Through the first five years after the Supreme Court cleared the way for states to legalize sports betting, it expanded based largely on geography, with states falling like dominoes as they raced to secure tax revenue.
Even legislators who were averse to sports betting generally agreed that it was better to permit and tax wagering within their state than to watch residents cross borders to add to the coffers of other states.
Missouri likely was the last to succumb to that reasoning when it opened in December, finally joining neighbors Iowa (legalized online sports betting in 2019), Illinois (2020), Arkansas (2022) and Kansas (2022).
At this point, each of the 18 states in which online sports betting remains illegal has its own reasons for keeping it that way.
Heading into the 2026 legislative session, Jeremy Kudon, the lawyer who directs lobbying strategy for an alliance of the leading U.S. sportsbooks, says a convergence of factors may lead to a new wave of legalization.
“The legalization of online sports betting becomes less and less controversial each year and may have gotten to the point where some legislators view it as a potential way to get elected, which I think is really a positive development for us,” said the Orrick law firm partner, whose client roster includes DraftKings, FanDuel and Fanatics. “In states like Georgia and Alabama, we’re hearing legislators say they want to be with us. They want to be supportive. Because that critical 18- to 39-year-old voter supports this overwhelmingly. And they want to get those voters. Those are the voters who elected Donald Trump. Those are the voters who elected Abigail Spanberger. They are malleable. They’re not one party or the other. They switch. So I think that is playing in our favor.”
The rise of prediction markets, first introduced in the U.S. last year by Kalshi and amplified by Robinhood, and gray-market pick ’em games such as PrizePicks and Underdog, also could be an important accelerant.
In November, the U.S. sportsbooks not operated by land-based casinos — most notably DraftKings, FanDuel, Fanatics and Bet 365 — broke ties to the American Gaming Association over a disagreement on whether members would be allowed to offer prediction markets, a controversial mechanism that permits sites to take bets on games in 50 states without securing state licenses.
In December, the sportsbooks expanded their own lobbying group, the Sports Betting Alliance, to also provide broader advocacy functions, hiring former AGA communications head Joe Maloney as CEO, with Kudon as chairman.
“Jeremy has been battling this illegal market bogeyman that, outside of digital advertising, keeps its head pretty low,” said Maloney, who was VP/public affairs for the Commanders before joining the AGA at the start of 2024. “That’s going to dramatically change. So, you’re going to be sitting there as an elected policy stakeholder watching a broadcast, and you’re going to begin to see quite a bit of advertising from each of those two companies.
“They’re well aware that their constituents might be opening accounts and betting, but there’s not the [tax] revenue opportunity.”
Kudon compares it to what he saw while working for DraftKings and FanDuel, which invited a wave of scrutiny when they ran a blitz of TV spots at the start of the 2015 NFL season.
“Kalshi and Polymarket are going to advertise significantly, as are DraftKings and FanDuel, on prediction markets in states,” Kudon said. “So I think there’s going to be a lot more activity and that is going to be a driving factor for legislators to push these bills forward, just so they can capture the tax revenue.”
Here’s this year’s rundown of where states that house teams in major pro leagues stand, heading into the legislative sessions.
Wisconsin
That sportsbooks had more to do with stalling a bill in Wisconsin last year than advancing one speaks to the maturing nature of the business and the conversation around legalization.
The bill that was gaining momentum early last year would have legalized sports betting through the state’s compact with Native American tribes, which would house servers in exchange for a 60% share of revenue. The sportsbooks chose to oppose the bill rather than go along with parameters under which they say they couldn’t turn a profit.
“We are working to get a better bill; a bill that will allow us to participate without having to go through the ... compact approach, or at least with a revenue share that would allow us to make some sort of profit in the state,” Kudon said. “It’s always tough sledding. I’m hoping that we get to a place by the spring that we have a bill that will allow us to operate in the state, along with the tribes as our partners.”
Kudon suggested a model similar to Michigan or Arizona, with licenses tethered to the tribes, which could then negotiate access agreements with the sportsbooks at market-driven rates.
“The unregulated market is growing by leaps and bounds,” Kudon said. “It would make little sense for us to agree to something where we would lose money operating in the state.”
Minnesota
The complexities of Minnesota, where the tribes, racetrack operators and teams each have their own view of how licensing should work and opponents have been especially vocal and well-organized, has made for a slow go.
Kudon was optimistic two years ago, when the stakeholders began moving toward a framework for compromise. But matters were complicated at the start of last year by a fight over control of the House. Then, in June, House speaker Melissa Hortman was assassinated. Bills for matters seen as less pressing, such as sports betting, stalled.
Kudon said the makings of the compromise remain in place heading into this year.
“There is a will to get this done and with the pressure coming from the prediction markets, there will be a motivation for legislators to try to have some kind of legal market,” Kudon said. “It’s just that any state that has a tribal presence leads to some jealousy from the racetrack and the teams. Putting that whole thing together has proven complicated. But in a year where you don’t have to focus on Texas, and there are just not as many states with sports betting in play, we can put that attention in and I’m hoping this will be the year.”
Georgia
Proponents continued their push for a referendum that would put the matter in voters‘ hands in November with betting launching in 2027, but they fared even worse than they had previously, with a pair of bills failing to make it to the floor.
Leading bill sponsor Marcus Wiedower has stepped down, but Kudon said the issue has other champions, pointing to a roster of about 50 representatives who were co-sponsors last year. He said his hopes were buoyed when fomer bill sponsors on the Republican side emerged as leading candidates for nomination as governor and attorney general.
“It’s seven years. It dominates the legislative session. Can we just do it and get past it?” Kudon said. “Georgia is an overwhelming example of that. We have been debating this. It has been this huge issue hanging over, especially the House, year after year since 2019. ... I think there’s a view that this is an issue where we just need to move on so we can deal with other issues.”
That sort of legislative fatigue can cut both ways.
California
FanDuel and DraftKings learned an expensive lesson when they backed a referendum without the support of the tribes in 2022 and have since opted to stand down and wait for them to create their own path.
Kudon said 2028 remains the likely realistic target to take a tribe-led referendum to voters, though there’s an outside chance economic factors in the state could accelerate it.
“The real factor in California is the economy,” Kudon said. “Unlike in some of these red states, where the economy is going great, California is going in a different direction. That hits the tribes especially hard. I think tribes are looking for another form of revenue and there is a growing sense of frustration among the tribes. ... I think that’s going to be the driving factor. The prediction markets just make it more frustrating to them, [seeing bettors using] Kalshi or any of the other apps.”
Texas
After a few years of start-and-stop optimism, Kudon said he is resigned to legalization remaining stalled in Texas, where the legislature won’t meet again until 2027. Longtime opponent Dan Patrick is running for a fourth term as lieutenant governor, with strong support from conservatives. And the well-funded push for casinos in the state by Las Vegas Sands, controlled by the Adelson family (which also owns the Mavericks), figures to continue to overwhelm efforts to address sports betting separately.
“I candidly don’t know what the answer is in Texas until there’s a change in leadership in the legislature,” Kudon said. “It’s going to be a longer-term play. If anything, the state has gotten more conservative. And ... that’s a state that’s the oxygen that is fueling prediction markets: both California and Texas.”
Oklahoma
Two bills that would have allowed the tribes to amend their compact to offer online sports betting on their land passed the House last year, but they died largely because the governor opposed them, preferring legislation that laid out a “free market” licensing structure. Another bill that was later withdrawn would have granted a license to the Thunder, with the tribe receiving a revenue share and the team keeping .25% of handle.
Legislative proponents launched an “interim study on sports betting” in October, hoping to find a path forward.
Utah
Still nope.
