According to a report from Vixio Regulatory Intelligence, the iGaming and sports betting online market could very well have record gross revenue this year reaching more than $26 billion. Furthermore, the regulated online gambling and sports betting industry could reach over $41 billion by the year 2028 if all goes well.

The online gaming and sports betting industry in the United States are on a rapid growth trajectory, projected to generate a gross revenue (combined) of a total of $26.8 billion in 2025, and this could even soar to over $41 billion by the year 2028, states the latest report from Vixio Regulatory Intelligence.

Vixio's analysis highlights that the US online sports wagering sector alone could contribute $17.2 billion in gross revenue in 2025. By 2028, the market is expected to climb significantly, with base and bull case estimates ranging between $24.8 billion and $29 billion. This growth is buoyed by the increasing number of states legalizing mobile sports betting, with 31 states currently permitting it and another eight allowing wagering at land-based casinos. Even the state of Missouri is set to join online betting later this year, further boosting the expansion of the market.

Shift in focus: regulation and taxation

Following the 2018 Supreme Court decision to overturn the Professional and Amateur Sports Protection Act, or PASPA, much of the initial focus centered on state-level legalization of mobile sports betting. However, recent developments indicate a shift towards taxation and regulatory issues. As states deal with budgetary pressures, many are eyeing higher gaming taxes as a solution to shortfalls in the budgets.

"More so than market expansion, the policy focus for 2025 will remain on potential regulatory restrictions, both at the state and possibly federal levels," noted chief analyst James Kilsby. "Tax increases seem set to be a key theme of the year ahead, with governors or lawmakers in several states already pushing for higher tax rates within just the first weeks of 2025."

Illinois has already transitioned to a graduated tax scheme on sports wagering, imposing higher rates on larger sports betting operators. Other states, including Ohio and Maryland, are considering similar tax hikes this year.

Expansion prospects for 2025: tempered expectations

While the industry's growth projections remain strong, Vixio's report tempers expectations regarding new state entries into the sports betting and iGaming markets in 2025. States such as California, Alabama, Minnesota, Georgia, Texas, and Mississippi are under watch for potential legalization of sports wagering. However, California, Georgia, and Texas, considered the most lucrative prospects, face significant hurdles. California is unlikely to legalize sports betting this year, and Georgia has a long history of stalled efforts in this area.

As for online gaming, the landscape is even more restrictive. Currently, only seven states - New Jersey, Pennsylvania, Michigan, Connecticut, Rhode Island, Delaware, and West Virginia - allow online casino gaming. Despite six states considering related legislation last year, none passed new laws. Vixio anticipates similar challenges in 2025, predicting that up to ten states may consider iGaming legislation, but none are expected to successfully approve a bill.

"Concerns about the cannibalization of brick-and-mortar casinos and opposition from organized labor groups are among the top hurdles to broader adoption of iGaming," Vixio noted in the report.

Competitive landscape: new challenges for sportsbook operators

In the base case scenario according to Vixio, the online sports betting market in the US's gross gaming revenue is expected to reach almost $25 billion by the year 2028. New York is projected to maintain its position as the largest market, with Florida moving into the second spot. The bull case scenario envisions $29 billion in revenue, contingent on states like Mississippi, Georgia, Texas, Oklahoma, and Washington State approving sports betting. Notably, Washington State currently permits sports wagering only at tribal casinos.

Adding to the competitive pressures, Vixio highlighted the emergence of sports event contracts as a new market threat. Companies like Kalshi and Crypto.com are offering these contracts nationwide, leveraging their classification as derivatives rather than traditional sports bets. This allows them to operate under the regulatory oversight of the US Commodity Futures Trading Commission rather than state gaming authorities.

"Another closely watched trend is the recent launch of 'sports event trading' across all 50 states by Crypto.com, allowing customers to trade their own predictions on the outcome of the 2025 Super Bowl," Vixio's report concluded. "The offering is not licensed by any state gaming regulatory authority; however, according to Crypto.com, it is permissible as a form of event contract subject to regulation by the CFTC."