- Eight years after the Supreme Court struck down PASPA, US sportsbooks processed $145.5 billion in handle in 2025 alone across 34 reporting jurisdictions.
- The national hold rate has climbed from 7.25% in 2018 to nearly 10% in 2025, a shift worth billions in revenue.
- FanDuel and DraftKings now control 78% of the US sports betting market, with BetMGM bringing that figure to 92%.
- A wave of state tax increases in 2025 pushed effective rates as high as 33% in Illinois, squeezing operator margins but generating record state revenue.
- An April 2026 federal appeals court ruling on prediction markets now threatens the state-based tax framework that generated $3.2 billion in 2025.
WASHINGTON – On the morning of May 14, 2018, the Supreme Court of the United States handed down Murphy v. NCAA and ended Nevada’s 26-year monopoly on legal sports betting.
Eight years later, questions surrounding who would profit and under what rules have been answered… for now.
A Brief History of the Growing US Sports Betting Market
- In 2018, seven states joined Nevada, launching sportsbooks in their jurisdictions.
- By the end of 2021, almost 30 states legalized sports betting.
- At the end of 2025, US sportsbooks were taking in over $150 billion per year.
The most underreported financial story of sports betting in the US is the hold rate, which is the percentage that sportsbooks keep after paying out winning bettors. Over the last eight years, it has moved decisively in operators’ favor.
According to data collected and sourced by LegalSportsBetting, the national hold rate was approximately 7.25% in 2018. By 2025, the national hold rate neared 10%, generating $14.3 billion in sportsbook revenue.
Factors Building The Hold Rate
The growth came from structural changes, rather than bettors’ lack of knowledge. Parlays and player prop bets carry hold rates of around 20%, compared to 5% on traditional spread and moneyline bets.
With DraftKings reporting in early 2025 that live in-play wagers accounted for more than 50% of their handle for the first time, it’s clear to see why sportsbooks have the edge.
But are they to blame for advertising these wagers?
Aside from bettors genuinely enjoying parlays and player props, states with legal sports betting have modified laws to encourage sportsbooks to get as much revenue as they can.
How Growing Tax Rates Changed Player Retention
After COVID-19, state legislatures were competing to attract operators in order to supplement a loss of state revenue. In turn, sportsbooks were offering unreal sports betting bonuses in an attempt to create loyal customers.
By 2025, those same legislatures watched the top US sports betting sites establish incredible market capitalization.
- FanDuel and DraftKings together control 78% of the US sports betting market. Add in BetMGM, and that total increases to 92% of all revenue from sports betting.
In response came a wave of tax increases. Maryland raised its mobile sports betting rate from 15% to 20%. Louisiana moved from 15% to 21.5%. Illinois added a per-wager fee of $0.25 on the first 20 million bets placed annually and $0.50 on all bets thereafter.
These states are just a few examples. Ohio, which launched in January 2023, already increased its tax rate once while looking to increase it a second time as well.
With these increases, the margin for sportsbooks became way more hostile. FanDuel’s US adjusted EBITDA margin was 15.2% in 2025. But in states like New York, where the tax rate is 51%, FanDuel must use the other 49% to cover customer acquisition, technology infrastructure, compliance costs, and promotional spend before producing any operating profit.
The Federal Government Steps In
For most of the post-PASPA period, the federal government was a passive observer of the market it had created.
- The 0.25% federal excise tax on sports wagers remained invisible in the background.
- The IRS’s treatment of gambling winnings and losses continued under pre-PASPA rules.
But this changed when the One Big Beautiful Bill Act, signed by President Trump in 2025, reduced the gambling loss deduction from 100% of gambling winnings to 90%. Though seemingly minor, it created a phantom taxable income for active bettors who win and lose similar amounts throughout the year.
Now required to pay income tax even for those who lost money during the year, it became another legislative move that impacted bettors negatively.
Though measures like the FULL House Act and the FAIR BET Act are being discussed with bipartisan support to repeal this, nothing has advanced yet.
Prediction Markets Add Fuel To The Fire
Last month, a federal appeals court ruled that the Commodity Exchange Act preempts state gambling laws when applied to sports-related event contracts traded on CFTC-registered exchanges.
In other words, sports prediction markets regulated at the federal level may be allowed to operate even if individual states try to ban them under state gambling laws.
A coalition of 42 state attorneys general immediately moved to challenge this. However, was this done for the betterment of their citizens or because of sports betting revenue loss?
The entire post-PASPA, state-based regulatory framework that generated $3.2B in tax revenue in 2025 was built on the premise that sports wagering falls under state jurisdiction.
The April ruling challenges that premise, and if it survives appellate review and reaches the Supreme Court (likely within two years), the result would be licensed sportsbooks operating under state tax and compliance standards. Meanwhile, prediction market apps serve the same customers under federal CFTC oversight at zero state tax obligation.
