The American Gaming Association (AGA) has released its definitive State of the States 2026 report, revealing that the US commercial gaming industry reached a staggering $78.6 billion in Gross Gaming Revenue (GGR) for 2025, a 9% year-on-year increase. However, the record-breaking figures were accompanied by a sharp warning from AGA President and CEO Bill Miller, who identified prediction markets as the industry’s most pressing regulatory “encroachment”.
The report outlines a strategic shift for the trade group. Having successfully lobbied for the removal of sweepstakes casinos from several key jurisdictions in 2025, the AGA is now mobilising its resources to treat prediction markets with the same level of administrative and legal hostility.
US Commercial Gaming GGR: 2025 Financial Performance Analysis
Despite the lack of new state sports betting launches in 2025, the existing markets showed remarkable maturity. According to the AGA data, traditional and digital verticals both performed strongly:
- iGaming Expansion: Generated $10.7 bn, a 27% increase over 2024. Pennsylvania maintained its lead as the top iGaming state, contributing $3.5bn.
- Sports Betting Resilience: Revenue grew 22.6% to $16.89bn, despite handle beginning to level off in older markets.
- Tax Contributions: Regulated gaming generated roughly $18bn in direct state and local tax revenue.
The AGA noted that these tax figures could have been significantly higher if not for “grey market” leakage. The association estimates that prediction market platforms offering sports event contracts have cost state governments nearly $800m in potential tax revenue since the start of 2025.
From Sweepstakes to Prediction Markets: The AGA’s New Regulatory Targets
A core theme of the 2026 report is the “successful containment” of the online sweepstakes model. Miller highlighted that in 2025, five states, California, Connecticut, Montana, New Jersey, and New York, enacted explicit prohibitions or enforcement actions against social gaming sites that utilise dual-currency models.
The AGA now intends to apply this blueprint to prediction markets. Miller stated that these platforms “go to the heart of the American gaming framework”, arguing that they bypass state-mandated consumer protections and responsible gaming standards. This stance mirrors the AGA’s gaming industry outlook, where over 80% of gaming executives identified prediction markets as a “very significant threat” to the regulated ecosystem.
Why Major Sportsbooks are Exiting the AGA
The AGA’s intensified rhetoric has not been without internal friction. The report arrives amidst a visible divide between traditional land-based casino interests and “digital-first” operators. Over the past year, several major brands, including DraftKings, FanDuel, Fanatics, and Bet365, have exited the AGA.
Analysts suggest the exodus is partly due to differing views on “event contracts”. While the AGA views them as unauthorised sports wagering, some digital operators see prediction markets as a complementary asset class. This rift is further complicated by recent market entries, such as Polymarket’s US iOS app launch, which utilises a CFTC-regulated framework that the AGA argues still undermines state-level gaming sovereignty.
State Enforcement Strategy: Blocking Unauthorised Sports Event Contracts
To counter the rise of platforms like Polymarket and Kalshi, the AGA has outlined a multi-front enforcement strategy for late 2026:
- Regulatory Opinions: Seeking formal declarations from State Attorneys General that “event contracts” on sports constitute illegal gambling under state law.
- Cease-and-Desist Pressure: Working with state regulators to issue notices to payment processors and geolocation providers serving these platforms.
- Legislative Templates: Promoting bills similar to the Minnesota legislature’s prediction market ban (SF 4760), which established felony penalties for operators.
2026 Industry Forecast: The Battle for Gaming Sovereignty
The State of the States 2026 makes it clear that the “honeymoon phase” of sports betting expansion is over, replaced by a defensive era focused on market protection. While the industry is more profitable than ever, the AGA’s primary objective for the coming year is to ensure that the definition of “gaming” remains strictly under the control of state and tribal regulators rather than federal commodities’ oversight.
As the industry matures, the battle over prediction markets will likely define the next decade of American wagering law, determining whether “event trading” becomes a regulated staple or is forced back into the offshore shadows.