.
Why This Matters and What's Driving the Growth?
This record-breaking success is good news for state and local governments. They got $18.09 billion from gaming taxes, which helps pay for things like schools and roads.
The big reason for this jump is that more states have made sports betting legal since a 2018 Supreme Court decision. States like New Jersey, Pennsylvania, and Michigan are leading the way with online gambling. All 38 states with commercial casinos saw more money coming in during 2025.
But there are some challenges too. The AGA, which represents the gaming industry, is worried about new betting platforms called prediction markets. These are taking away over $500 million in tax revenue, and the industry sees them as a big problem.
While these numbers focus on non-tribal casinos, if you include tribal ones, the total amount won by casinos in the U.S. might be over $125 billion in 2025.
The report from the AGA shows that people are still very interested in gambling, especially online. With its sixth year in a row of record earnings, the industry looks like it will keep getting bigger, especially with more players and new technology in gambling.
Where Do Prediction Markets Fit In?
Prediction markets are online platforms where users can trade (or bet) on the outcomes of future events, such as sports results, election winners, economic indicators, award shows, or even niche occurrences like celebrity events.
They function like financial exchanges: users buy and sell "contracts" (e.g., "Yes" or "No" on whether a team wins a game) against each other, with the platform acting as a marketplace facilitator that collects fees rather than a traditional "house" that takes the opposite side of bets. Popular platforms include:
- Kalshi — A U.S.-based, CFTC-regulated exchange that gained massive traction in 2025, especially for sports event contracts. It reported weekly trading volumes exceeding $1 billion at times, with sports making up a huge portion (around 90%) of activity. For example, it processed over $1 billion in volume on Super Bowl LX alone.
- Polymarket — Often crypto-linked, it saw explosive growth in 2025, with billions in notional volume, heavy focus on sports and politics, and major investments (e.g., from firms tied to the NYSE parent).
These markets exploded in popularity in 2025, with total sector notional volume estimated in the tens of billions (some reports cite $44 billion+ across platforms).
They surged amid high-profile events like elections and major sports seasons, and even traditional sportsbook operators (e.g., DraftKings, FanDuel, Fanatics) launched their own prediction-style products to compete.
AGA's Concerns and the Revenue Diversion Issue
The AGA views prediction markets—especially those offering sports event contracts—as a major threat.
In its report, the AGA explicitly stated that these platforms have diverted more than $500 million in potential sports betting tax revenue to date, likely cumulative through 2025 and early 2026.
Key AGA arguments include the following:
- These platforms operate under federal Commodity Futures Trading Commission (CFTC) oversight as "event contracts," framed as derivatives or investments similar to commodity futures used for hedging prices, like wheat.
- This allows them to bypass state-regulated sports betting laws, avoiding state gaming taxes, responsible gambling standards, consumer protections, and licensing requirements.
- They compete unfairly with licensed sportsbooks by offering nationwide access—even in states without legal sports betting—and marketing sports wagers as "investments" rather than gambling.
- Public confusion is high: AGA research shows many users mistakenly believe state regulators oversee disputes or protections on these platforms (78% in one study), and sports event contract users are far more likely to view their activity as investing (28% versus 9% for traditional sportsbook users).
- Broader risks include threats to sports integrity, a lack of anti-money laundering (AML) rigor comparable to regulated betting, and siphoning activity from state and tribal operators that generate billions in taxes ($18.09 billion in 2025 alone from regulated gaming).
The AGA has called this a "defining fight" for the industry.
They have launched ad campaigns against these platforms and urged Congress to take action jointly with the Indian Gaming Association, which highlighted how these platforms "blur lines" for consumers while evading state authority.
Current Landscape:
- Legal Battles: Over 30 (possibly up to 50) lawsuits are active, including federal cases on preemption (CFTC vs. state gambling laws), state enforcement actions (e.g., Nevada banning or suing platforms), tribal claims (alleging diversion from casino revenue under IGRA), and class actions. Some involve high-profile events like the Super Bowl.
- Growth vs. Scrutiny: Despite opposition, the sector boomed in 2025 and continues into 2026, with platforms pushing mainstream adoption via partnerships and massive funding. However, 2026 is seen as a potential "reckoning" year, possibly heading to the Supreme Court over federal vs. state jurisdiction.
- Industry Split: Some sportsbook operators are embracing prediction markets (or launching hybrids) for growth, while traditional casino and tribal groups, along with the AGA, push back hard.
In short, prediction markets represent a disruptive, fast-growing alternative to traditional sports betting—legal under federal rules but accused of undermining the regulated industry's tax base, protections, and market share.
The $500M+ diversion figure underscores why the AGA flagged them amid otherwise record-breaking 2025 results.
