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United Kingdom (EN) Overview of the US Online Gambling Industry in 2026
Due to a unique combination of factors, regulated online gambling has been lagging in the US. But in recent years, things have changed for the better. Powered by recent legislative changes, the US is now home to one of the most exciting online gambling markets in the world.
In this guide, we will explore the factors that led to the current state of the US online gambling industry. We will explore the complex and convoluted legal landscape of online gambling across state and federal jurisdictions, as well as identify the current trends and major players in the industry.
History of Online Gambling in the United States
The online gambling industry arose in the 1990s, a few years after the internet became open to the public. In 1994, Microgaming created the first-ever digital gambling software. That same year, the government of Antigua & Barbuda, an island nation in the Caribbean, passed a law called the Free Trade and Processing Act.
That act created a licensing system for the newly formed industry of online gambling. Soon, the first online casino called InterCasino was launched by a company called Cryptologic. InterCasino accepted its first online wager in 1996. Meanwhile, the Mohawk Council established another online gambling licensing authority in Canada – the Kahnawake Gaming Commission.
The US had a major role in this early stage of online gaming. With the largest online userbase, it was the main target market for online casinos. But this relationship was full of ups and downs, thanks to the evolution of US online gambling laws.
Here is a brief timeline of this fascinating story:
In 1999, the Internet Gambling Prohibition Act was introduced into the US Senate. The legislation aimed to ban internet gambling in the United States. But it failed to gain traction in Congress and was not passed into law.
As more and more US players flocked to online casinos, the industry revenues touched $4.5 billion by 2002. By 2006, the number of active online casinos available to US players had touched a massive 2300. At this rate, the industry looked poised to strike the $20 billion mark by 2010.
‘The UIGEA had a massive impact on US online gambling. Virtually all major online software providers left the US market. Only a few based in the Caribbean – Real Time Gaming and Betsoft, continued to serve American players. Since the law did not target players, it led to the creation of a massive illegal online casino market – based on offshore casinos based in the Caribbean.
Dubbed ‘Black Friday,’ it led to indictments against dozens of individuals involved with these companies, on charges ranging from violation of UIGEA to money laundering, bank fraud, and more. All poker brads were forced to shut their operations and return the deposits of American players.
That changed in 2018, when the US Supreme Court repealed the act, paving the way for legal online sports betting in the United States. This truly opened the floodgates of online gambling in America, home of incredibly popular sports leagues like the NFL, NBA, MLB, NHL, and NCAA. Powered by the rapid rise of legal sports betting, US gambling is currently experiencing a major expansion.
Size of the US Online Gambling Market
The US online gambling market is highly fragmented at the moment. Since interstate gambling is prohibited by the Wire Act and UIGEA, it is up to individual states to make laws legalizing online gambling. New Jersey, Nevada, Pennsylvania, and Delaware are some of the major domestic markets in the US at present.
Online Casino Gambling
New Jersey has the biggest market for online casinos in the US, as it has been active since 2013. In 2019, the online gambling revenue in the state was a total of $482 million, with online casinos contributing $460 million. The remaining $20 million was contributed by online poker sites. In 2020, during the COVID 19 pandemic, the state’s online gambling revenues skyrocketed to $970 million.
Pennsylvania comes next with a total of $565 million from online casino gaming in 2020. Two other states have a small, but rapidly growing online casino market as of 2021 – Delaware and West Virginia. In total, the current US online gambling market in these four states is worth close to $2 billion. Based on current growth figures of close to 50%, we can expect this figure to reach close to $10 billion by 2025.
Sports Betting
In 2019, the entire US online sports betting revenues were around $833 million. That figure crossed the 1 billion mark in 2020, reaching a historic high of $1.2 billion. Nevada accounted for around $330 million, followed by New Jersey with $300 million.
Apart from New Jersey, other major states with sports betting include Nevada, Colorado, Indiana, and Pennsylvania. Together, the 19 states with legal online sports betting pulled in wagers worth $3 billion in 2020. Based on current industry trends, the US online sports betting market is expected to exceed $8 billion by 2025.
