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

Only seven states currently allow iGaming, whereas 39 states and Washington, DC, allow some kind of sports betting. This year, bettors shouldn't anticipate an increase in those figures.

Jordan Bender, a Citizens Equity Research Analyst, claims in a recent report to clients that the firm has no foundation for legalization in 2026. Even while things are moving in the right direction, he adds, "we have taken a bearish view as we model no new states legalizing sports betting or iGaming." Legislative action is a time-consuming procedure. However, surprises can happen.

"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 became the latest state to implement online sports betting last month, and it may be the last for a while.

Could Prediction Markets Promote the Growth of Video Games?

Considering the 11 states that forbid sports betting, it's a "lock" that Texas and California won't participate this year, to borrow a phrase from business jargon. The other states are Georgia, Minnesota, and Oklahoma, where legislation pertaining to sports betting has often been offered but ultimately failed. The other states include politically conservative states that have shown minimal interest in sports betting, as well as Hawaii and Utah, which have no legal betting alternatives at all.

There is some conjecture that more states may decide to allow online sports betting or iGaming as a result of the growth of prediction markets. Although there are currently no ways for states to tax yes/no derivatives, it's unclear whether this will lead to an increase in gaming.

Bender points out that state legislators are becoming more conscious of the threat posed by the prediction markets tax, but it will take time to resolve the issue, citing Wisconsin's failed sports wagering law as an example from late last year.

“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.

The path might be much more challenging for iGaming. Only seven states currently allow iGaming: Connecticut, Delaware, Michigan, New Jersey, Pennsylvania, Rhode Island, and West Virginia. Only Florida is anticipated to introduce regulated online casinos by the end of 2027, according to industry observers.

Everyone's Focus on Sports Betting Taxes

Illinois, Louisiana, New Jersey, and Ohio increased their levies on sports betting last year. A city-specific levy on internet sports betting is being proposed by Chicago.

The point is that states are searching for additional sources of income, and politicians are frequently ready to turn to the gaming sector in areas where it is permitted. Investors are aware of that.

“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.”