2025 Gambling Year in Review - Part 2

Every year I break down the biggest stories in gambling in my 'Year in Review' pieces. Below find the Top 5 stories in gambling in North America and check out 6-10 here. Check back for the top 5 global gambling stories after the weekend!

5 – The massive growth in digital sports betting

Prior to SCOTUS passing PASPA it was estimated that Americans were betting $5 billion legally on sports with almost all the betting occurring in Nevada. Since that time the betting has grown exponentially. In 2022 sports betting grew to around $100 billion as states like New York and Michigan entered the fray, and in 2025 that figure has grown to $150 billion. It is expected the number will pass $200 billion by 2030. Of course, that only represents legal sports betting and most analysts have suggested that when adding in unregulated gambling (which includes underground bookmakers and offshore betting), the number was close to the $250 billion figure. Nevertheless, illegal bookmaking hasn’t disappeared and Americans still continue to wager with other sources, so it’s very likely that Americans are already wagering $200 billion or more each year on sports through all sources. The growth has occurred in all states with New York leading the way.

The massive growth in sports betting is almost all attributable to online betting through website and apps, which makes sense since DraftKings and FanDuel, who dominate the space, are almost exclusively online (save for a few states where they operate a land-based sportsbook). This growth is impressive and is making states quite happy as they receive both licensing fees and taxes from gross gambling revenue. But it’s also raising a lot of concern with responsible gambling groups who say this growth is leading to a huge increase in problem gambling and corresponding social problems. The Responsible Gambling Council notes that over 90% of bets are now made on cell phones with more than half of bets made in-play. This ease of betting on games happening, including prop bets, is driving an addiction with many bettors, the majority being young men. Reports say that a lot of students in college are constantly checking lines and scores and have become so fixated on bets that it is harming their grades and leading to what they called "hazardous betting."

Responsible gaming groups have also stated a concern that the proliferation of gambling ads and ease of betting is leading underage individuals to find a way to bet. Consequently, some jurisdictions, such as Ontario, have banned ads that use athletes to promote betting and others, like Massachusetts, have similar laws not only banning athletes and celebrities, but also banning gambling ads during games. The groups say that when it was all done offshore or underground younger people weren’t so tempted, but now with sports betting ads everywhere, it is widely accepted as a safe and profitable activity and they want to get in the game.

Other analysts, however, say that the growth is good because now it’s in the open. They note that sports betting always existed but now there are regulations in place to prevent problem and underage gambling, enforce geolocation requirements, helps spot cheating and it provides money to states and gambling sites who use some of the winnings to help problem gambling and addiction groups help those who fall through the cracks.

The massive growth has led to states that wanted to use sports betting as a tool to help their land-based businesses rethink that strategy. At least three states since 2017 that initially said they are only legalizing sports betting in-person at casinos have since allowed betting online as well, since they realize that is what their citizens want and also what brings in the most profit.

This unprecedented and rapid growth in sports betting, particularly in 2025 is the #5 story of 2025.

4 – The Provision in “The Big Beautiful Bill” that only allows 90% of betting losses to be written off

One law in the United States that confounds most non-Americans is the provision that requires gambling winnings to be reported as income. In almost every other country, windfalls including lottery wins and gambling winnings, are not considered taxable income, since there is already an inherent tax built into the bets and tickets. But in the U.S., all gambling winnings must be reported as income and any gambling losses can be written off against winnings whether the losses are from sports betting, horse racing, lottery play or at casinos. As a result, most bettors lose more than they win and thus don’t have to pay tax. But this year, Donald Trump’s Big Beautiful Bill, which addresses everything from Medicaid to SNAP benefits to the Affordable Care Act and other federal spending also has a provision which says that only 90% of gambling losses can be applied towards wins. Not surprisingly, this new rule has a major impact on both professional gamblers and even casual bettors, who may not have enough losses to cover wins.

For example, if a bettor at DraftKings wagers $50,000 over the year and takes back $55,000 in the past year, his net wins would be $5,000 ($55,000 - $50,000) and they would have to declare that on income and pay tax based on his/her tax bracket. But the new law says that only 90% of losses can be applied to the wins. So under the new rule, the amount that has to be declared as income is $55,000 minus $45,000 (90% of the $50,000 wagered), hence the bettor now has to pay tax on $10,000 instead of $5,000. For many this is a big issue, particularly if the bettor is wagering millions each year. But it gets worse. If the bettor wagers $50,000 and takes back $48,000 (assuming the account now has zero), then in reality they had a $2,000 loss and in the past would not be required to pay any tax on gambling, but the new rule says that only $45,000 can be applied to gambling wins meaning that they have to pay tax on $3,000 "in winnings" that didn’t actually exist.

Needless to say, this was never the intent of U.S. income tax law, as the 1954 IRS Code that only gambling wins must be declared. More concerning to lawmakers is that the new law could lead Americans to start wagering offshore or with underground bookies again since those entities don’t report winnings to the IRS or submit W2-G forms. In fact, the rule in the Bill is so contentious that Rep. Dina Titus of Nevada introduced the Fair Bet Act to amend the Bill and other legislators are demanding a change to the bill saying that it makes no sense require a tax on non-existent "winnings." To date there have been no changes to the Bill, but without a doubt it will come up again in 2026 and the huge impact on a gambling rule that has been around for over 70 years makes in the #4 story of 2025.