Important Segments of the US Online Gambling Market
At present, there are three major segments worth noting in the American online gambling market – online casinos, online poker, sports betting (both traditional and fantasy sports). Of the trio, online casinos and sports betting are the ones showing maximum growth.
Online Casinos
Surprisingly, Nevada is not a leader when it comes to online casino gaming in the US. Despite being home to Vegas, it has a rather strong anti-online gambling stance. New Jersey, Pennsylvania, West Virginia, and Delaware are the only states with legal online casinos as of 2021.
Online operators include major brands like Golden Nugget, Virgin, BetRivers (from Rivers Casino), Unibet, DraftKings, Ceasars, Tropicana, and BetMGM. The games offered include video slots, blackjack, roulette, baccarat, and other casino games.
With bricks and mortar casinos suffering from COVID-related closures, online casinos, where you can win real money have a bright future in the US, especially over the next few years. Keep an eye out during this time for enticing no deposit bonuses and free spins.
Online Poker
Poker rooms made a return to the US just a few years after Black Friday when New Jersey legalized online gambling within its borders. Brands like WSOP, PokerStars, Borgata Poker, Party Poker, 888 Poker, and BetMGM offer legal online poker in these states – New Jersey, Nevada, Pennsylvania, and Delaware.
Despite showing a slump in 2019, the online poker industry picked steam during COVID 19. Unable to go to bricks and mortars poker rooms, players flocked to online poker sites in droves, particularly in Nevada and New Jersey. With the pandemic seemingly here for the long haul, online poker is sure to witness record growth in the coming years in the US.
Sports Betting
While online poker and casinos are unavailable in most American states, the same is not true about sports betting. The repeal of the PASPA in 2018 has paved the way for legal sports betting in at least 20 states. Before 2018, only Nevada had any kind of legal betting on sports.
With the massive popularity enjoyed by professional sports leagues in the US, this is the most exciting segment of online gambling at present. It includes both traditional betting on live sports, as well as Fantasy Sports.
Fantasy sports involves creating your virtual teams, based on players from a real league like NFL or NBA. Your team gets points based on the performance of your players in real matches. Betting on fantasy sports has become a major component in US online sports betting after 2018.
Betting can take place in several ways in fantasy sports – players can compete across the entire season to get a share of the prize pool, or they can place wagers on points scored against other players for shorter periods.
DraftKings and FanDuel are the two major fantasy sports brands in the US. After the 2018 Supreme Court ruling, they both entered the online gambling scene, in partnership with major casino brands and the pro sports leagues.
Other big names in the US Sports betting scene include William Hill, Golden Nugget, BetMGM, BetRivers and Caesars.
The Role of Major Leagues in US Online Gambling
For decades, the major US sports leagues like NFL and NBA had opposed betting on sports. Their stance was based on a fear of corruption from gambling – given the history of major fixing scandals, the leagues feared that sports betting would affect the integrity of the professional sport.
But by 2014, the pro sports leagues largely recognized that PASPA had failed in preventing betting on sports. It continued as a thriving underground activity, aided especially by the rise of online betting. An estimated $400 billion was being wagered illegally on US sports each year. With legal sports betting, the leagues could get a share of that pie in several ways.
Increased Fan Engagement and Direct Revenues
As soon as the Supreme Court repealed PASPA, major leagues like the NFL, NBA, NHL, and MLB stood to gain a lot from the rise of legal sports betting. From sponsorship, TV ads, data and video revenues, and other indirect streams, the total figure was estimated to be around $4.2 billion, according to Nielsen and the American Gaming Association studies.
One interesting aspect is that the major source of this money will not be directly from sports betting. Instead, the major leagues are expected to benefit more from increased fan engagement driven by betting – individuals are more likely to buy tickets to matches or watch them on TV when they have a wager on it.
For example, this would bring the NFL around $1.7 billion in indirect revenues, as opposed to $573 million received from betting operators through data fees, sponsorship, and ads. Likewise, the MLB stands to gain $952 million from fan engagement, with just $154 million coming from direct betting revenues.
