Commercial, Tribal Gaming Hit Records as Prediction Markets Rise

U.S. commercial gaming generated a record $7.06 billion in May while tribal gaming posted a record $46.2 billion for fiscal year 2025, according to industry and federal reports. Trade groups, tribal organizations and regulators have warned that prediction markets offering sports event contracts could affect licensed sportsbooks and state tax revenues.

The American Gaming Association’s Commercial Gaming Revenue Tracker shows May commercial gaming revenue rose 4.6% year over year. Commercial gaming revenue totaled $34.0 billion for the first five months of 2026, a 6.4% increase from the same period in 2025. Sports betting revenue in May fell 1.8% from a year earlier, while year-to-date sports betting revenue through May was 8.5% higher than the first five months of 2025.

The National Indian Gaming Commission reported FY2025 gross gaming revenue for tribes of $46.2 billion, a 5.3% increase from FY2024 and the highest annual total on record for Indian gaming. Seven of the agency’s eight regions reported year-over-year growth; the Rapid City region posted a slight decline.

Prediction markets let users buy and sell contracts tied to sports outcomes. The AGA has asked Congress and the Commodity Futures Trading Commission for clarity that sports event contracts fall outside the Commodity Exchange Act and has raised concerns that those contracts enable nationwide wagering without state gaming licenses, state tax payments or some consumer protections. The AGA also published a tracker estimating state gaming tax revenue lost to prediction markets at more than $1.21 billion since such contracts were introduced.

Several tribes and tribal organizations have filed lawsuits against operators including Kalshi, asserting that sports event contracts violate exclusivity agreements under the Indian Gaming Regulatory Act. State enforcement actions and litigation involving prediction market operators are active in Nevada, New Jersey, Maryland, Washington, Minnesota, New York and New Mexico. Members of Congress have held hearings on the topic and lawmakers have introduced more than two dozen bills addressing jurisdiction and regulation.

Activity during the recent FIFA World Cup showed growth for both regulated sportsbooks and prediction markets. One sportsbook operator reported more than 2 million bets on the World Cup final and said total bets on the tournament rose sharply compared with 2022. A market analysis estimated prediction market trading volume exceeded $50 billion in June, driven by World Cup activity. Another researcher estimated prediction markets accounted for about 27% of comparable U.S. sports betting activity during the tournament, up from roughly 9% earlier in the year. A geolocation provider for regulated sportsbooks reported record location checks during the tournament, including 160.6 million checks in the opening week and 14.7 million checks during the final.

Trading volume on prediction exchanges measures the total value of contracts traded and does not equal operator revenue. Revenue reports from the AGA and the NIGC do not reveal how much activity, if any, has shifted from licensed sportsbooks to federally regulated event contracts. Other factors that affect sportsbook revenue and handle include the slower pace of new state market launches after 2018 and changes in sportsbook hold.

At a House subcommittee hearing, David Bean, chairman of the Indian Gaming Association, testified that national revenue gains can mask local declines and that many tribes and regions are experiencing losses even as prediction markets have grown over the past 18 months.

Courts have reached differing rulings on key legal questions and no single federal standard has been set. Litigation and regulatory review of prediction markets are ongoing and may proceed through appeals.