The commercial gaming sector in the United States experienced a revenue boost in February, with an increase of 4.6% compared to the same month last year. However, the performance of sportsbooks raised concerns, as they reported a decline in revenue year-on-year.
According to data from the American Gaming Association's Commercial Gaming Revenue Tracker, sportsbook earnings fell by approximately 6% compared to the previous year. This downturn is largely attributed to a decreased hold percentage resulting from favorable outcomes for players, which subsequently squeezed operator margins. Additionally, there are worries regarding the competitive pressures facing the industry.
While the U.S. gaming market continued its upward trend in February, a noticeable divide is emerging. iGaming is thriving, while retail casinos are striving for stability, and sports betting is beginning to show signs of difficulty. As prediction markets gain popularity among sports bettors, there are indications that state-sanctioned sports betting revenues may struggle.
Revenue from land-based casinos saw a year-on-year increase of 3.9%, bolstered by a 5% rise in table game earnings. This marked the first monthly growth for table games since October, offering a hopeful outlook for retail casinos following a lackluster 2025.
On the other hand, iGaming maintained its robust momentum, with online casino revenue soaring by 25% to reach $976.3 million, which accounts for nearly a quarter of the $4 billion generated by traditional casinos.
The overall gains from casinos helped to mitigate the weaker performance in sports betting, as sportsbook revenue dipped by 6.4% year-on-year to $1.17 billion in February.
This decline was partially linked to a lower hold rate of 9.24%, down 73 basis points. Nevertheless, the broader landscape of sports betting remains troubling, with the handle declining for the fourth consecutive month.
In recent months, prediction market platforms have begun to expand into sports event contracts that resemble traditional betting options, including player props and parlays. Unlike regulated sportsbooks, these platforms do not operate under state gaming licenses and do not contribute tax revenue through established betting frameworks.
On the same day the latest Revenue Tracker update was released, the American Gaming Association highlighted on X that prediction markets have potentially cost states around $800 million in tax revenue, funds that could have supported pensions, responsible gaming initiatives, and other public services.
Overall, regulated gaming produced $1.42 billion in gaming tax revenue for state programs, reflecting a 10.5% increase from the previous year. However, the AGA notes that this figure could have been significantly higher, impacted by operators of skill machines, “sweepstakes casino” websites, and those offering sports bets through prediction market platforms, none of which contribute to state gaming taxes.
The results for March may provide a clearer picture of whether the decline in sports betting is a temporary shift or indicative of a broader trend. Prediction market operators have ramped up their advertising efforts around the NCAA Tournament, a key period in the U.S. sports betting calendar. If they begin to capture a significant share from licensed sportsbooks, this may become apparent in the AGA’s next monthly report.