US Sports Betting State by State: How the Market Works

The United States is not one sports betting market but almost forty, each with its own law, regulator, tax, licence structure and quirks, all created since the Supreme Court struck down the federal ban in May 2018. This guide explains the structure that produced that patchwork, the models states chose, where the money is, what tax and market access look like, which states remain closed and why, how online casino differs, and how prediction markets have started to change the picture. It gives the shape rather than a table of rates, because the rates change every legislative session and the regulatory map tracks them.

The legal foundation

The Professional and Amateur Sports Protection Act of 1992 barred states (other than Nevada and a few grandfathered exceptions) from authorising sports betting. New Jersey challenged it for years and in Murphy v NCAA (2018) the Supreme Court held that PASPA unconstitutionally commandeered state legislatures. From that day, sports betting became a matter for each state to permit or prohibit.

Two federal laws still matter. The Wire Act of 1961 prohibits interstate transmission of bets on sporting events, which is why every state's online market is fenced by geolocation and why national liquidity pools do not exist. The Unlawful Internet Gambling Enforcement Act of 2006 obliges payment processors to block unlawful gambling transactions, which is what makes offshore operators' payments difficult and licensed operators' payments a compliance function.

Tribal gaming sits on a third foundation: the Indian Gaming Regulatory Act of 1988, under which federally recognised tribes conduct gaming on their lands under compacts with states. Where tribes hold exclusivity for casino gaming, sports betting has had to be negotiated through compacts, which explains the delays and the shapes of the markets in California, Florida, Oklahoma and elsewhere.

The models states chose

Open, competitive online markets tied to land-based licences. New Jersey's model, followed by Pennsylvania, Michigan, Colorado, Indiana, Arizona, Ohio, Massachusetts and others: each casino, racetrack or (in some states) professional sports team or tribe holds a licence and may partner with one or more online brands ("skins"). Operators compete, tax is on revenue, and the market has ten to twenty brands.

Limited-operator markets. States that capped licences: New York (nine online operators chosen by tender, at a 51% tax), Illinois (tied to casinos with high fees), Tennessee (online only, no casinos, unlimited licences but strict rules), and states with two or three operators.

Lottery or state-run models. New Hampshire, Oregon, Rhode Island, Montana and Delaware, where the state lottery contracts with a single operator or runs the product itself. Small markets with limited choice.

Retail only. Mississippi, North Carolina until 2024, and a few others permitted betting in casinos but not online, with online following later or not at all.

Tribal models. Florida, where the Seminole Tribe holds a statewide online monopoly under a compact upheld after litigation; Connecticut, where the two tribes and the lottery each hold licences; Arizona, where tribes and sports teams share the licences; and California, where competing tribal and commercial ballot measures both failed in 2022 and no market exists.

Where the money is

New York is the largest market by handle and tax revenue, despite its 51% rate, because of its population and the absence of casinos in the city. New Jersey, Illinois, Pennsylvania, Ohio, Michigan, Massachusetts, Arizona, Colorado, Virginia, Tennessee, Indiana and North Carolina follow. Nevada, the original market, is smaller online because of in-person registration rules. Florida's monopoly makes it large and opaque. Texas and California, the two most populous states, have no legal sports betting, and their eventual decisions are the largest open question in the market.

The national picture: annual handle in the hundreds of billions of dollars, revenue in the low tens of billions, and two operators (FanDuel and DraftKings) holding a combined majority of online share, with BetMGM, Caesars, Fanatics, bet365, Hard Rock and a second tier behind.

Tax and its direction

States tax sports betting on gross gaming revenue at rates from single digits (Nevada, Iowa) through the teens and twenties (New Jersey, Michigan, Colorado) to the high end (Pennsylvania in the 30s, New York at 51%, Rhode Island and New Hampshire at 51% under their lottery models). Whether promotional credits are deductible from taxable revenue is a second variable that changes the effective rate as much as the headline.

The direction is up. Illinois moved to a graduated rate topping out at 40% and then added a per-bet fee; Ohio doubled its rate; several states have debated increases; and the operators' response has been surcharges, reduced promotions and, in Illinois, a per-bet charge passed to customers. Tax is the policy lever states reach for when budgets tighten, and every operator's state-level model carries scenarios.

Market access

Because most states tie online licences to land-based licence holders, market access is a business: casinos, racetracks, tribes and teams sell skins to online operators for fees and revenue shares, and the price of access in a large state has been substantial. Operators without land-based estates (DraftKings, FanDuel at the outset, bet365, Fanatics) bought access; operators with estates (MGM, Caesars, Penn, Rush Street) used their own. Access deals expire and are renegotiated, and the operators that consolidated the US market in the early years partly did so by locking up skins.

The states still closed

California (tribal and commercial interests in conflict, and two failed ballot measures), Texas (a legislature that meets every two years and a Senate that has blocked it), Georgia, Alabama, South Carolina, Oklahoma (tribal compact disputes), Minnesota (tribal and racetrack conflict), Missouri (approved by ballot in 2024, launched 2025), Hawaii, Utah, Idaho and Alaska. Each has its own politics; the common thread is that where an existing gaming interest (tribes, casinos, a lottery) cannot agree with newcomers on who gets the licences, nothing passes.

iGaming: the profit is elsewhere

Online casino (iGaming) is legal in only seven states: New Jersey, Pennsylvania, Michigan, West Virginia, Connecticut, Delaware and Rhode Island. It produces more revenue per state than sports betting and far higher margins, and the operators with strong casino products in New Jersey, Pennsylvania and Michigan earn most of the US online industry's profit. Every legislative session brings bills in New York, Maryland, Illinois, Maine and elsewhere, and every session most fail, blocked by land-based casinos fearing cannibalisation, by unions, and by problem-gambling concerns. The iGT Oracle runs a market on which state moves next.

Prediction markets

Since 2024, exchanges regulated by the federal Commodity Futures Trading Commission have offered sports event contracts (which team wins, by how much) nationwide, including in states without legal sports betting, on the argument that they are derivatives, not gambling. State regulators have issued cease-and-desist orders, litigation has run in several federal courts, and the CFTC's own position has shifted with administrations. Sportsbooks see a competitor operating without state licences, state taxes or state consumer protections; the exchanges see a federal market. The outcome is the largest structural question in US betting since PASPA, and the prediction markets desk follows it daily.

Frequently asked questions

How many states have legal sports betting? Around 38 plus Washington DC, with roughly 30 offering online betting. The regulatory map has the current list.

Why is New York's tax 51%? The state chose a limited-operator tender in which bidders competed on tax rate; the winning consortium bid 51%.

Can I bet online across state lines? No. The Wire Act and state law require geolocation within the licensing state.

Which states have online casino? New Jersey, Pennsylvania, Michigan, West Virginia, Connecticut, Delaware and Rhode Island.

Are prediction markets legal sports betting? They are federally regulated event contracts whose status under state gambling law is being litigated. They operate nationwide today.

Related on iGaming Times

The regulatory map and United States country page carry each state's current position; Prediction Markets Explained covers the challenger; Gambling Tax Rates by Country includes the state rates; and the US Online Gambling Regulation course goes deeper.

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Regulation, tax and market figures move quickly, sometimes mid-year. Where this guide gives a number, treat it as a starting point and confirm the current position with the named primary source before you rely on it.