Gaming executives remain broadly confident about the direction of the US industry, even as prediction markets move from a fringe concern to one of the sector’s most pressing “threats”.
The American Gaming Association’s spring 2026 Gaming Industry Outlook found that real economic activity in the gaming sector rose 1.5 per cent year-on-year in the first quarter, continuing the expansion recorded in the previous two quarters. The association’s Gaming Conditions Index tracks gaming revenue, employment, wages, executive sentiment, and casino-hotel event activity.
Growth holds, but pressure is building
“The legal state- and tribal-regulated gaming industry continues to demonstrate resilience and adaptability in a dynamic economic environment,” said AGA president and chief executive Bill Miller. “Operators are focused on investing in innovation and delivering world-class entertainment, while also navigating an evolving competitive and regulatory landscape.”
Executive sentiment was strongly positive, with 21.4 per cent more executives reporting an optimistic outlook than a negative one. That was the highest reading since the third quarter of 2022. More than 60 per cent of executives said they expect capital investment, revenue and balance sheet health to improve over the next six to 12 months. In the survey, 62 per cent of respondents said they plan to increase capital investment, while promotional activity is expected to decline.
That points to an industry still prepared to spend, but no longer willing to chase growth at any cost. Operators appear increasingly focused on margin discipline, product upgrades and customer retention rather than expensive bonus-led competition.
The outlook is not uniformly strong. Hiring expectations remain weak, with executives reporting negative expectations for the seventh consecutive survey. Employee wages were cited by 54 per cent of respondents as the main expense pressure, followed by tax and regulatory policy changes.
Prediction markets move to the centre
The biggest shift in the latest outlook is the prominence of prediction markets. According to the AGA, 81 per cent of executives now view platforms offering sports event contracts as a “very significant” threat to the regulated gaming industry.
“Illegal sports betting through sports event contracts is increasingly encroaching on legal, state-and tribal-regulated operators,” said Miller. “It’s clear the legal, regulated industry views this as a threat, and will continue to fight back and protect the integrity of our industry.”
Platforms such as Kalshi and Polymarket argue that event contracts are financial products rather than sports bets. That position has allowed them to operate in some states where online sports betting is not legal. Licensed operators say this creates an uneven market, because sportsbooks are subject to state taxes, gambling licences and responsible gaming rules.
Executives quoted in the AGA report described prediction markets as “Unregulated and untaxed competition,” a “Threat of further expansion into gaming markets”, and a risk that could “Impact industry credibility.”
The issue is now closely tied to the future of sportsbook strategy in the US. In a recent interview with SiGMA News, Hebert Gaban, chief commercial and marketing officer for Latin America at KBET, argued that prediction markets are not simply a passing novelty.
“They remind me of movements we’ve seen before, like social games and sweepstakes, which tried to reinterpret or work around the traditional iGaming model,” he said.
Still, Gaban was cautious about overstating the threat. “I don’t see this as a real long-term competitor to sports betting,” he said. “If they manage to scale globally, they’ll likely occupy their own space, with a different audience and a very different profitability logic.”
Regulation becomes the next test
For iGaming and sportsbook operators, the issue now is how regulators define prediction markets. Some state gaming authorities have warned licensed operators against links with these platforms. Several operators, meanwhile, argue that sports event contracts should be regulated in the same way as sports bets.
Gaban’s view is that the outcome depends on the rules that emerge. “There’s room for both to coexist, as long as the regulatory framework is balanced,” he said. “Otherwise, it becomes a game of loopholes rather than real value creation.”
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