Integrity Fees
Apart from sponsorship and other direct revenues, the NBA and MLB, in particular, are demanding a share of betting revenues in the form of an “integrity fee.” This is basically a tax on sports betting, with the proceeds going to the sports leagues who may use it to prevent corruption and match-fixing.
The concept of integrity fees is not new – it has already been tested in countries like Australia, and France. But since US sports betting laws are set by individual states, this is still an ongoing issue, involving negotiations between the leagues, state legislatures, and betting operators.
Initially, the leagues demanded a whopping 1% of total betting handles, which would roughly equate to 20% of gross revenues from sports betting. Later, amid growing criticism, they reduced this to 0.25% of the total betting handle.
Considering an example of a $500 million monthly handle, with a typical 5% hold, the operator would get around $25 million, out of which the leagues would get $1.25 million as integrity fees. If it had been kept at 1%, the leagues would be looking at a windfall of more than $5 million.
That’s not a lot, but a fully mature US betting market might easily exceed betting handles of $200 billion. The leagues would stand to gain billions of dollars – even with a 0.25% fee, they will get hundreds of millions.
So far, none of the state gambling laws passed have imposed integrity fees. There is considerable opposition towards this kind of mandatory taxation in the sports betting industry. The leagues already stand to benefit heavily from sports betting. Adding more to their coffers at the cost of betting operators would be bad for the long-term growth of the industry.
Current Legal Status of Online Gambling in the USA
Online gambling is not illegal across the entire United States of America. In some forms, it is completely illegal, while it is legal at least partially in parts of the country. Unfortunately, due to the nature of the US legal system, things are pretty complicated.
There are two different levels of laws operating on online gambling (and many other topics) in the United States. One is the Federal Law, while the other is the laws passed by individual states. To fully understand the legal status of online gambling in the US, it is first necessary to understand the Federal Government’s stance.
Federal Government Laws
Two major laws are in place to regulate online gambling in the United States at the Federal level – The Wire Act of 1961 and The UIGEA of 2006. Both focus on the financial side of gambling – player payments and transactions, instead of outlawing gambling itself.
The Wire Act and Online Gambling
The Wire Act was passed in the 1960s to prevent organized crime syndicates from using telephone lines to accept illegal sports bets. It was signed by President John F Kennedy and has remained unchanged for decades. It did not mention the internet anywhere since that technology did not exist in the 1960s.
But when online gambling became popular in the 1990s, the Department of Justice opted to broaden the scope of the Wire Act to include all forms of online gambling, and not just sports betting as is mentioned in the actual text of the law.
After reversing that position in 2011, the DoJ once again opted to take the broader interpretation of the Wire act in 2018 to crack down on illegal online gambling. As of 2021, The Federal government’s position is that the Wire Act applies to all forms of online gambling.
So, what implications does the Wire Act have on online gambling?
Here are the main points:
- It only applies to operators offering betting and gambling services.
- It prohibits operators from using phone/internet communications for betting and transaction of funds across state lines.
- It does not penalize players in any way.
- It does not focus on legal betting activities inside individual states.
The UIGEA and Online Gambling
Since there was no mention of online gambling anywhere in Federal laws, the UIGEA was passed in 2006 and signed by President George W Bush. The law does not make online gambling illegal in the US – instead, it makes payments made to unlicensed gambling sites illegal.
The law gives the DoJ power to sanction any operator, bank, or payment service allowing illegal betting transactions involving US consumers. Like with the Wire Act, this law does not target or penalize players themselves.
But it acted as a powerful deterrent on US-based businesses involved in online gambling. All major sites and software vendors left the American market as a result of the UIGEA. And many payment providers also refused to process online gambling transactions of US players.
The UIGEA does not target licensed betting sites operating under the jurisdiction of individual states like New Jersey or Pennsylvania. It also does not target offshore betting platforms directly. This has led to the rise of sites like Bodog and Bovada, which are unlicensed betting platforms that accept US players.
The Professional and Amateur Sports Protection Act – PASPA (Repealed)
The PASPA focused on sports betting, both offline and online. It prohibited all forms of legal sports betting in the US (except in Nevada). This act was ruled unconstitutional by the US Supreme Court in 2018, paving the way for legal sports betting online and offline in the US, subject to state laws.