DraftKings has read this dynamic clearly. The company announced plans to spend approximately $300M on prediction market development and marketing in 2026.
The investment reflects a strategic hedge: if prediction market apps erode the licensed sportsbook market’s customer base, DraftKings intends to cannibalize its own business before a competitor does.
FanDuel’s parent Flutter has signaled similar intentions.
For state revenue departments, the scenario is deeply uncomfortable. Eight years of budget projections have been built on sports betting taxes that are now subject to a federal jurisdictional challenge.
Still, the 42 AGs filing against the April ruling are fighting to protect state revenue streams, not consumer protection frameworks.
Failure To Modernize
Regardless of the method by which customers are “betting on sports” or “trading event contracts”, the national picture shows consistent growth. However, two states in the dataset tell a starkly different story: Mississippi and Delaware.
Mississippi sportsbooks brought in $585 million in wagers and $65.9 million in revenue during 2021. However, a land-based only model has seen their numbers drop to a $340 million handle and revenue of only $45.4 million during 2025.
Still, the political blockage is extraordinary. Mississippi’s House passed online sports betting legislation by a 100-11 vote in 2026. However, the bill never received a Senate committee hearing.
One committee chairman who holds his seat until 2028, Senator David Blount (D-29), has blocked the idea entirely, while every state with online sportsbooks grows.
With neighboring Tennessee launching a fully mobile market in 2020 and Louisiana following in 2021, there was no surprise to the closure of the Sam’s Town Casino in Tunica. While not the largest gambling market, the five casino properties are the physical embodiment of what retail-only betting looks like in 2026 in a town that once had eight casinos thriving.
Delaware presents the same dynamic on a smaller scale. The state was among the first to launch sports betting in 2018, generating nearly $26 million in revenue over its first full year of action.
By 2023, that figure had fallen to $10.9 million.
Growth Through Year 9?
The expansion of sports betting in the US post-PASPA is largely settled. However, there is still some growth on the horizon.
Missouri was the last state to launch, with voters approving sports betting in November 2024 and the state launching online and in-person sportsbooks on December 1, 2025.
Now, all eyes are on Georgia, Nebraska, Wisconsin, Oklahoma, Texas, and California.
Though Wisconsin already held an in-person sports betting market, Governor Tony Evers signed a bill into law on April 9, allowing for statewide mobile betting. Giving favoritism to Wisconsin’s Native American tribes, the law requires commercial operators like FanDuel and DraftKings to pay 60% of their revenue to tribes if they operate in the state.
Perhaps the only hope for a new state to legalize sports betting comes from Nebraska. Reported to be “on track” by nearing the signature total for a November referendum, voters may be able to decide on online sports betting laws. With the initiative heavily funded by DraftKings and FanDuel, signature collectors are chasing a July 3 deadline to qualify for the ballot.
Elsewhere, things aren’t looking as realistic for an immediate expansion.
- In Georgia, House Resolution 250 was rejected in March, which would have put sports betting legalization on the ballot in 2026. Likewise, House Bill 910, which aimed for legalization via the lottery without requiring a voter referendum, did not advance.
- For Oklahoma, Senator Bill Coleman is attempting to bring laws to the state. However, the Oklahoma Senate rejected House Bill 1047 on April 22, despite having support from the Oklahoma City Thunder and a supermajority of tribal nations.
- Lt. Governor Dan Patrick, who oversees the Texas Senate, has made his stance clear, opposing sports betting in Texas. Since the Texas legislature only meets in regular session on odd-numbered years, proponents are focusing on changes in 2027. According to the Texas Tribune, lawmakers are looking to build support in the House to push through a constitutional amendment that would allow voters to decide.
- As for California, no initiative reached the ballot for 2026 following failed attempts in 2022. With failed negotiations in 2024 as well, the focus moves to 2028. This delay is based on the complexity of bringing tribal card rooms and casinos to the same table as commercial operators.
Still, the more important story of year nine is not expansion but what happens to markets that already exist.
Looking backward, the numbers are extraordinary: $145.5 billion in handle during 2025 alone across the 34 reporting jurisdictions, with the majority built from scratch in eight years.
Looking forward, the picture is more complex.
Hold rates at 10%+ nationally mean bettors are losing a larger share of each wager than at any point since legalization. Public opinion has soured fast, with 43% of Americans now viewing legalized sports betting as bad for society, up from 34% in 2022.
And the prediction market ruling introduced genuine uncertainty for the first time since PASPA itself.
Year nine will depend less on how much Americans bet on sports, as that number has never been in question. But rather, the focus will be on which level of government ultimately gets to decide who taxes it and what changes we’ll see on a state-to-state level.
