Numbers always tell a story, and as gaming enters the second half of 2026, the industry’s story remains one of sustained growth and consumer engagement. 

More than half of Americans participate in some form of legal gaming, underscoring its place as mainstream entertainment activity. Built on consumer trust, responsible growth and significant community investment, the regulated gaming industry continues to generate record economic benefits for states, Tribes and local communities across the country. 

Together, those factors continue to drive strong performance.

2026 off to strong start in Q1

The commercial gaming industry started 2026 with strong momentum as all three verticals – traditional gaming (land-based), sports betting and iGaming – posted year-over-year growth. Total commercial gaming revenue surpassed $20bn for the first quarter, a 6% increase over the same period last year. 

Nearly 80 percent of commercial gaming jurisdictions reported revenue growth during the quarter, underscoring the industry’s broad-based strength. 

Traditional gaming continued its steady trajectory, generating $12.5bn in revenue for the quarter, up more than 2% year-over-year. Meanwhile, iGaming remained the industry’s fastest-growing vertical, with revenue climbing approximately 20% from the previous quarter 
to exceed $3bn in first quarter.

The regulated market also generated a total of $4.67bn in gaming tax revenue for state and local governments during the first quarter – an 11% increase from the same period in 2025. That performance builds on another record-setting year for the industry. In 2025, commercial gaming generated an all-time high $78.62bn in annual revenue, producing a record $17.86bn in direct gaming tax revenue supporting public services, infrastructure, 
and community priorities across the country.

Sports betting landscape and 'prediction markets' encroachment

As “prediction markets” continue to threaten state-regulated operators and state gaming tax revenue by offering backdoor sports wagers, the sports betting landscape presents a more nuanced picture. State-regulated sports betting revenue increased to $4.27bn 
in the first quarter, driven largely by a higher hold percentage. Handle, however, tells a different story, declining one percent during the first quarter and more than 3% compared to the same period last year. 

The decline in handle illustrates the growing pressure that licensed sportsbooks are facing from “prediction market” operators attempting to position sports wagering as a financial product rather than gaming activity, and bypassing the regulations that state and Tribal sportsbooks are held to. 

Our latest Gaming Industry Outlook showed that 81% of gaming executives identified “prediction markets” as a “very significant” threat to the regulated gaming industry, and that threat extends to state and Tribal tax revenue. While the state and Tribal-regulated industry continues to 
generate record funding for local public services and community investments, “prediction market” operators avoid the tax requirements licensed sportsbooks are obligated to meet. We estimate that to date “prediction markets” have siphoned more than $1bn in potential state tax revenue nationwide.

Consumer protection concerns are also mounting. Through May, nearly half of all digital sports betting advertisements viewed by consumers originated from “prediction market” operators, which lack the responsible 
gaming rules and safeguards required of legal sportsbooks. Consumers are increasingly exposed to more and more of these prediction market betting ads, with audiences seeing 72% more “prediction market” sports ads so far this year than they did in all of 2025. 

Executive outlook: Looking ahead

Industry executives remain optimistic around the broader outlook for gaming in 2026. The Gaming Industry Outlook’s executive sentiment rose 21.4%, its highest level since late 2022, reflecting growing confidence in the industry’s overall health. Executives expressed particularly strong expectations around revenue growth, customer activity, capital investment and long-term investment opportunities. 

While economic conditions remain uncertain, gaming operators and suppliers continue to signal overall confidence in the market’s long-term trajectory. Nearly two thirds of executives reported plans for continued capital investment this year.

The data reflects an industry that continues to demonstrate sustained growth while delivering meaningful economic benefits to states, Tribes and local communities. Supported by ongoing investment, consumer demand, and a resilient market, the gaming industry remains well-positioned to build on its momentum throughout 2026.

Simultaneously, preserving the integrity of the state and Tribal-regulated framework is essential to the industry’s long-term success. As “prediction market” operators continue to offer backdoor sports betting, ensuring the right regulatory oversight, consumer protections and 
tax accountability are critical to sustaining the benefits legal gaming provides to communities across the country.