3 -  ESPN dropping PENN and partnering with DraftKings

For the last few years it was believed that once ESPN got into the sports betting game they would jump to the top as the most profitable book. But that didn’t happen. In 2023, PENN Gaming partnered with ESPN to launch ESPNBet, in a 10-year deal that had PENN paying ESPN $2 billion for the branding. It was expected that betting for PENN would skyrocket from its former Barstool brand, but the company never rose above 3% of the American iGaming market share and there is no indication it ever will. FanDuel owns 35% of the market, DraftKings owns 32%, BetMGM has 11% and the remainder have 5% at best.

This poor performance led ESPN to announce it was ending its partnership with PENN and planned to launch with DraftKings instead as of December 1. It seems the decision was mutual as ESPN felt its name was too important to be dragged down by lousy performance and PENN wanted a way to stop hemorrhaging $200 million a year for a brand name that was not helping generate revenue. PENN for its part said it would still keep all its state licenses but use TheScoreBet as the brand for its product. TheScoreBet is still operational in Ontario and doing quite well, plus the brand had a brief stint in New Jersey, so it was not a completely unknown name to bettors.

The story was very concerning to other sportsbooks who wondered what their future was if even the name ESPN couldn’t induce growth. Ballys has yet to get 1% market share and Bet365 is not growing as fast in the U.S. as they figured they may once they opened their Denver headquarters. BetCaesars, BetRivers and BetFanatics seem to be stuck at about 5% and others are worse. Add to that the U.S. closures of books like Unibet, BetFred, Betway and 888 that had been extremely successful in the rest of the world, and one has to wonder if it’s just a matter of time before all books are closed and/or sold and amalgamated to FanDuel, DraftKings, BetMGM and possibly BetFanatics? And if that does happen, what does it mean in markets like New York where the tax could be as high as 64% if there aren’t enough operators to move it down the tax matrix? Moreover, one must wonder if the underperforming books will simply abandon sports betting and concentrate on casinos. Caesars is still one of the largest land-based companies in the world, Rivers has several successful land-based casinos in the Northeast, PENN has some land-based casinos and a very successful i-Gaming presence with Hollywood Casinos and Ballys is still best known for the slot machines it produces for land-based casinos. Any way you slice it, the news that ESPN had to find a new partner to be possibly profitable makes in the #3 story of 2025.

2 – MLB and NBA betting scandals

Until 2014 the sports leagues in North America were steadfast in their opposition to sports betting because they were concerned about cheating scandals. But in 2014 that stance changed after NBA Commissioner Adam Silver issued an op-ed piece in the New York Times stating that in his opinion sports betting should be legal and regulated to take away betting with illegal bookies, which he said was causing all the scandals, including the Tim Donaghy scandal where the referee made bad calls to help him win bets with underground bookies.  He said with regulated sports betting, sportsbooks could be better monitor betting to spot cheating.

At first other leagues rejected Silver’s comments with NFL Commissioner Roger Goodell saying he would never agree to promoting the idea, but slowly each league either agreed with Silver or simply didn’t oppose it, and this lack of opposition led to the Supreme Court overturning PASPA in 2017, legalizing sports betting in the United States. Aside from wanting a better mechanism to spot cheating scandals, the leagues also wanted to benefit from partnerships with teams the same way UK soccer teams benefitted with partnerships with sports betting companies to increase exposure and profits.

While Silver’s opinion was justified, what he likely never considered was the huge increase in proposition bets on player performances and its influence on betting. Unlike the Black Sox scandal of 1919 or the NCAA point shaving scandals of the 1950s that affected the whole outcome of the game, proposition bets only look at individual performances. The first high profile cheating scandal that involved props after the 2017 SCOTUS decision occurred with Toronto Raptors Center Jontay Porter. Sportsbooks noted unusual betting patterns involving Jontay Porter and investigations revealed that between January and March of 2024 Porter had placed bets on NBA games, including betting the Raptors to lose, using another person’s account. Worse that that, Porter purposely pulled himself from several games saying he was ill and it was discovered that his decision to leave games were all to ensure that proposition bets on him to achieve certain milestones in the game such as points, assists etc. never came to fruition. Instead all props went under the listed line. In one particular game, Porter played 3 minutes before pulling himself. There were also texts discovered between him and bettors on Telegram indicating that he would be pulling himself so that bets could continue to be made on him not reaching the total for his props. These actions led to porter being banned by the NBA for life.

Unfortunately for the league 2025 was worse. Tony Rozier, while playing for the Charlotte Hornets, was accused of feigning a foot injury in 2023 as part of a betting scandal, where he was said to have helped bettors win a wager on him not to go over the total on some prop bets. And Chauncey Billups has been charged with working with the mafia to help fix land-based poker games using his NBA influence. For their part the league has denied the accusations, although even the notation that it was possible more cheating occurred has raised eyebrows.

