Legal US sports betting ended 2025 with record numbers, then spent 2026 learning that record handle does not guarantee record profit. Margins slipped, two of the biggest operators trimmed or held their outlooks, and federally regulated prediction markets turned into a real competitor for the same bettors. Our read: 2027 will be the year the industry stops selling growth and starts selling efficiency.
In this article 8 sections
- Where the sports betting market stands after a record 2025
- State regulator reports show handle softening in mature markets
- Operator earnings and guidance: DraftKings, FanDuel and BetMGM
- Promotions spending is climbing again
- Prediction markets turn into a real sportsbook rival
- Bettors are growing in number but cooling on the idea
- What to expect in 2027
- Further reading on American.Bet
Where the sports betting market stands after a record 2025
Start with the high-water mark. The American Gaming Association’s year-end data showed commercial sportsbook revenue of $16.89 billion in 2025, up 22.6% on 2024, across 35 reporting jurisdictions (Florida’s tribal-only market is counted separately). New York alone produced about $2.5 billion of that, with Illinois, New Jersey and Ohio the only other states above $1 billion. The AGA tracker put full-year handle at $166.94 billion, up 11%, which means revenue grew twice as fast as betting volume. That gap is the story: operators were squeezing more out of every dollar wagered, mostly through higher-margin multi-leg products.
2026 broke that pattern. According to AGA figures for the second quarter, sports betting revenue slipped 0.2% year on year to $3.91 billion even as handle rose 7.8% to $38.84 billion. Hold fell to 10.1%. June was the sharpest example: World Cup action pushed handle up 26%, yet revenue dropped 18.3% as hold fell to 8.1% from 12.5% a year earlier.
State regulator reports show handle softening in mature markets
The monthly state reports add a second, more worrying signal: in some established markets, people are simply betting less.
- New Jersey: The Division of Gaming Enforcement reported September 2026 sports wagering revenue of $77.0 million, down 14.3% year on year, on handle of $725.5 million, down 7.3%. Year-to-date handle is down 4.1% and revenue down 6.3%, while the state’s internet casino win is up 13.2%.
Revenue swings month to month with results. Handle does not, and two of the oldest large markets posting lower volume during football season is not noise. Check our New Jersey sportsbooks guide for how the state’s operators compare.
Operator earnings and guidance: DraftKings, FanDuel and BetMGM
The public companies are telling the same story in their own numbers.
DraftKings’ second-quarter release showed sports handle up 14.5% to $13.14 billion, but sports revenue down 10.6% and total revenue down 4.6% to $1.44 billion. Its sports net revenue margin fell to 6.8% from 8.7%. Management blamed unfavorable results and heavier promotional spending on both the sportsbook and its new Predictions product. Monthly unique payers rose about 9% to 3.6 million, but average revenue per payer fell about 13%. The company kept full-year guidance of $6.5 billion to $6.9 billion in revenue and $700 million to $900 million in adjusted EBITDA. Third-quarter results are due November 5.
Flutter went further and cut. Its Q2 filing lowered the 2026 US revenue midpoint to $7.4 billion, down $395 million, and the US adjusted EBITDA midpoint to $760 million, down $210 million. FanDuel still holds a 39% share of online sportsbook gross gaming revenue, but its sportsbook revenue fell 15% in the quarter on handle growth of just 2%. Peter Jackson stepped down as CEO, with Dan Taylor taking over on October 1.
BetMGM is the outlier, mostly because it leans on casino. Its Q3 2026 update showed net revenue up 7% to $710 million and adjusted EBITDA more than doubling to $86 million. Online sports revenue grew 7% to $216 million, against $483 million from iGaming, and its online sports GGR share sits at 8%. BetMGM reiterated 2026 guidance but said it is tracking toward the lower end. Our sportsbooks hub breaks down the brands behind these numbers.
Promotions spending is climbing again
For several years the playbook was simple: spend heavily on launch bonuses, then pull back as states mature. That has reversed. FanDuel’s promotional spend rose 140 basis points to 5.4% of handle in Q2, which Flutter tied to new state launches and World Cup investment, and it has earmarked roughly $385 million of revenue for what it calls strengthening the sportsbook proposition. That reads as better pricing and more bonuses for existing customers. DraftKings named promotions as a direct drag on revenue.
