Nick Devor
The 2026 World Cup is set to be the biggest betting event in history: An estimated $50 billion will be wagered globally on the tournament -- 48 teams in 104 matches over 39 days. In the U.S., local time zones will allow for live betting on matches as they unfold. According to Sportradar, some 90% of Americans planning to bet on the tournament will be wagering on a World Cup for the first time.
This month also brings the National Basketball Association Finals, Stanley Cup Finals, and the U.S. Open golf tournament. The betting bonanza will be a boon to sportsbooks, notably the U.S. sports betting duopoly of FanDuel and DraftKings.
Beyond those tentpole events, though, the business of sports betting faces an uncertain future. Now that a long run of state legalizations has largely played out, the easy growth looks to be over. Excluding the new market of Missouri, in the first quarter of this year, total U.S. sports wagers, known as the handle, fell 3.1% from a year earlier, according to the American Gaming Association. March represented the steepest drop since June 2020.
Flutter Entertainment, FanDuel's parent company, lowered its revenue outlook for the full year when it reported first-quarter earnings in May. DraftKings' handle was up a modest 1.5% during the quarter.
Their stocks have taken a beating. DraftKings stock has fallen 27% since the beginning of the year, while Flutter has dropped 53%. The Roundhill Sports Betting & iGaming exchange-traded fund is down 25% from its 12-month high.
The sports-betting industry is also grappling with new competition in the form of prediction markets, which essentially allow sports wagers nationwide regardless of state law. To keep bettors engaged, the sportsbooks are spending nearly $700 million a year on television ads, according to Nielsen data commissioned by the AGA.
But inflation and higher federal taxes on gambling winnings are pinching bettor's pockets, and the public is now showing signs of gambling fatigue as issues mount around public health and sports integrity.
The shifts in sentiment are driving renewed skepticism from lawmakers, who seem more willing to take on the industry. In March, an effort to legalize sports betting in Georgia failed in the state's legislature. Colorado's state senate recently passed a bill banning credit-card deposits on sportsbooks, along with advertising prohibitions.
"Historically, a state would never reopen a gambling law," says Steve Ruddock, a gambling industry analyst who writes the newsletter Straight to the Point. "All of a sudden, that is no longer off limits."
All told, eight states have hiked their sports betting taxes since 2023, and five have put limits on sportsbooks taking tax deductions for promotional spending.
The sportsbooks are feeling the impact. Illinois recently imposed a new levy on sportsbooks that can tax as much as 40% of sports betting revenue. That's on top of a Chicago city tax of 10.25%. This past month, DraftKings shuttered the physical sportsbook it operated at Wrigley Field.
Jonathan Cohen leads sports betting policy for the American Institute for Boys and Men, which has made gambling reform a priority. He argues that most Americans never asked for this much sports betting. "There was no public mandate," Cohen says, noting that the wave of legalization was spurred by a Supreme Court decision in 2018 and states desperate for new tax revenue at the height of the Covid-19 pandemic.
"This is the classic American bravado of legalizing the most aggressive form of a product right away and then only later reckoning with the negative externalities," Cohen says. Gambling addiction carries a higher risk of suicide than other addictive behaviors, and research has shown that legalization of sports betting is associated with increased rates of child abuse.
Barron's has reported that the public-health infrastructure for gambling addiction remains underfunded and poorly coordinated.
"As we start to hear from our public-health institutions how this is really affecting children and families, I think that's starting to wake up the general public," says David Mahan, policy director at the Center for Christian Virtue, an Ohio-based organization leading the effort to reform sports betting in the state.
Many state gambling regulators already mandate so-called responsible gambling features to be built into betting products, but legislators across the country are considering further measures meant to address public health concerns.
Those measures "definitely have a negative effect on revenue, fundamentally," says Nigel Eccles, co-founder of FanDuel, though most operators are supportive of them in principle. "No one in the industry wants problem gamblers on their product," he adds, "but in practice, sometimes these things are very punitive."
Still, Cohen says gambling addiction is unlikely to be the issue that turns the regulatory tide for betting. Rather, it's worries about the games themselves.