But it’s not just basketball that saw betting scandals in 2025. In Major League Baseball Emmanuel Clase and Luis Ortiz were indicted on conspiracy charges for allegedly helping bettors cheat on "microbets," where the performance for one specific play could be bet on.
The indictment said that Clase would tell a bettor what he planned to pitch on a specific play and the bettor would wager and win. For example, he would tell the bettor to wager on the pitch being a ball under 90 mph and Clase would then throw a slow curve into the dirt, guaranteeing the win. In exchange for the information, it is alleged that Clase and Ortiz would get kickbacks and bribes, including a horse, although both players deny the claim.

As a solution MLB says it would be working with its sports betting partners to limit wagers on these microbets to $200, making it less appealing for players to risk their careers to cheat. But, most psychologists agree that money is never the motivating factor for cheating but rather the ability to do so. If true then even a max bet of $1 may not change behavior. Responsible Gambling groups and some analysts have said that the only solution that would work is to ban prop bets altogether. Sports books probably won’t be happy with that solution since props are so profitable and bettors will always have offshore and underground bettors to place bets with, who unlike the DraftKings or FanDuels of the world, are not regulated. These growing scandals are the #2 story of 2025.

1 – Mainstream sportsbooks moving into prediction markets

For quite some time the Commodity Futures Trading Commission (CFTC) and some state governments were trying to get prediction markets declared illegal, but in 2025 the CFTC dropped its appeal against Kalshi, which emboldened that company to announce it would be offering prediction markets on sports as well. Consequently, Polymarket, which had left the U.S. after settling a lawsuit, said it would be coming back to the states and a few other new players seemed ready to enter the fray. Prediction markets were deemed legal by the courts in October 2024 when Kalshi won a lawsuit launched by the CFTC against the company that was trying to offer prediction markets on the November elections. The courts ruled that prediction markets were no different than other forms of stock trading and hence what Kalshi was offering was really no different than what companies like E-Trade or Charles Schwab offer. Kalshi and Polymarket became household names in November of 2024 when they correctly predicted the election of Donald Trump as President of the U.S., despite polls showing something different. The courts differentiated Kalshi from a company like FanDuel since prediction market sites get a commission on trades while sportsbooks win on losing bets. The courts also noted that a big difference is that sportsbooks are regulated by state Gaming Commissions while prediction market sites are regulated by the Federal CFTC.

Kalshi for its part decided to partner with Robinhood to help create sports futures prediction markets and they set up partnerships with the NHL. And not surprisingly this caught the eye of traditional sportsbooks who believed Kalshi were infringing on their business. Consequently, FanDuel, DraftKings and BetFanatics announced they would be getting into the prediction market game as well. Every sportsbook and bettor would agree that the difference between betting on the L.A. Rams at 4/1 odds to win the Super Bowl at a sports betting site, or taking a $20 position on the L.A. Rams to win the Super Bowl with the final payout on a correct position returning $100 is slim to none, especially since futures can always be cashed out at a sportsbook for a profit before the event is settled. But the court decision means that the latter is legal in every single state since stock trading is legal in all 50 states, whereas the former is only legal in states that have legalized sports betting. So, cease-and-desist orders were issued by the Attorney Generals of Arizona, Connecticut, Illinois, Massachusetts, Montana, Maryland, Nevada, New Jersey and Ohio to stop Kalshi from offering prediction markets on sports as they all have legal sports betting and want Kalshi to apply for a sports betting license to be legal. Kalshi has appealed those orders and asked for a temporary injunction allowing it to move forward and that was provided.

Not willing to wait for the decision on cease-and-desist orders, DraftKings, FanDuel and BetFanatics launched prediction markets in some states with the intent on having it legal in every state that they currently don’t offer sports betting. That means that even in states like Utah, Hawaii and Alaska where every form of betting is illegal (even outlawed under the Utah State constitution), prediction markets on sports are deemed legal since they allow people to play the stock market and this is considered the same thing. As of today, FanDuel has prediction markets in five states, BetFanatics has it in 10 states and DraftKings has sports betting markets in 17 states and prediction markets on sports and non-sports in 38 states. This allows DraftKings to circumvent current state laws that disallows betting on non-sports events like elections and awards shows. The American Gaming Association stated its opposition to prediction markets which led FanDuel and DraftKings to withdraw from the AGA as a partner.

In November, a Nevada District Court ruled against Kalshi, lifting its injunction and allowing the Nevada Gaming Control Board to sue Kalshi for illegal sports betting. That in turn led to a class action lawsuit against Kalshi filed in the Southern District of New York which has representatives of six states but is expected to include every state with legal sports betting. The final result of that class action will determine whether Kalshi and Polymarket will have to stop offering sports betting contracts or whether it will be full steam ahead on prediction markets for sportsbooks. The unpredictability of the decision and the massive implications on traditional sportsbooks and sports betting makes prediction markets the #1 story of 2025.

Check out the rest of the Top 10 gambling stories in North America for the year that was 2025 here!

Read insights from Hartley Henderson every week here at OSGA and check out Hartley's RUMOR MILL!

Read insights from Hartley Henderson every week here at OSGA and check out Hartley's RUMOR MILL!