State Government Laws
Again, things are pretty complicated here as well, since each state has its take on different forms of online gambling. Some have legalized all forms, while others only allow certain activities. And since the PASPA was only repealed recently, many states are still in the process of legalizing online sports betting. So, this list is bound to change with time.
That said, we can divide states with legal online gambling into three main categories:
- States with legal casinos, poker, and sports betting
- States with online poker and sports betting
- States with legal sports betting
States With Legal Online Casinos, Poker, and Sportsbooks
New Jersey
New Jersey is the pioneer of online gambling in the US since 2013. There are close to 20 legal online casinos open to New Jersey residents and visitors. The casino services are only available to individuals who are physically present inside the state at the time of placing wagers. Popular online casinos include Golden Nugget, Caesars, 888, and Tropicana.
Sports betting is also legal in the state as of 2018. At least 10 sites are active, including big names like DraftKings, BetMGM Sports, FanDuel Sportsbook, and 888 Sportsbook. As for online poker, it has been legal for several years now, with popular brands like PokerStars and WSOP available in New Jersey.
Pennsylvania
The Keystone State legalized online casino gambling and poker in 2017. When PASPA was repealed the next year, the state quickly legalized online sports betting as well. Currently, the state is home to roughly half a dozen online casinos including BetMGM, Unibet, and Caesars.
PA Sportbooks currently number around 10, with major players like DraftKings, Unibet, FanDuel, and FoxBet. PokerStars is the main platform for legal online poker in Pennsylvania.
Michigan
All three forms of online gambling were legalized in the state in 2019. The 26 existing bricks and mortar casinos (23 are Indian Casinos) in the state were given the option to offer sports betting in 2020. By 2021, online casinos like BetRivers, DraftKings, BetMGM, and FanDuel were available to residents.
West Virginia
According to the online gambling laws passed in 2019, online casino licenses have to be connected to one of five existing casino resorts in the state. Each casino can host three licenses each, meaning that there will be a maximum of 15 West Virginia licensed online casinos.
As of 2021, there are two active online casinos in West Virginia – BetMGM and DraftKings. The licensing for these casinos was expedited in 2020, as a result of the ongoing Coronavirus pandemic. Three other casinos from PokerStars, Betfair/Fanduel, and Golden Nugget are expected to launch soon.
Online sportsbooks are available in the state – the three main options active currently are BetMGM, FanDuel, and DraftKings. The 2019 legislation also legalized online poker sites. But major platforms are yet to go online.
Delaware
The home state of the current US President has all forms of legal online gambling. It was the first state ahead of New Jersey to legalize online gambling. The state’s gambling system revolves around giving online licenses to existing casino resorts.
Currently, the three Delaware casinos – Delaware Park, Dover Downs, and Harrington Raceway – use the same 888 online gambling platform, which includes casino games and online poker. The casinos are free to use individual branding, but it is in essence a single-provider system.
The state had legal sports betting even during PASPA, as it was one of several states given exemptions. After the Supreme Court ruling, the state was the first to legalize online sports betting. But sportsbooks are yet to go online in the state.
States with Legal Sportsbooks
The following states have legalized sports betting online as of 2021:
- Illinois
- Virginia
- Colorado
- Tennessee
- Indiana
- Iowa
- New Hampshire
- Oregon
- Rhode Island
- Montana
All these were states that had to wait until PASPA was struck down to legalize sports betting.
However, there is one other state with a long history of sports betting:
Nevada
After 1992, Nevada had a near-monopoly on sports betting in the US. In the state synonymous with casinos, virtually all forms of gambling have been legal for decades. The notable exception is online casinos, which are opposed by the land-based casinos.
Under the online gambling laws passed by the state in 2013, only online poker was legalized. Two brands currently own the licenses – WSOP Caesar, and Real Gaming. There is virtually no hope of the state ever legalizing online casinos, as they are considered hostile to the interests of land-based casinos.
All major casinos offer in-house sportsbooks. Many of them also provide online apps for internet betting, but only available inside state lines.
