CryptoSlate
Americans are on pace to lose more money on legal gambling this year than at any point in the country's history, with Joseph Politano's analysis projecting the total above a quarter-trillion dollars in 2026. The American Gaming Association reported commercial gaming revenue hit a record $78.72 billion in 2025, up 9.2% year over year, while sports betting alone generated $16.96 billion in revenue on a $166.94 billion handle. Gambling losses have climbed 67% since the start of COVID-19 and another 8% over the past year, outpacing any growth recorded between 2000 and 2020.
Why it matters
The dollar figure, large as it is, captures only sportsbooks and casinos. Prediction markets, options, and crypto now channel billions more into economically identical behavior, but each falls under a different regulator, a different legal standard, or no meaningful oversight at all. Polymarket and Kalshi together cleared roughly $38 billion to $39 billion in notional volume through November 2025, US listed options volume topped 15.2 billion contracts for a sixth straight annual record, and the memecoin complex round-tripped from early-2025 highs down 61% before partially recovering. A resident of a state without legal sports betting can still open a federally regulated prediction market app and take a position on a Fed rate decision, a hurricane, or the World Series.
Market impact
The legal fault line is already producing friction. The AGA estimates prediction markets offering sports contracts have diverted more than $500 million in potential state and tribal betting tax revenue since the start of 2025, and litigation is now active in Nevada, Massachusetts, Arizona, and Tennessee over whether federal derivatives law preempts state gambling statutes. DraftKings and FanDuel both resigned from the AGA in November 2025, days before DraftKings launched a federally regulated event-contract product that hit a $3.1 billion annualized run rate within six months. Researchers studying the overlap, including New York Fed economists Jacob Goss and Daniel Mangrum, have tied state sports-betting legalization to higher debt delinquency, while separate work has linked NFL upset losses in legal-bet states to a ten-percentage-point increase in intimate-partner-violence rates. Economists increasingly argue that regulation should track the risk a product actually carries rather than the legal bucket it falls into, an idea that would treat a same-day option and a same-day sports bet the same way and bring memecoins under consumer-protection oversight for the first time.
Frequently asked questions
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How much did Americans lose on legal gambling in 2025?
The American Gaming Association reported commercial gaming revenue hit a record $78.72 billion in 2025, up 9.2% from 2024. Sports betting alone generated $16.96 billion in revenue on a $166.94 billion handle, and Joseph Politano's analysis projects total gambling losses above a quarter-trillion dollars in 2026.
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How big are prediction markets compared to sportsbooks?
Polymarket and Kalshi together cleared roughly $38 billion to $39 billion in notional trading volume between January and November 2025, with Polymarket at about $21.5 billion and Kalshi at $17.1 billion. The AGA estimates prediction markets offering sports contracts have diverted more than $500 million in potential…
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Why are prediction markets treated as derivatives instead of gambling?
Kalshi and Polymarket operate under CFTC oversight as event contracts and financial derivatives rather than under state gaming commissions. The legal distinction is being litigated in Nevada, Massachusetts, Arizona, and Tennessee, with the AGA arguing Congress never intended the CFTC to become a national…
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How much retail trading happens in 0DTE options?
Cboe's year-end report shows total US listed options volume topped 15.2 billion contracts in 2025, a 26% jump over 2024 and a sixth consecutive annual record. Zero-days-to-expiration contracts on the S&P 500 averaged 2.3 million contracts a day, making up 59% of total SPX volume, with retail traders responsible for…
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What harm has been linked to the rise in legal sports betting?
New York Fed economists Jacob Goss and Daniel Mangrum found debt delinquency rates rose as states legalized sports gambling, with the effect concentrated among men and people under 40. Separate research cited by Politano found that in states with legal sports betting, an NFL home team's upset loss raises the rate of…
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