US sports-betting revenue fell 15.6% year-on-year to $1.00 billion in August 2026, while prediction markets expanded their presence across sports-related trading.
The American Gaming Association (AGA) said weaker sportsbook activity, a later start to the college football season and competition from prediction-market platforms contributed to the decline. Growth in iGaming and traditional casino gaming was not enough to prevent a marginal fall in total commercial gaming revenue.
Sports-Betting Handle And Hold Rate Both Declined During August
Sports-betting handle fell 0.7% year on year to $10.89 billion in August. The sportsbook hold rate also dropped to 9.2%, compared with 10.8% during the same month in 2025.
The decline in sports betting outweighed gains in other parts of the US gaming market. iGaming revenue increased 12.3% to $1.03 billion, while traditional casino gaming revenue rose 0.9% to $4.44 billion.
Slot-machine revenue reached $3.25 billion, up 1%, and table-game revenue increased 2.1% to $885.91 million.
State Gaming Tax Revenue Fell As Prediction Markets Avoided Traditional Levies
Regulated gaming generated $1.46 billion in state gaming tax revenue during August, a 1.5% decline from the previous year. State sports-betting tax revenue fell by 14%.
The AGA argued that tax collections could have been higher because skill-machine operators, sweepstakes casino sites and platforms offering sports-related event contracts do not pay state gaming taxes in the same way as licensed sportsbooks.
The trade association estimated that prediction-market platforms offering what it describes as backdoor sports betting had cost state governments more than $1.56 billion in potential gaming taxes since the beginning of 2025.
Prediction-Market Volumes Are Forecast To Grow Sharply Through 2026
Macquarie forecasts that prediction-market taker volume will reach $187 billion in 2026, compared with $22 billion in 2025. Sports contracts are expected to remain the main driver of growth, while the US midterm election cycle could support additional political-event trading.
September prediction-market volume reached $20.1 billion, up 1,079% year on year, according to Macquarie figures reported by casino.org. Sports-event contracts represented 79% of September volume on the largest prediction market.
DraftKings and FanDuel are among the sportsbook companies seeking positions in the prediction-market sector. Macquarie estimated that one operator controlled 63% of domestic sports-event contract volume in September, while DraftKings held around 4% and FanDuel approximately 3%.
CFTC Proposals Add To The Uncertainty Over Event-Contract Regulation
The Commodity Futures Trading Commission has proposed explicitly including event contracts in the definition of swaps under federal law. A separate interim final rule would clarify that casino-style gambling products, including traditional sportsbook wagers and casino games, do not qualify as swaps.
These proposals aim to distinguish financial derivatives from gambling products, but court disputes remain unresolved. The Third Circuit ruled in Kalshi’s favour in its dispute with New Jersey, while the Sixth Circuit reached a different position in cases involving Tennessee and Ohio. Also, the Ninth Circuit rejected the argument that state gambling laws are automatically pre-empted by federal commodities legislation.
August’s figures suggest that prediction markets are becoming a major competitor to regulated sportsbooks, especially in states where event contracts attract sports bettors but avoid gaming taxes. The market’s rapid growth is likely to continue while federal and state authorities dispute jurisdiction.
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