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 online casino (the ninth state with any legal iGaming, counting Nevada's poker-only market) when LD 1164 was enacted without the governor's signature on 11 January 2026; like other non-emergency laws of that session it took effect on 29 July 2026, and launches wait on the state's Gambling Control Unit writing rules and issuing licences. Between them the seven live markets generated online casino revenue of $10.73 billion in 2025, according to the American Gaming Association, and in each of them online casino revenue exceeds sports betting revenue, usually by a wide margin: in 2025, on the AGA's figures, Pennsylvania took $3.46 billion from iGaming against $883.7 million from sports betting (its Gaming Control Board, which reports on a different basis, gives $2.78 billion and $602.5 million), and even Rhode Island, the smallest market, reported $58.0 million against $40.8 million. The reason is structural: a casino game's small built-in edge is applied to money that is recycled many times in a session, whereas a sportsbook's margin is taken once 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 opponents such as the National Association Against iGaming cite cannibalisation and the job losses they expect to follow; the evidence from the live markets is that land-based revenue has broadly held steady alongside online growth (in 2025 Atlantic City's land-based casino revenue rose 2.7 per cent and Pennsylvania's fell 0.8 per cent, while online casino revenue grew by more than a fifth in both states), 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 has to be weighed against the tax that states already collect from their land-based casino operators, which is the revenue opponents say online play would erode.
The result is a slow march. Bills have been introduced in Illinois, New York, Maryland, Indiana, Virginia and others in recent sessions; most have died in committee, and the furthest any has got recently is Maryland's 2024 bill, which passed the House of Delegates 92 to 43 and then went no further than a Senate hearing. Illinois has seen online casino bills since at least 2021; the 2026 version proposes a 25 per cent tax and repeats a 2025 bill that did not get beyond its first committee. In New York, Senator Addabbo's bill, which would tax online casino revenue at 30.5 per cent, was sent back to committee in January 2026. Maine, in 2026, is the only state to have legalised since Rhode Island in 2023, and industry forecasts of rapid expansion 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, 26 online casinos operating at the end of 2025, and a state tax raised in the 2025 state budget from 15 to 19.75 per cent with effect from 1 July 2025 (22.25 per cent once a 2.5 per cent community investment obligation is added). Its regulator, the Division of Gaming Enforcement, has regulated online casino since 2013, as long as any state regulator of a full online casino market, and its rules (on testing, geolocation, KYC, affiliates, responsible gambling) are widely used as a template.
Pennsylvania taxes online slots at 54 per cent and online table games and poker at 16 per cent, close to the 55 and 16 per cent it charges on land-based slot machines and table games, 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, at $3.46 billion in 2025 on the AGA's figures, 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 $3.09 billion of iGaming revenue in 2025 and 15 online casinos live at the end of the year. It is a member of the multi-state poker compact.
West Virginia taxes online casino at 15 per cent, tethered to its five casinos, with a small market ($375.5 million in 2025). Connecticut runs online casino through its two tribes, the Mohegan and the Mashantucket Pequot, under a May 2021 law (the state lottery takes part in sports betting, not online casino), with a tax of 18 per cent due to rise to 20 per cent after the fifth year of operations, in 2026. Delaware operates through its three racinos with a single contracted platform, BetRivers, which the Delaware Lottery brought in from early 2024 after a decade with the previous provider. Rhode Island launched in March 2024 with a single operator tied to the state's casino company, Bally's, with effective tax rates of 62.45 per cent on online slots and 16.5 per cent on online table games, which makes it, with Delaware, one of the least competitive structures in the country.
Maine's 2026 law is a departure: only the state's federally recognised tribes, the Wabanaki Nations, may hold an online casino licence, one each, and each may contract with no more than one management services provider to run it, with 18 per cent of adjusted gross receipts paid to state funds and the state's commercial casinos excluded. It extends the model of the 2022 law that gave the tribes mobile sports betting.
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 Justice Department's 2018 opinion froze its expansion and the First Circuit's January 2021 decision that the Act is limited to sports gambling revived it; Pennsylvania became the compact's sixth member in April 2025. Pooled poker remains small next to casino but is the only interstate online casino product in the country (horse racing has long taken interstate wagers placed by telephone or other electronic media under federal law).
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 tested against the state's technical standards (RNG, RTP, game rules) and approved by the regulator before it is offered (New Jersey's rules refer throughout to Division-approved games); platforms are certified and changes notified; servers must be located in the state (in New Jersey, primary gaming equipment must sit within Atlantic City, with the regulator's prior approval); geolocation must confirm presence within the state when the player logs in and at intervals the regulator approves during the session; 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, spend and time limits (New Jersey requires operators to offer daily, weekly and monthly deposit and spend limits and a daily time limit), session reminders and cooling-off periods. New Jersey's regulator proposed rules in November 2025 that would require automated monitoring to detect at-risk players, a lead responsible gaming executive to investigate them, and the suspension or closure of accounts that show signs of problem gambling after an intervention. 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. They grew fastest in states without legal online casino, and the legal reaction was fast: California, Connecticut, Montana, New Jersey and New York passed laws in 2025 explicitly prohibiting them, Maine followed in 2026 with fines of $10,000 to $100,000 for operating or promoting one, and regulators in states such as Arizona and Louisiana issued cease-and-desist orders under existing law. 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, those who fear for casino jobs, 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, job-loss arguments, 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.