No States Will Approve iGaming, Sports Betting in 2026, Says Analyst

• Bleak outlook for US gaming expansion this year
• Sports betting is legal in 39 states and Washington, DC
• Adding to that list this year appears unlikely, says a sell-side analyst

Currently, 39 states and Washington, DC, permit some form of sports wagering, while just seven allow iGaming. Bettors shouldn’t expect those numbers to grow this year.

In a new report to clients, Citizens Equity Research Analyst Jordan Bender says the firm’s base for 2026 legalization is nothing. He notes that while things are trending in the right direction, legislative action is a time-consuming process, adding “we have taken a bearish view as we model no new states legalizing sports betting or iGaming.” Surprises are possible, though.

The learnings from the last three years highlight to us that guessing legislative changes is near impossible, as North Carolina legalized sports betting at the last moment, the Illinois tax rate changed structure in the final hours, and Missouri, a state expected to pass sports betting, barely garnered enough votes,” observes Bender.

Missouri went live with online sports betting last month, making it the most recent state to do so and perhaps the last for some time.

Could Prediction Markets Spur Gaming Expansion?

Looking at the 11 states that don’t allow sports betting, borrowing a term from industry lingo, it’s a “lock” that California and Texas won’t join the party this year. The others include Georgia, Minnesota, and Oklahoma — states where sports betting legislation has been frequently proposed only to die. The other states include Hawaii and Utah, which have no legal betting options at all, and politically conservative states that have expressed little interest in sports betting.

Highlighting the example of Wisconsin’s failed sports wagering bill late last year, Bender notes state politicians are increasingly aware of the prediction markets tax threat, but addressing the issue takes time.

“Lawmakers are taking notice and could be an upside catalyst to our estimates, but as mentioned, these bills take time, and we have taken a view not to add in sports betting into our models,” notes the analyst.

As for iGaming, the road may be even more difficult. iGaming is permitted in just seven states today — Connecticut, Delaware, Michigan, New Jersey, Pennsylvania, Rhode Island, and West Virginia. Industry observers expect that through the end of 2027, only Florida will add regulated internet casinos.

All Eyes on Sports Betting Taxes

Last year, Illinois, Louisiana, New Jersey, and Ohio boosted sports betting taxes. Chicago is attempting to implement a city-specific online sports wagering tax.

“We expect investors to grapple with ‘what state is next?’ for these changes and could highlight a broader issue for investors, thus creating volatility in trading in 1H26 during legislative sessions,” concludes Bender. “That said, we believe the overreaction in valuation is partially a result of higher taxes, but this year could prove different with the successful implementation of minimum bets and surcharges in Illinois starting in September 2025, acting as a defensive strategy in this event.”