Analyst: No U.S. iGaming Or Sports Betting Expansion Expected In 2026

By Bill Speros

Jan 5th, 2026 1:52 PM EST

If you’re waiting for a wave of new U.S. states to legalize sports betting or online casinos in 2026, don’t hold your breath. A major industry analyst Monday said they expect no U.S. iGaming or sports betting expansion in 2026.

The base case is simple: nothing new gets across the finish line. Not because lawmakers aren’t talking about gaming expansion — they are — but because the past several years have shown just how unpredictable and slow the legislative process can be.

Since 2018, when the Supreme Court opened the door to legal sports betting, legalization has moved in fits and starts. Even states that looked like locks ended up stumbling. North Carolina didn’t legalize sports betting until the final moments of its legislative session back in 2023. Illinois rewrote its tax structure at the eleventh hour last year. A ballot measure to legalize sports betting in Missouri limped over the finish line in 2024. The Show Me State became the lone jurisdiction to launch sports betting in 2025.

That history matters. It’s why Citizens in its 2026 guidance issued Monday modeled zero new U.S. sports betting or iGaming states in 2026, despite ongoing efforts in several holdouts. Even Canada is being pushed out in forecasts, with Alberta now expected to launch no earlier than early 2027.

Prediction Markets Aren’t a Shortcut — Yet

One of the louder arguments in gaming circles is that prediction markets will force states’ hands. The theory is simple: if states don’t legalize sports betting, platforms operating in legal gray areas will fill the void — without state oversight or consumer protections.

Lawmakers are starting to notice. A failed sports betting bill in Wisconsin late in 2025 sparked a blunt warning from Rep. Tyler August, who said that leaving gray areas in the law allows national prediction platforms to operate without local regulation or safeguards.

That kind of language signals awareness. But awareness doesn’t equal action.

Gaming legislation takes time — years, not months — and many lawmakers are still grappling with the basics of how sports betting works, let alone how it overlaps with newer prediction-style products. For now, analysts see this as a long-term pressure point, not a near-term catalyst.

Meanwhile, sports betting operators such as DraftKings, FanDuel, Fanatics, in addition to DFS operators PrizePicks and Underdog, all joined the prediction market space in various forms in 2025.

And this year, there's more headwinds than in the past. Sports betting scandals have tarnished voters' opinions on existing sports betting and iGaming rules, never mind expansion. Daniel Little of the Yuhaaviatam of San Manuel Nation said at December's National Council of Legislators from Gaming States winter meeting cited recent betting scandals as another barrier to sports betting being legalized in California.

The Bigger Risk in 2026: Taxes, Not Legalization

IGaming legislation has surfaced in New York, Massachusetts, Maine, and elsehwere. Just days ahead of a deadline for Maine Gov. Janet Mills to decide on an iGaming bill, a poll found 64% of Maine voters surveyed opposed the bill. They citing health, social and economic risks, the survey found.

While expansion may be stalled, legislation still has the power to move markets — particularly on taxes.

From 2018 through 2025, most states adopted relatively operator-friendly tax structures when legalizing online betting. That era may be ending. Recent tax hikes or structural changes in states like Ohio, Louisiana, New Jersey, and Illinois reflect growing fiscal pressure and a willingness to squeeze gaming operators for revenue.

That creates a new source of volatility for investors, according to Citizens' Jordan Bender. As legislative sessions ramp up in early 2026, the key question won’t be “Which state legalizes next?” but rather “Which state raises taxes next?”

Operators and analysts are already planning for that risk. Many models now assume incremental tax increases over time rather than stable rates. The fear is that surprise changes could hit valuations quickly — especially if multiple states act at once.

Why Illinois Could Be a Blueprint

There is, however, a potential silver lining, Bender noted.

Illinois rolled out minimum bets and operator surcharges in September 2025, giving sportsbooks tools to defend margins even as tax pressure rises. Early indications suggest the strategy is working, offering a template other states could follow. Operators have countered by either tacking on surcharges to certain wagers, or installing minimum bet limits.

If that model gains traction, Bender wrote, it could soften the impact of future tax hikes and help explain why some of the recent selloff in gaming stocks may already be pricing in worst-case scenarios.

Bottom Line

For 2026, the smart money isn’t betting on expansion. No new states. More tax noise. More legislative headlines. That combination is likely to keep gaming stocks volatile — especially during the first half of the year.

But with operators adapting and lawmakers moving slowly, the risk may be more manageable than it looks at first glance.

If nothing else, the past few years have proven one thing: when it comes to gaming laws, the only safe prediction is that predicting them is almost impossible.

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