States Likely to Legalize Online Betting
Many other states are poised to legalize online betting in the aftermath of the 2018 Supreme Court decision.
Here are the twelve states likely to see some developments on this front in 2021:
New York
The state already has sports betting, but only at retail outlets. The plans to legalize mobile betting is currently stalled in the legislature. But budget shortfalls created by economic gloom and COVID may finally push things through in 2021.
Maryland, Louisiana, South Dakota
Ballot measures favoring online sports betting were passed in all three states in 2020. Legislation has a slight chance of passing in 2021 itself.
Connecticut
With online deals already in place for the two casinos in the state, Connecticut may be closest to legalizing in 2021. The legislators have to finalize the number of operators to be allowed in the state.
Massachusetts
There is clear support for online betting in the State legislature. But a bone of contention is the inclusion of college sports, which is being opposed by the major universities. Due to a lack of consensus on key details, legislation has stalled in the last two years.
Ohio and Missouri
Bills have already been introduced to state legislatures, but the progress has been stalled due to the pandemic. Details like the number of licenses to be issued remain to be ironed out as well.
The Major Players in the US Online Gambling Industry
The US online gambling industry is expanding at a tremendous rate at the moment. Given the vast size of the market, there is plenty of room for expansion. The major players at the moment are an eclectic mix of land-based casino operators, fantasy sports brands, and online poker companies.
DraftKings
The fantasy sports giant needs no introduction to US sports fans. Post-legalization, they have been active in both sports betting and online casino gambling. Their online casinos are available in New Jersey, West Virginia, and Pennsylvania. They are dominant in the US market with a 16% market share.
Rush Street Interactive
The online wing of the company behind the famous Rivers casinos is also in a commanding position of the gambling landscape with a 16% share of the market. Their online casinos use the SugarHouse-Rivers branding in Pennsylvania and New Jersey.
Flutter Entertainment
Flutter Entertainment is a global giant in online casino gaming and sportsbooks. They own major brands like Paddy Power, Betfair, FanDuel, SkyBet, FoxBet, FullTilt Poker, and PokerStars. Two subsidiaries of Flutter are major players in the US online gambling scene – BetFairFanduel with casinos in New Jersey and Pennsylvania (15%), and PokerStars in New Jersey (5%).
MGM – GVC
Under a joint venture called ROAR, the iconic MGM casino brand owns 13% of the US gambling market. The two partners own brands like BetMGM, Borgata, and PartyPoker. ROAR is active in New Jersey, West Virginia, and Pennsylvania.
Golden Nugget
MGM’s rival on the Vegas Strip is another major player in the online market. The company owns the most popular online casino in the lucrative New Jersey sector. They are also in plans to expand into other states like Pennsylvania.
The Fate of Offshore Operators in The US Gambling Market
For decades, offshore gambling platforms served US customers in the absence of any real alternatives. In 2018, only 3% of the online bets wagered by Americans were through legal channels. But now, things have changed drastically. The most extreme case is in online sports betting. Close to 30 states have either legalized it or are in the process of doing so.
This leaves offshore platforms dedicated to sports betting in an awkward position. A huge chunk of their clientele now has access to legit options closer to home. And these are all big brands like DraftKings and FanDuel.
The recent news about an operator called 5Dimes from Costa Rica might hold an answer, at least for some of the bigger offshore sportsbooks. In a landmark deal with the DoJ, the company forfeited over $40 million of its revenues from the US market.
In exchange, the company will avoid prosecution in the US. The deal also paves the way for a potential entry into the regulated sports betting market for 5Dimes. If other major platforms can secure similar deals, they might be tempted, considering the size of the US betting market.
Still, the illegal sports betting market in the US was around $150 million. That is huge – some of the smaller players may still manage to find players, particularly from markets like Texas, Hawaii, and Utah, which have not yet shown any inclination to legalize online betting.
As for offshore online casinos, things look somewhat better. Only four states have legalized online casino gambling, and others are not really interested in following them. And residents outside these four states cannot play at the casinos.
Unless many other US states decide to legalize online casino gambling, offshore operators will continue to have a footing in the country’s lucrative market for the foreseeable future.
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