Sports leagues once believed that legalized gambling would undermine the perceived fairness of their competitions. "The most precious possessions that we as a football league have are our reputations for integrity and the integrity of our games," then--National Football League Commissioner Paul Tagliabue said during a congressional hearing on sports betting in 1990.
Thirty-four years later, Super Bowl LVIII was held in Las Vegas.
Tagliabue's warning is proving prescient, even if it went ignored. According to a recent Morning Consult poll, 50% of Americans believe that professional athletes often or sometimes alter the way they play to help sports gamblers win bets.
After two Cleveland Guardians pitchers were indicted on a charge of allegedly taking bribes from bettors, Ohio Gov. Mike DeWine called legalization of sports wagering one of the biggest regrets of his half-century long career in elected politics. "Ohio shouldn't have done it," he told the Associated Press.
DeWine has specifically opposed wagers tied to individual player performances, known as "prop bets." Mahan's group is lobbying to ban player props and cap individual bets at $100 in Ohio. He says the legislation has bipartisan support.
The prop bets are a popular ingredient in parlays where individual wagers are strung together to make one bet. Parlays are a major portion of profits at both DraftKings and FanDuel.
Other recent scandals, like a spate of professional and college basketball match-fixing allegations, "challenge Americans' trust in the integrity of sports," said Sen. Marsha Blackburn (R., Tenn.) at a Senate hearing on sports betting and integrity in May. "And this has all been inflamed by the rapid explosion of legal sports betting across our entire country."
The gambling lobby argues that Americans long ago made peace with gambling and sports.
"Gambling has been present in sports for as long as there have been sports to bet on," says Joe Maloney, president of the Sports Betting Alliance. In 2016, two years before the Supreme Court opened the door for nationwide sports betting, the Seton Hall Sports Poll found that 52% of Americans believed that an NFL game "could be rigged by outside influences," suggesting a base level of cynicism around the integrity of sports matches.
"This is as American as apple pie," Maloney says. " 'Oh, the referee must be getting paid.' We've been saying that for a long time."
If sports betting is old hat, prediction markets certainly aren't. Today, all facets of life are open to betting.
Growth at leading prediction markets Kalshi and Polymarket has been dizzying. Kalshi saw a record $14.8 billion worth of contracts traded in April, up some 3,100% from a year prior.
Prediction markets have "tapped into the trader mind-set -- the type of user that would not play blackjack because their view is it's a losing game," says Eccles, the FanDuel co-founder.
Most of the contracts traded are tied to sports, but it's the markets on politics, culture, and business that have grabbed the public's attention.
Prediction markets opened "whatever was left of the lid on Pandora's box, " Cohen says of gambling in America. Someone not interested in sports and unbothered by the effect of betting on baseball may have a different view when it comes to betting on wars and elections.
In May, the Senate hearing intended to take on integrity in sports turned into a heated debate on prediction markets. A few weeks ago, the House Oversight Committee launched an investigation into insider trading on the prediction markets run by Kalshi and Polymarket.
"It's the Wild West," said Rep. James Comer (R., Ky.), the chair of the committee.
Kalshi and Polymarket have referred multiple cases of insider trading to U.S. authorities in recent months.
The upstart prediction-market platforms have taken Wall Street by storm and rocked the gambling industry, with pre-initial-public-offering valuations eclipsing Flutter's and DraftKings' current market capitalizations. Prediction markets' federally regulated event contracts closely resemble sports bets but are exempted from state taxes and available nationwide to anyone over the age of 18.
Polymarket has a data sharing partnership with Dow Jones, the publisher of Barron's.
DraftKings and FanDuel have launched their own prediction markets to stay competitive, a costly pivot that is weighing on earnings. While executives have positioned prediction markets as opportunities, they're acting from a defensive position.
A recent survey commissioned by the American Gaming Association of executives at gambling firms saw 81% of executives say prediction markets pose a "very significant threat to the regulated gaming industry."
"The industry itself is doing a good job of downplaying the impact of prediction markets," says Ruddock. "There's a lot of uncertainty around what this all means going forward."
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June 05, 2026 03:15 ET (07:15 GMT)
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