The US commercial gaming sector experienced a notable revenue rise in February, recording a 4.6% growth compared to the same month last year. However, results from sportsbooks indicated a year-on-year downturn, raising concerns about the implications of prediction markets.
According to data from the American Gaming Association’s Commercial Gaming Revenue Tracker, sportsbook revenue saw a decline of approximately 6% year-on-year. This decrease was linked to a lower hold percentage due to favorable player outcomes, which diminished operator margins amidst rising competitive pressures.
Though the US gaming landscape continued to expand in February, a noticeable divergence appears to be developing. With iGaming on the rise and retail casinos striving for stability, sports betting is beginning to exhibit signs of distress. As prediction markets gain popularity among bettors, there’s evidence suggesting state-sanctioned sports betting revenues may falter.
Revenue from land-based casinos increased by 3.9% year-over-year, bolstered by a 5% surge in table game revenue. This marked the first monthly growth for table games since October, providing a promising outlook for retail casinos following a lackluster 2025.
In contrast, iGaming maintained its robust momentum, with online casino revenue soaring 25% to reach $976.3 million, accounting for nearly 25% of the $4 billion generated by brick-and-mortar casinos.
The combined revenue from casinos helped mitigate the impact of weaker sports betting results, as sportsbook revenue declined 6.4% year-over-year to $1.17 billion in February.
Part of this decrease can be attributed to a reduced hold rate, which fell to 9.24%, a drop of 73 basis points. Nevertheless, the overall outlook for sports betting remains worrisome, as handle has decreased for the fourth consecutive month.
Recently, prediction market platforms have begun to offer sports event contracts that closely mirror traditional betting products, such as player props and parlays. Unlike licensed sportsbooks, however, these platforms do not operate under state gaming licenses nor contribute tax revenue through regulated betting frameworks.
On the same day the latest Revenue Tracker update was released, the American Gaming Association acknowledged on X that prediction markets have led to an estimated loss of $800 million in tax revenue for states, funds that would have otherwise supported pensions, responsible gaming initiatives, and various public programs.
In total, regulated gaming generated $1.42 billion in gaming tax revenue for state programs, reflecting a 10.5% increase from the previous year. However, the AGA asserts that this figure could have been significantly higher, as it is affected by operators of skill machines, “sweepstakes casino” sites, and those utilizing prediction markets for sports betting, none of whom contribute state gaming taxes.
Results for March may shed light on whether the sports betting downturn is a mere temporary fluctuation or a wider trend. Prediction market operators have notably ramped up their advertising efforts around the NCAA Tournament, a key period in the US sports betting calendar. If they begin to capture substantial market share from licensed sportsbooks, this may become evident in the AGA’s subsequent monthly report.