US Gaming Industry Outlook: Key Insights and Trends

The US gaming industry showed resilience at the close of 2025. Gaming demand remains strong, especially in the digital space, but investors can still find bargain opportunities.  

Focus has shifted away from foot traffic on the Las Vegas strip to the expansion and legalization of sports betting and i-gaming. The competitive landscape of the gaming industry is clearly changing, as legacy brands like MGM Resorts must compete with digital-first companies like DraftKings for market share.  

These are just some of the trends and insights shaping the US gaming industry in the fourth quarter of 2025. For a detailed analysis of industry leaders and potentially valuable stock picks, download the full Q4 2025 Gaming Industry report.

While US gross domestic product grew 3.9% in the third quarter of 2025, US commercial gaming revenue increased a robust 7.2%.  

The commercial gaming industry’s sales growth has averaged about three times GDP growth for the past six quarters. We believe this hunger for gaming will endure, stoked by expanding legalization of sports and i-gaming betting, along with more types of wager offerings (progressive parlays, in-game, and online casino play). 

• Progressive parlays: This is a bet placed on multiple independent outcomes. This allows for the wagerer to still win something even if not all outcomes, or legs, of the parlay are successful.

• In-game: Also known as live betting, these bets are placed during live events as they are happening but before the event has ended. These bets leverage changing odds.

• Online casino play: These are wagers on traditional physical casino games like blackjack and poker that are done with or without live dealers through a mobile device. 

The gaming industry is capital intensive and competitive. The US has about 1,000 physical casinos which need to be renovated every few years to stay competitive. This cycle can affect investments on a quarterly basis depending on the timing of construction projects.

Physical casino margins at select companies have been pressured since 2023.  

However, gambling wage growth has moderated over the past year, and gambling industry employment remains at high levels, once again demonstrating the resilience of the industry.

In our view, Las Vegas is no longer the only game in town, as sports betting and i-gaming also offer a winning hand. Vegas results are mixed amid economic challenges. 

The chart below shows revenue share over time for key gaming segments. One-third of commercial gaming sales come from sports betting and i-gaming compared to less than 20% from Vegas.

Vegas visitation and gaming sales have returned to growth in recent months, but labor costs have dampened Las Vegas margins.  

Third quarter Las Vegas EBITDA margins of 34.3% were below the 37.9% average over the past six quarters. We believe that lasting cost efficiencies are being more than offset by higher industry labor costs and elevated promotions in an ominous economic landscape. 

In contrast, regional revenue growth has improved at some companies. As a result of economic uncertainties, consumers are seeking cheaper, closer-to-home gaming options. Regional EBITDA margins increased to 31.0% in the third quarter of 2025 from 30.4% in the fourth quarter of 2024. 

Despite having no moat rating, Caesars Entertainment CZR offers investors a leading omnichannel presence in the US gaming market. Its portfolio includes about 50 physical properties regionally and an industry-leading loyalty membership base of more than 65 million.

Demand for sports and i-gaming wagering has not abated. I-gaming and sports betting are seeing healthy revenue growth, but digital margins have taken a step back due to higher promotions and more outcomes that favored bettors.  

We expect lasting double-digit industry sales growth, driven by increases in user and wagering volume in existing and new states that legalize sports betting and i-gaming.

DraftKings' online sports platform, with its narrow moat rating, offers more betting options like high-margin parlays and in-game play, which predictive markets can't replicate, since their odds and liquidity are dependent on peers and not set by DraftKings’ powerful risk-management tools.  

We believe the launch of DraftKings’ predictive product expands the company’s reach into a younger age group of 18-20 year olds, and into states like California and Texas, which could be an incentive to legalize the activity. However, this stock carries high uncertainty advisors should consider.  

Our outlook through 2026 is led by the digital segment.  

We expect US sports betting growth to be boosted by the incremental legalization of the industry in a handful of states. Based on our analysis of the legislative process, we forecast that six more states will allow sports wagering by 2028. 

• Texas

• Georgia

• Minnesota

• South Carolina

• Alabama

• Oklahoma

Texas presents the largest opportunity, with an estimated 7.1% revenue share in 2028, driving our industry revenue growth forecast to more than $30 billion in 2030 from about $14 billion in 2024. 

Another expected revenue boost will come from expanded legalization of i-gaming. We think the number of states will expand from seven to 10 to 15 states by 2028. If i-gaming is legalized, we estimate New York will represent 19% of the i-gaming revenue market in 2028, with Ohio and Illinois following with 14% and 13% respective revenue share at that time. 

We project $30 billion in annual sales for the US sports industry and $26 billion for the i-gaming industry by 2030. Combined, this would bring total revenue to $56 billion, a significant increase from $22 billion in 2024. 

Advisors should use the projected growth in digital gaming and i-gaming to identify companies poised to benefit from expanding legalization and consumer demand.

Competitive and financing concerns present attractive opportunities within the gaming sector.

Both DraftKings DKNG and Caesars present attractive opportunities for advisors to consider. DraftKings' technology and product offering produce a brand advantage, earning it a narrow moat.  

Advisors might consider narrow-moat companies for tactical investments, focusing on those with strong regional performance or emerging market share in sports betting.  

Meanwhile, we forecast Caesars’ debt/adjusted EBITDA at 6.7 times in 2025.  We believe the market’s overzealous concerns of Caesars debt obligations have presented an opportunity to own shares with a management team that has a strong track record of paying down debt with strategic moves rather than using shareholder returns.  

Those looking to further diversify their client portfolios should explore other industry insights like the travel services industry.