US Online Casinos 2025: A Review of the Year That Was

As 2026 begins, the U.S. online casino industry is shaped more by regulatory clarification and market consolidation than by rapid expansion. While 2025 did not deliver a wave of new iGaming states, it was far from a quiet year. Instead, it marked a period of tightening oversight, growing resistance to unregulated alternatives, and renewed legislative positioning ahead of potential expansion in 2026.

For lawmakers, operators, and players alike, 2025 helped define the boundaries of what US online casinos are, and are not, likely to become in the near term.

The US iGaming Landscape in 2025: Limited Reach, Strong Returns

By the end of 2025, the number of states offering fully regulated, real-money online casinos remained small. However, those markets continued to deliver outsized revenue and tax contributions, reinforcing the long-term case for regulated iGaming.

States With Legal Online Casinos

As of late 2025, fully regulated real-money online casino gaming remained limited to seven US states: Connecticut, Delaware, Michigan, New Jersey, Pennsylvania, Rhode Island, and West Virginia. While no new iGaming states were added during the year, these established markets continued to demonstrate the commercial viability of regulated online casinos.

States such as New Jersey, Michigan, and Pennsylvania reported steady year-over-year growth throughout 2025, reinforcing the case that online casinos can generate meaningful and recurring tax revenue without significantly undermining land-based gaming operations.

At the same time, political caution persisted in states considering expansion. Ongoing concerns around responsible gambling, opposition from land-based casino interests, and unresolved tribal-state dynamics continued to slow legislative momentum, particularly in larger or more complex gaming markets.

The Defining Regulatory Trend of 2025: The Sweepstakes Reckoning

One of the most consequential shifts of 2025 came not from traditional iGaming expansion, but from regulatory action against sweepstakes and social casino platforms.

Throughout the year, multiple states enacted measures to limit or prohibit platforms that offer casino-style games under sweepstakes or promotional frameworks. States including New York, Montana, Connecticut, New Jersey, and Louisiana either passed legislation or issued cease-and-desist orders to curb sweepstake casino operations.

Regulators increasingly viewed sweepstakes casinos as operating in a legal grey area; offering real-value gameplay without the licensing, taxation, or consumer safeguards required of regulated operators. As legal iGaming markets matured, tolerance for unlicensed alternatives declined.

By the end of 2025, the regulatory message was clear: casino-style gaming with real value would no longer be permitted outside established gambling frameworks.

Market Control in 2025: The Big Four Tighten Their Grip

Competition in the U.S. online casino market remains dominated by a small group of operators. FanDuel, DraftKings, BetMGM, and Caesars collectively held roughly 80% of the market, leveraging the scale and brand recognition built through sports betting to strengthen their casino offerings.

A key moment came in July 2025, when Flutter Entertainment acquired Boyd Gaming’s remaining 5% stake in FanDuel, giving Flutter full ownership of the largest online sportsbook and casino brand in the US.

The move highlighted a broader trend toward consolidation. Rising compliance costs, tighter advertising standards, and increased regulatory scrutiny have made national scale increasingly important. For smaller operators, 2025 reinforced the difficulty of competing without significant capital and cross-platform reach.

New Market Activity: Cautious Progress, Not Rapid Expansion

Although 2025 did not add new iGaming states, there were notable developments.

Rhode Island fully launched its online casino market in early 2025 under a single-operator model, with Bally’s as the exclusive provider. While limited, the market offered lawmakers in other states a real-world example of a tightly controlled alternative to open licensing models.

Meanwhile, Missouri launched legal sports betting in late 2025. While not an online casino launch, the legalization of sports betting has historically served as a precursor to broader iGaming discussions in multiple states.

Together, these developments reflected a broader theme of 2025: incremental change over sweeping reform.

Looking Ahead to 2026: Pressure, Correction, and Expansion Potential

As 2026 begins, the US online casino industry faces a convergence of forces. State budget pressures, more precise regulatory boundaries, and mature iGaming performance data are pushing lawmakers toward more definitive decisions.

States to Watch for iGaming Legalization in 2026

Several states enter 2026 with active discussions or mounting financial incentives.

Maryland

Maryland faces a multi-billion-dollar budget gap, making online casino tax revenue increasingly attractive. iGaming is expected to feature prominently in fiscal discussions during the 2026 legislative session.

Ohio

Following the strong performance of its sports betting market, Ohio continues to build momentum toward iGaming. Supporters are targeting a potential launch by March 31, 2026, should legislation advance.

Virginia

After stalled efforts in 2025, online casino legislation has been pushed to the 2026 session, keeping Virginia firmly on the industry’s radar. Lawmakers are also revisiting plans for a unified gaming commission as casino growth expands online, a move that could influence how iGaming legislation is structured going forward.

New York

Often described as the industry’s “white whale,” New York remains the most consequential potential market. Legalization in 2026 could more than double the size of the US iGaming market, though political resistance remains strong.

Federal Tax Changes Take Effect in 2026

Beyond state-level developments, 2026 brings a significant shift in federal tax policy.

Under the One Big Beautiful Bill Act (OBBBA), changes effective January 1, 2026, include:

Loss Deduction Cap

Gamblers may deduct only 90% of losses against winnings, down from 100%. This creates scenarios where players who break even still owe tax on “phantom” income.

New W-2G Threshold

Slot and sports betting reporting thresholds are expected to be standardized at $2,000, thereby reducing inconsistencies in paperwork and simplifying reporting for mid-tier wins.

Technology Trends Shaping the Next Phase of iGaming

While legislation advances slowly, technology continues to evolve.

AI-driven personalization is expected to expand in 2026, offering tailored game recommendations and enhanced responsible gambling tools, including automated spending caps and behavioral monitoring.

Live dealer casinos are moving toward more interactive, player-driven formats that blend social features with real-time gameplay.

Meanwhile, interstate online poker is set to grow as more states consider joining the Multi-State Internet Gaming Agreement (MSIGA), following recent expansions.

Final Thoughts

2025 was not business as usual for US online casinos. It was a year defined by regulatory clarity, enforcement against unlicensed alternatives, and consolidation among market leaders. While the map of legal iGaming states remained unchanged, the groundwork laid during the year positioned the industry for more decisive action in 2026.

Whether that action results in meaningful expansion or sharper rules will depend on political will and fiscal pressure. What is clear is that the direction of US online casino regulation is becoming better defined, even if the pace remains deliberate.