US commercial gaming revenue grows 4.6% in February, but sports betting faces challenges

The US commercial gaming industry reported a revenue increase for February, up 4.6% over the same month last year. However, sportsbook results showed a year-on-year decline, drawing concerns over the impact of prediction markets.

Data from the American Gaming Association's Commercial Gaming Revenue Tracker shows sportsbook revenue declined by around 6% year-on-year. The drop was attributed to a lower hold percentage following player-friendly outcomes, which reduced operator margins, but concerns loom over competitive pressure.

While the U.S. gaming industry continued to grow in February, a divide is seemingly emerging. As iGaming surges and retail casinos aim to stabilize, sports betting is beginning to show signs of strain. As prediction markets gain traction with sports bettors, data suggests state-sanctioned sports betting revenues could languish.

Land-based casino revenue increased 3.9% year-over-year, supported by a 5% rise in table game revenue. It marked the first monthly growth for table games since October, offering a positive sign for retail casinos after a subdued 2025.

Meanwhile, iGaming continued its strong momentum, with online casino revenue surging 25% to $976.3 million, equal to nearly a quarter of the $4 billion generated by traditional casinos.

Combined casino gains helped offset weaker sports betting results, as sportsbook revenue fell 6.4% year-over-year to $1.17 billion in February.

Part of that decline was linked to a lower hold rate, which came in at 9.24%, down 73 basis points. Still, the broader sports betting picture remains concerning, with handle declining for a fourth straight month.

In recent months, prediction market platforms have expanded into sports event contracts that resemble traditional betting products, including player props and parlays. Unlike licensed sportsbooks, however, these platforms do not operate under state gaming licenses or contribute tax revenue through regulated betting frameworks.

On the same day the new Revenue Tracker update was published, the American Gaming Association argued on X that prediction markets have cost states an estimated $800 million in tax revenue, funds that would otherwise support pensions, responsible gaming initiatives, and other public programs.

Overall, regulated gaming generated $1.42 billion in gaming tax revenue for state programs, a 10.5% increase over last year. But the AGA says the figure could have been significantly higher, as it is impacted by operators of skill machines, “sweepstakes casino” sites, and those offering sports bets through prediction market platforms, none of which pay state gaming taxes.

March results could provide a clearer indication of whether the sports betting drop remains a limited shift or a broader trend. Prediction market operators significantly increased their advertising around the NCAA Tournament, one of the most important periods on the US sports betting calendar. If they are beginning to take meaningful share from licensed sportsbooks, it may become more visible in the AGA’s next monthly report.