AGA survey reveals gaming executives remain positive despite booming predictions markets

Optimism tempered by a shifting risk map

The upbeat read on executive sentiment lands amid a complicated turn in U.S. gambling. Operators see steady demand, healthy balance sheets and capacity to invest, but the ground is moving under their feet. A swelling illegal market continues to siphon play and taxes, prediction markets are pressing for legitimacy, and public unease about sports wagering is rising. The stakes for policymakers and companies are whether regulatory lines can be redrawn fast enough to protect the licensed sector without pushing consumers to gray and offshore options.

The tax drain of illegal play

One of the most persistent headwinds is the scale of unregulated gambling. The American Gaming Association estimates states forfeit about $15.3 billion in annual tax revenue as illegal operators account for nearly a third of the overall market. Americans wager roughly $673.6 billion each year on offshore sites, unregulated skill machines and illegal sportsbooks, generating $53.9 billion in revenue that bypasses licensed venues and public coffers. That footprint has expanded since 2022, with illegal online casino revenue up 38% and a marked drop in the share of players using only legal sites. While illegal sports betting’s market share has narrowed, it still represents tens of billions in wagers and about $1 billion in lost taxes. The AGA has framed the trend as a call for tougher enforcement and broader cooperation to shut down offshore providers, as detailed in reporting on the revenue and tax losses tied to illicit gambling.

The growth of these channels complicates the industry’s investment thesis. Capital plans depend on stable regulatory returns; when gray markets undercut pricing and promotions, licensed operators face pressure on margins and responsible-gaming commitments. State budgets, often linked to gaming taxes for infrastructure and education, also take a hit, raising the political cost of inaction.

Prediction markets seek a federal lane

At the same time, prediction markets—event-based trading venues—are testing the perimeter between financial products and gambling. Kalshi and Crypto.com recently launched the Coalition for Prediction Markets, joined by Coinbase, Robinhood and Underdog, to argue for federal oversight and to resist state-level efforts to treat their products as gambling. The coalition points to growing adoption and billions in trading volume, and it warns that a patchwork of conflicting state interpretations will nudge users offshore. The strategy and stakes are laid out in coverage of the coalition’s formation and push for CFTC-supervised rules.

For casino and sportsbook operators, prediction markets are both a competitive and regulatory risk. If event contracts replicate core betting products without the same consumer protections or tax obligations, they could erode the licensed market’s value proposition. If, instead, they are brought under consistent federal rules distinct from gambling, that could cement a dual-track system with new entrants competing for attention and liquidity.

Public sentiment and political pressure build

Even as legal sportsbooks proliferate, the public mood has cooled. A recent Washington Post–University of Maryland survey found that 36% of Americans now view the spread of legalized sports betting as a bad thing, up from 23% in 2022. Concern climbed across key groups, including regular sports viewers and younger adults. Majorities cited addiction risk, game integrity and underage access as top worries. Those findings arrive after high-profile betting scandals in professional leagues and as 39 states and the District of Columbia allow some form of wagering. Lawmakers have taken notice, with the Senate Commerce Committee flagging an emerging integrity problem in U.S. sports. The shift is detailed in reporting on rising concern about the impact of sports betting.

For the industry, softening public support can translate into stricter marketing rules, tighter limits on bet types, or slower adoption in holdout states. It also sharpens scrutiny of products that blur categories—such as event contracts—by reinforcing arguments that unaligned oversight weakens consumer safeguards.

Trade groups push Congress to draw the lines

The ambiguity around event contracts has prompted an unusual alignment among trade groups. The American Gaming Association and the Indian Gaming Association jointly urged Congress to address sports event contracts, which they described as “indistinguishable” from legal sports bets as offerings have expanded from single-game outcomes to parlays and props. They argued the Commodity Futures Trading Commission’s posture has allowed rapid growth without the gambling-specific protections and taxation that apply to sportsbooks. Their letter, which followed controversy over a contract tied to the capture of a foreign leader, asked lawmakers to anchor cryptocurrency market structure legislation and strengthen gambling laws to prevent gaming through the CFTC framework. The campaign is outlined in coverage of the AGA and IGA’s call for congressional action.

Any congressional move would set the competitive landscape for years. A tighter definition that routes sports-related event contracts into state gambling regimes could curb prediction markets’ growth and reinforce the licensed sportsbook model. A distinct federal regime could invite financial platforms to scale event trading, intensifying competition on pricing, product features and customer acquisition.

Responsible play as a strategic hedge

Amid policy fights and market churn, the industry has tried to fortify its social license. The AGA rolled out the Play Smart Consumer Hub, an online resource built around setting limits, understanding games and intentional play. The hub includes a pre-play checklist, a glossary of gambling terms, and tools for self-assessment, alongside a toolkit for operators to standardize responsible-gaming messaging. The initiative reflects the sector’s push to keep safeguards visible and consistent as offerings expand. Details are in coverage of the AGA’s responsible gaming hub.

The effort dovetails with mounting calls to shrink the illegal market and clarify the status of event contracts. Stronger consumer protections help differentiate licensed operators from offshore sites while addressing the concerns now animating voters and lawmakers. If prediction markets win a distinct federal lane, a prominent responsible-play posture could also become a competitive expectation across adjacent products.

Why it matters now

Executive optimism rests on a familiar equation: steady consumer demand, improving profitability and a pipeline of investments. The variables are less familiar. Illegal channels are expanding in some segments, a new class of competitors is lobbying for federal rules that could circumvent state gambling regimes, and the public appetite for more betting is cooling. The policy choices ahead—enforcement against offshore sites, whether and how to regulate event contracts, and the depth of responsible-gaming requirements—will shape where dollars flow and who captures them. The industry’s confidence will be tested by how quickly those lines are drawn, and on whose terms.