We expect promotional intensity to stay elevated through 2027. When a competitor can offer sports contracts nationally without state licensing, keeping a customer becomes more expensive than acquiring one used to be.
Prediction markets turn into a real sportsbook rival
The biggest change of the past year is not inside the regulated sportsbook market at all. Kalshi recorded about $871 million in notional volume tied to Super Bowl Sunday, according to a Bank of America note, and football has made up roughly 90% of its trading volume in recent months. Eilers & Krejcik Gaming estimated that US sports prediction markets reached about $2 billion in monthly handle-equivalent volume in March 2026, and projected around $34 billion for the full year, or roughly 20% of trailing sportsbook handle. On a per-adult basis, it ranked Kalshi as the fourth-largest US sports betting operator.
That same research found “limited substitution” so far, with activity concentrated in states without legal mobile sports betting, including California and Texas. We think that conclusion will age quickly. The September handle declines in New Jersey and Pennsylvania are the first sign of overlap in licensed states, and the sportsbooks themselves are hedging: DraftKings launched Predictions in December 2025 and says it is growing faster than expected, while Flutter expects FanDuel Predicts revenue to be offset by acquisition costs in the second half of 2026 before growing in 2027. Read our prediction markets section for how these platforms work.
Bettors are growing in number but cooling on the idea
Consumer data points two ways. Pew Research Center found that 22% of US adults bet on sports in the year to summer 2025, up from 19% in 2022, and the share betting online rose from 6% to 10%. Among men under 30, 21% placed an online bet, up from 9%.
Yet 43% of adults now say legal sports betting is bad for society, up from 34% in 2022. Among men under 30, the group that bets most, that figure jumped from 22% to 47%. A customer base that keeps growing while souring on the product is a fragile one, and it gives lawmakers and regulators cover to tighten rules on advertising and promotions.
What to expect in 2027
- Handle growth in the low single digits, with flat or falling volume in mature states. New Jersey and Pennsylvania are already down year on year, and we expect more established markets to follow.
- Hold stays volatile, and revenue tracks it. Q2 2026 showed that higher handle can still produce lower revenue when results go against the books.
- Prediction markets keep taking share. If the Eilers & Krejcik 20% estimate holds, sports contracts could rival a top-three sportsbook in volume, with all three major US operators running a prediction product alongside their sportsbook.
- Promotions stay expensive. FanDuel’s 5.4% promotional rate and DraftKings’ commentary point to retention spending, not the long-promised pullback.
- iGaming carries the earnings. BetMGM’s growth and New Jersey’s 13% internet casino gain show where operators will lean when sportsbook margins tighten.
- Guidance gets more conservative. After Flutter’s cut and BetMGM’s lower-end warning, we expect 2027 targets to emphasize EBITDA and cost savings over top-line growth.
Overall, US sports betting is not shrinking, but it is entering its first real competitive squeeze. Our bet is that the operators who do best in 2027 will be the ones that can keep customers without paying for every bet.
Sports betting is for adults 21+ only. If gambling stops being fun, call 1-800-GAMBLER or visit GambleAware.org for free, confidential support.
Further reading on American.Bet
- Parlays, Props and Micro-Betting in 2027: How America Will Bet Next
- Sports Betting Taxes in 2027: Why the Bill Lands on Bettors Next
- Prediction Markets in 2027: Supreme Court, CFTC Rules and the State Fight
- bet365 Sportsbook review
Is US sports betting revenue still growing in 2026?
Not consistently. AGA data showed Q2 2026 revenue dipped 0.2% even as handle rose 7.8%, because sportsbook hold fell to 10.1%.
How big are sports prediction markets compared with sportsbooks?
Eilers & Krejcik estimated about $2 billion in monthly sports prediction market volume in March 2026 and projected roughly $34 billion for the year, around 20% of sportsbook handle.
How many Americans bet on sports?
Pew Research Center found 22% of US adults bet on sports in the year to summer 2025, with 10% placing an online bet.