Here's What You Need To Know About Sports Betting in 2025 and Beyond

In 2018, the U.S. Supreme Court in its Murphy v. NCAA decision struck down the federal ban on sports betting outside the state of Nevada, and ushered in a rapid proliferation of regulated sports wagering across the country. Currently, 39 states and the District of Columbia now allow some form of legal sports betting, which has generated billions in wagers and revenue for state coffers. A recent study by the Tax Foundation shows that legal sports betting in the U.S. generated more than $1.8 billion in state tax revenue in FY 2023, with statutory tax rates ranging from 6.5 percent to over 50 percent of gross gaming revenue. 

This whirlwind expansion has created a growth industry of ancillary services including sportsbooks, mobile apps, betting-data providers, and even state governments chasing the rapidly expanding revenue. While many focus on the benefits, as the market matures, tensions are rising — over integrity, tax burdens, competition with the black/grey market, and the sustainability of the regulatory models.

Recent Sports Betting Scandals and Concerns About Integrity

As sports betting becomes more ubiquitous, the risk to sporting integrity grows. In previous years, there have been several scandals, including a 2024 gambling scheme around prop bets involving NBA player Jontay Porter, which led to a lifetime ban from the league and a pending jail sentence. We’ve also seen several suspensions, investigations and concerning gambling activity across the NHL, MLB, NFL and other major sports leagues. A recent scandal involving the Portland Trail Blazers coach Chauncey Billups, Miami Heat player Terry Rozier and former assistant coach Damon Jones, along with other high-profile NBA figures, illustrates the increase of gambling activity and continued danger to the integrity of sports. Recently, the Federal Bureau of Investigation arrested over 30 individuals connected to illegal gambling, insider leaks and rigged games, highlighting how in‐game prop bets (bets on statistical events within games) present a vulnerable point. 

In the collegiate realm, the NCAA permanently banned three men’s basketball players from their schools after they bet on their own games and manipulated performances.

These incidents raise critical issues for sports enthusiasts and policymakers:

• When players, coaches, or officials become involved in gambling, the apparent fairness and competitive nature of sport, in general, is undermined.

• Even regulated markets can’t fully eliminate illicit or corrupt activity, especially when prop bets or other individual player‐stats bets are involved.

• The public’s trust in sports can erode, which in turn threatens both the sporting product and the betting product that leans on it.

In response, leagues, sportsbooks, and regulators are facing increased public pressure to build stronger integrity systems which may involve monitoring suspicious bets, requiring disclosures, establishing rigorous enforcement policies and imposing harsh penalties, as well as limiting risky bet types (e.g., certain in‐game props) and enhancing education for athletes and staff.

State Tax Rate Increases: Balancing Revenue and Market Growth

One of the major policy trends in the sports betting industry is that many states are raising the tax burden on sportsbooks. The rationale is clear: once the market is established, states see a ready source of revenue. The interest in chasing increased revenue raises questions about long-term market health and operator willingness to invest. Some key examples:

• In Maryland, lawmakers raised the tax rate on mobile sports wagering from 15% to 20% under HB 352, effective mid-2025. 95% of the increased revenue is earmarked for education. 

• In Illinois, the tax regime has become particularly aggressive: the revenue tax is graduated up to 40% for high-earning operators (based on Adjusted Gross Sports Wagering Receipts), and a separate per-wager tax (25 cents per wager on first 20 million wagers, then 50 cents) was introduced effective July 1, 2025. 

• In Wyoming, though a small market, a legislative committee proposed raising the online sportsbook tax rate from 10% to 20%.

• In North Carolina, a budget proposal would double the tax rate from 18% to 36% for online sportsbooks.

From a policy perspective, there are pros and cons. On the pro side, ther will be higher state revenue, especially for underfunded public priorities (e.g., education, infrastructure) without raising general taxes. On the other hand, excessive taxation may squeeze operator margins, reduce promotional offers, raise prices for bettors, and shrink competition or push bettors back into unregulated markets. 

In short, states are trying to capture the upside of sports-betting maturation — but must balance growth and sustainability so the legal market remains appealing both for operators and consumers.

Technology Innovation and Prediction Markets in Sports Betting

Beyond traditional sportsbooks, the industry is seeing expansion into prediction markets and technology-driven change. Prediction markets are systems where participants can bet on a wide range of outcomes — sports events, political events, economic indicators — often using decentralized or novel structures. Recent academic work (“Decentralized Prediction Markets and Sports Books”) outlines how prediction markets using automated market makers can parallel sportsbook models. 

Meanwhile, machine learning (ML) and real-time analytics are also reshaping the space. Research shows that calibration (i.e., ensuring predicted probabilities match observed frequencies) may be more critical than simple accuracy for betting models.

Future Sports Betting Industry Trends and Developments

What does all this suggest about the future?

• More data and personalization: Bettors will increasingly expect personalized odds, micro‐bets (e.g., live player stats), and mobile convenience. Bookmakers will lean on ML for risk management and dynamic pricing.

• Broader market ecosystems: Prediction markets could offer adjacent opportunities (e.g., betting on "player X has Y rebounds", or non‐sports outcomes) and perhaps integrate with blockchain or decentralized finance in some jurisdictions.

• Regulatory evolution: As scandals mount and tax burdens grow, we may see calls for federal regulation (or at least greater uniformity among states). For instance, the scandal in the NBA has spurred renewed interest at the federal level. 

• Pressure on margins and offerings: With higher tax rates, rising marketing costs and increased competition, margins may shrink. Operators might limit promotional offers, raise vigs, or withdraw from smaller markets.

• Integrity-first approaches: Leagues and regulators will need to strengthen monitoring, transparency, and athlete education to protect the product from corruption and safeguard consumer trust.

As the industry enters a new phase, several questions are worth monitoring:

• Will states continue to raise taxes? And at what point does the tax burden discourage competition or push bettors toward the underground market?

• How will sportsbooks and operators adapt to higher taxes while maintaining customer value and growth?

• Can prediction markets become a significant adjunct or alternative to traditional sportsbooks? And will they be regulated similarly or differently?

• How will regulation and oversight evolve, especially given that sports integrity incidents threaten both the sports and betting ecosystems?

• What changes to prop bets, risky bet types and in-state wagering will states make?

• What changes to gambling policies, penalties, and enforcement will governing bodies at the professional and collegiate level make?

• Will technology (e.g., ML, blockchain, real-time analytics) drive a new wave of innovation (and risk) in sports betting? And will regulatory frameworks keep pace?

What's Next for Sports Betting?

The U.S. sports-betting industry is at a pivotal moment. What began as a nascent legal market has matured into a multibillion-dollar ecosystem. Yet with that scale comes scrutiny: from tax harvesters in state capitals, integrity risks in sports, and competitive challenges for operators. The expansion of prediction markets and advanced technologies promises further evolution, but also complexity.

For bettors, regulators, and operators alike, the question is less if the industry will evolve and more how it will evolve. Will states strike a balance between revenue collection and market vitality? Will the integrity of sport hold up in the face of broader betting access? Will operators adapt profitably in higher‐tax, higher‐risk environments? The next few years will reveal the answers.