new taxes but stalled expansion

Gambling legislation gave industry proponents in the US plenty to talk about in 2025, but they saw few wins as lawmakers spent much of the year tightening screws on the existing sports betting and online casino markets rather than opening new doors.

While the industry notched significant victories in a coordinated fight against unregulated sweepstakes casinos, most high‑profile efforts to expand sports betting and online casinos stalled amid integrity fears, problem gambling concerns and political gridlock.

At the same time, legislators across the country pursued sports betting tax increases to plug budget holes, signalling a shift from growth to revenue extraction. And as scandals piled up and public sentiment softened, federal lawmakers sharpened their scrutiny of the online sector, reviving broad reform proposals that — even if unlikely to pass — set the tone for where the next wave of gambling debate will play out.

Federal talk about gambling legislation

Following multiple sports betting scandals in the fall, federal lawmakers renewed calls for industry reform. Likewise, multiple lawmakers and committees called for hearings and information from the NBA and MLB. While there was chatter, multiple pieces of legislation have failed to move in Washington over the past several years.

As the year end approached, lawmakers again renewed their calls for reform.

Rep. Dina Titus of Nevada asked the chairman of the House Ways and Means Committee for an expedited hearing on the Fair Accounting for Income from Betting Earnings and Taxation (FAIR BET) Act, which would restore the 100% income tax deduction for gambling losses. The One Big Beautiful Bill Act, which President Donald Trump signed in the summer, reduced the deduction to 90%.

Titus also renewed her decade-plus long effort to repeal the sports betting excise tax.

Senator Richard Blumenthal told The Hill in December that the federal government should be involved in regulating sports betting. Blumenthal and Rep. Paul Tonko again sponsored the Supporting Affordability and Fairness with Every Bet Act, or SAFE Bet Act.  The bill would establish national advertising standards, ban prop bets and restrict use of AI to target bettors.

Blumenthal and Senator Katie Britt also sent a letter to Attorney General Pam Bondi asking for a crackdown on illegal gambling.

Multiple lawmakers also spoke out against prediction markets, from their use of sports event markets to the partnership between Kalshi and CNN.

Sweeping national sweepstakes casino action

Lawmakers and regulators in many states across the US took action to curb unregulated sweepstakes casinos in 2025.

“This issue has brought lawmakers together that it represents illegal gambling and revenue theft in many states,” West Virginia Delegate Shawn Fluharty, who is also president of the National Council of Legislators from Gaming States and head of government affairs at operator Play’n GO, said at the NCLGS Winter Conference in Puerto Rico. “Rarely do we agree on anything as lawmakers, but on this issue, we agree that this represents illegal gambling operations.”

Multiple legislatures passed laws prohibiting sweepstakes operators in their states, including:

• California
• Connecticut
• Montana
• Nevada
• New Jersey
• New York

Louisiana legislators also passed a ban, but Governor Jeff Landry vetoed the bill. Landry said state regulators already had the power to enforce gaming laws. The Louisiana Gaming Control Board then sent 40 cease-and-desist letters to offshore operators, including sweepstakes casinos.

Several other states also took up legislation but did not pass it, including Maryland and Mississippi.

Regulators from multiple states also sent more than 100 cease-and-desist letters to sweepstakes operators during the year.

As 2026 begins, states are already gearing up for sweepstakes discussions, including the legislatures in Florida, Indiana and Maine.

Sports betting taxes go up

In 2024, Illinois took its sports betting tax from a 15% flat fee to a tiered system ranging from 20% to 40% based on sportsbook revenue. This year, Illinois imposed a per-bet fee on sportsbook operators. Sportsbooks now pay 25 cents for their first 20 million bets, and 50 cents for every bet thereafter.

But Illinois was not alone in 2025 in increasing the tax burden on sportsbooks.

Maryland Governor Wes Moore initially asked lawmakers to double the sports betting tax rate from 15% to 30% in his budget proposal. Legislators settled on a 20% tax in the final budget.

New Jersey Governor Phil Murphy proposed taking the tax from 13% to 25%. Lawmakers ultimately took it to 19.75%. Murphy also proposed increasing iGaming tax rates from 15% to 25%. Lawmakers kept it in line with sports betting at 19.75%.  

In Louisiana, legislators took the tax rate from 15% to 21.5%.

Other states considered tax hikes but punted on them, including in Ohio where Governor Mike DeWine proposed doubling the tax from 20% to 40%. DeWine had succeeded in a prior effort to double the tax from 10% to 20% in 2023.

Many in the industry believe sports betting tax hikes will be discussed in 2026 as the new federal budget will reduce the funds sent to states.

Online gambling expansion efforts fizzle

Online gambling legislation faced increasing headwinds throughout 2025, and lawmakers carrying bills looking to legalise online sports betting and casinos struggled to gain momentum.

From growing problem gambling concerns to sports betting scandals, headlines around the industry were largely negative and caused public support to drop. In a December University of Maryland and Washington Post survey, 36% of Americans said sports betting is a “bad thing”. That figure was up from 23% in 2022.

Following several years of incremental progress in Minnesota, a sports betting proposal fell apart shortly after the 2025 session began. The opposition solidified despite industry stakeholders finally having an agreement in place among themselves.

Discussion also cooled in Georgia, where a constitutional amendment and enacting legislation both failed to pass either chamber. That was a step back from 2024, when a pair of bills passed the Senate. Sports betting lost a key supporter in the fall when bill sponsor Rep. Marcus Wiedower resigned. Still, a tourism study committee that was formed has recommended legalising sports betting.

Efforts in Alabama also stumbled backward as the House put the sports betting onus on the Senate. After Senate President Pro Tem Garlan Gudger declared sports betting dead for the year, Senator Greg Albritton, a key sports betting sponsor, said the issue is likely dead for another 20 years.

Oklahoma legislation again made it through the House but did not receive a Senate floor vote. Governor Kevin Stitt has remained adamant that he will not sign a bill giving tribes exclusive control. Stitt’s contentious relationship with the tribes, which have historically had gambling exclusivity, has stymied recent attempts in the state.

Hawaii might have been the lone bright spot for sports betting legalisation progress, as a sports betting bill made it further than ever before. The issue passed the Senate and House but failed to emerge from a conference committee by the deadline. Governor Josh Green even signalled he would sign the bill if it had reached him.

iCasino gambling legislation efforts stumble

Online casino efforts face similar pushback based on perceived fears about problem gambling as a result of the rise of sports betting. Legislative opponents kept legalisation attempts at bay, supported by a group of brick-and-mortar casino operators worried about revenue cannibalization.

Lawmakers in multiple states introduced or hinted at online casino legislation, including:

• Indiana
• Maine
• Massachusetts
• New Hampshire
• New York
• Ohio
• Virginia
• Wyoming

The most significant push for online gambling legislation was in Maine, where an iCasino bill reached Governor Janet Mills. Mills has not signed the bill.

In Illinois, Governor JB Pritzker hinted at online casino to help increase state tax revenue. Ultimately, the state passed the per-wager fee instead.

Bills in New Hampshire and Virginia were both tabled by their sponsors shortly after introduction.

Other states concentrated on other issues, and some efforts even garnered vocal opposition from key figures such as Ohio’s Governor DeWine.

Pat Evans

Pat covers the legislation and regulation of online gambling in North and South America, having covered the US sports betting industry extensively since 2019.