The smaller, richer market
Online casino is legal in far fewer American states than sports betting and produces far more revenue where it exists. Seven states have live online casino markets in 2026: New Jersey (since 2013), Delaware (2013), Pennsylvania (2019), Michigan (2021), West Virginia (2020), Connecticut (2021) and Rhode Island (2024). Maine became the eighth to legalise in January 2026, with a law effective in July 2026 and launches expected around the turn of 2027. Between them the live markets generate online casino revenue of several billion dollars a year, and in each of them online casino revenue exceeds online sports betting revenue, usually by a wide margin, because the product has a structural hold of several per cent on turnover that recycles many times a session rather than a 7 to 10 per cent hold on money bet once.
That contrast, more states with sports betting and more revenue from casino, is the central fact of American online gambling policy, and the reason the industry's lobbying effort has shifted from sports to casino.
Why iGaming lags
Sports betting legalised quickly after 2018 because it was culturally accepted, already happening offshore, and championed by leagues, media and states hungry for revenue. Online casino faces opposition that sports betting did not. Land-based casinos in several states fear cannibalisation of their floors, and casino workers' unions have opposed bills on that basis; the evidence from the live markets is that land-based revenue has generally held or grown alongside online, but the argument persists. Tribal exclusivity complicates the question in states where tribes hold Class III rights. Legislators who accepted sports betting as a bet on a game are more hesitant about slots on a phone, and responsible-gambling advocates focus their opposition on casino. And the fiscal case is muddied by the fact that several states have already sold or committed their land-based casino revenue streams.
The result is a slow march. Bills have been introduced in Illinois, New York, Maryland, Indiana, Virginia, Iowa, Louisiana, Wyoming and others in each of the past several sessions; most have died in committee, and the ones that advanced (Maryland in 2024, Illinois in 2026) have stalled on tax rates, licence counts or land-based opposition. Illinois in 2026 has bills proposing a 25 per cent tax; New York's competing bills in 2026 range from 25 to 50 per cent. Industry projections that the number of online casino states could double in a single year have not been borne out.
The live markets compared
New Jersey is the model: online casino licences tethered to Atlantic City casinos, each with multiple skins, a market of more than thirty brands, and a tax raised in the 2025 state budget to 19.75 per cent from 15 per cent. Its regulator, the Division of Gaming Enforcement, is the most experienced online regulator in the country and its rules (on testing, geolocation, KYC, affiliates, responsible gambling) are the template others copied.
Pennsylvania taxes online slots at 54 per cent and online table games and poker at 16 per cent, mirroring its land-based rates, with licences tethered to the state's casinos at 10 million dollars for a full certificate. Despite the slot tax it is the largest online casino market by revenue, which says something about the elasticity of the product.
Michigan licenses online casino and sports betting together through its commercial and tribal casinos, with a graduated tax from 20 to 28 per cent on online casino revenue, and has become the second-largest market with a broad operator field. It joined the multi-state poker compact and its regulator is regarded as effective.
West Virginia taxes online casino at 15 per cent, tethered to its five casinos, with a small market. Connecticut runs online casino through its two tribes and the state lottery under a 2021 arrangement, with a tax rising over time from 18 to 20 per cent. Delaware operates through its three racinos with a single contracted provider, switched in 2024 after a decade with the previous one. Rhode Island launched in 2024 with a single operator tied to the state's casino company, taxed at 61 per cent on slots and 15.5 per cent on tables, which is the least competitive structure in the country.
Maine's 2026 law is a departure: online casino licences are held by the state's four Wabanaki tribes, who partner with operators, with a 16 per cent tax and the state's commercial casinos excluded, the culmination of a decade of tribal-state negotiation.
Poker and interstate compacts
Online poker is legal wherever online casino is, and in Nevada, which permits poker without casino. Poker needs liquidity, and a single state's players cannot fill tables; the answer is the Multi-State Internet Gaming Agreement, under which Nevada, Delaware, New Jersey, Michigan, West Virginia and Pennsylvania have agreed to pool players across state lines. The compact depends on the Wire Act being read as sports-only (lesson one), which is why the 2018 opinion froze its expansion and the 2021 First Circuit decision revived it. Pooled poker remains small next to casino but is the only interstate online gambling product in the country.
Product and technical rules
Online casino regulation is more prescriptive than sports betting regulation, because the product is the operator's own. Every game must be certified by an approved testing laboratory against the state's technical standards (RNG, RTP, game rules); platforms are certified and changes notified; servers must be located in the state (or, under some rules, in an approved location with the state's consent); geolocation must confirm presence within the state for every session and, for some states, every transaction; and the state's list of approved games and suppliers is a licensing gate for every studio and aggregator. Suppliers need their own licences or registrations in every state they serve, which makes American supply a licensing business as much as a content one.
Responsible-gambling rules follow the land-based tradition: state self-exclusion lists, deposit and loss limits, session reminders, cooling-off periods, and, in Pennsylvania and New Jersey, detailed requirements on problem-gambling plans and on interactions with at-risk customers. Affordability checks in the British sense are not required.
Sweepstakes as the shadow market
Where online casino is not legal, a parallel market has grown: sweepstakes casinos, which use a dual-currency model to offer slot and table games with cash prizes under sweepstakes and promotional law rather than gambling law. By 2024 they were estimated to be taking billions of dollars a year in purchases across states without legal online casino, and the legal reaction was fast: Montana, Connecticut, Nevada, New Jersey, New York and California enacted prohibitions in 2025, other states followed in 2026, regulators issued cease-and-desist orders, and class actions multiplied. The sweepstakes question is the sharpest illustration of the online casino gap: demand exists everywhere, and where the state does not license it, something else fills it. Lesson six returns to it alongside prediction markets.
The outlook
The industry's projections for online casino expansion have been consistently early, and the honest forecast is slow growth: one or two states per two-year cycle, with the large prizes (New York, Illinois, Maryland) depending on tax-rate compromises and on land-based operators being brought inside the tent. The pressure for expansion comes from state budget gaps, from sweepstakes and offshore leakage that legislators are increasingly aware of, and from the live markets' revenue figures; the resistance comes from land-based interests, unions, tribes and public health advocates. An operator planning for the American online casino market plans for the seven live states, for Maine, and for a pipeline whose timing nobody can promise.
What to take from this lesson
Seven states have live online casino and Maine has legalised it; each produces more online revenue than its sports betting market. Expansion is slow because of land-based cannibalisation fears, unions, tribal exclusivity and legislative caution. New Jersey is the template; Pennsylvania the largest; Michigan the broadest; Rhode Island and Delaware single-operator outliers; Maine tribal. Poker pools across six states under a compact that depends on the Wire Act's sports-only reading. Product regulation is prescriptive (certification, in-state servers, geolocation, supplier licensing). Sweepstakes casinos filled the gap in non-casino states and are now being prohibited state by state.