The U.S. iGaming stalemate as operators fight for online casino expansion

February 18, 2025

The U.S. iGaming stalemate as operators fight for online casino expansion

While U.S. sports betting surges ahead, iGaming remains stuck in low gear. Efforts to legalise online casinos face stiff resistance from lawmakers, casino operators, and unions. Some states are pushing forward, but the road is far from clear. This second instalment in a three-part series based on the Vixio Regulatory Intelligence U.S. Sports Betting & iGaming Outlook January 2025 analyses the battle over iGaming legislation. Casino operators, unions, and legislators remain divided. Some states are eager to legalise, but progress is slow.

The industry faces political, financial, and structural obstacles. Can operators push through, or will resistance continue?

States leading the iGaming push in 2025

New York remains the most significant battleground. Lawmakers continue to debate online casino gaming, but opposition is fierce. Unions fear job losses at land-based casinos. Some resort developers argue that iGaming could affect billion-dollar investments in physical venues. The state’s high-tax mobile sports betting market has set a precedent. Lawmakers could delay action until a budget crisis forces their hand. iGaming could generate over $1 billion in tax revenue annually, making it a potential solution to future deficits.

Florida’s iGaming future is tied to the Seminole Tribe. After a strong relaunch of Hard Rock Bet’s sportsbook, the tribe has shown an interest in online casinos. Their influence in Tallahassee gives them an advantage. However, opposition from other gambling stakeholders remains a major roadblock. Expanding the Seminole’s monopoly could trigger legal challenges. Florida’s success may open the door for more tribal-led iGaming across the U.S.

Illinois, meanwhile, finds itself in the middle of a tug-of-war. The state’s gambling sector is soaring, but video gaming terminal (VGT) operators are pushing back against online casinos. These VGTs provide a steady income stream to small businesses and contribute heavily to state taxes. That has left lawmakers walking a tightrope—they want to grow the market without undercutting the local businesses that rely on those machines. Budget shortfalls could be a deciding factor in 2025. A well-structured regulatory framework could help Illinois become one of the most lucrative iGaming states.

Louisiana’s Senate approved a study on iGaming in 2024, led by the Louisiana Gaming Control Board. Lawmakers will review the findings in early 2025. However, opposition from video poker operators and some casino stakeholders may slow progress. The state’s parish-by-parish approach to gambling expansion could further complicate iGaming approval. Lawmakers must weigh economic benefits against resistance from established gaming interests.

Other states testing iGaming waters

Maryland’s iGaming bill made progress in 2024 but stalled in the Senate. At least two major casino operators opposed the bill. Unions raised concerns about job security. While supporters may push for another attempt in 2025, a required referendum means no potential launch before 2026. Maryland lawmakers must navigate opposition from land-based casinos that see iGaming as a direct competitor rather than a complementary product. Maryland recently proposed Senate Bill 860 that would ban sweepstakes casinos and impose stricter controls on companies involved in offshore markets.

Colorado may introduce iGaming legislation for the first time. Lawmakers and industry leaders have held discussions, but voter approval is required. A 2019 referendum on sports betting passed by a narrow margin. Online casino gaming may face even greater resistance from conservative voters. The state’s gambling laws have historically been restrictive, making a breakthrough difficult.

Wyoming will reintroduce an iGaming bill in 2025. A recent study suggested that iGaming would not erode existing gaming revenue. However, some tribal gaming operators remain sceptical. While Wyoming moved quickly on mobile sports betting, online casinos may face tougher opposition. Given the state’s small population, the revenue potential is lower than in larger markets, but it could serve as a regulatory model for other states.

Arkansas is also exploring regulatory changes that could enable online casino expansion without the need for full legislative approval. While discussions are still at an early stage, this regulatory approach could put Arkansas on the iGaming map in 2025.

Virginia and Ohio may begin preliminary discussions on iGaming in 2025. Neither state is expected to push legislation forward straight away, but their inclusion in early-stage talks suggests a growing interest in expanding online gambling options.

***Source: Vixio Regulatory Intelligence.***

Why iGaming expansion is facing roadblocks

The success of iGaming in states like Michigan, Pennsylvania, and New Jersey has proven its revenue potential. Despite this, obstacles remain:

Cannibalisation fears continue to be a dominant argument against expansion. Land-based casino operators worry about losing revenue to online gambling. Unions representing casino workers argue that iGaming could reduce jobs. However, data from existing markets shows that online casinos often complement land-based venues rather than replace them. Pennsylvania casinos saw record revenues even after online casinos launched, proving that coexistence is possible.

Union opposition is strongest in states with large casino industries. In New York and Maryland, unions have successfully stalled iGaming bills. Worker advocacy groups demand guarantees that jobs will not be lost if online gambling expands. Some states may consider labour agreements to ensure online gaming growth does not harm existing employment.

The dominance of FanDuel and DraftKings in sports betting raises concerns for some casino operators. The two companies have established market control and could replicate their dominance in iGaming. However, WinView IP Holdings, LLC recently launched two major patent infringement lawsuits against industry titans DraftKings and FanDuel, alleging that both companies have unlawfully incorporated WinView’s patented technologies into their sports betting platforms. Smaller operators worry they will be squeezed out. Traditional casinos fear they will not benefit as much as digital-first platforms. The rise of hybrid online and retail models may help bridge the gap between digital giants and brick-and-mortar establishments.

Budgetary needs may force some states to reconsider iGaming. Federal pandemic relief funds are running out. Some states face increasing deficits. Online casino gaming could provide a substantial new revenue stream. But lawmakers are hesitant to act unless financial pressures become urgent.
Michigan’s iGaming tax revenue smashed expectations, exceeding $200 million in gross monthly revenue several times during 2024. This shows how effective online gaming can reinforce state finances.

Referendum requirements offer another challenge. In states like Colorado, Louisiana, and Maryland, only a public vote can legalise iGaming. Historically, referendums on gambling expansion face strong resistance. Even if lawmakers approve bills, voter rejection remains a risk. Public awareness campaigns might educate voters about the benefits of a regulated iGaming market.

The rise of sweepstakes casinos and legal concerns

Sweepstakes casinos are thriving in states where iGaming remains illegal. Chumba and LuckyLand operate within defined legal frameworks, but California regulators signalled a growing interest in these platforms in late 2024, suggesting the market could face closer scrutiny in 2025. These models allow players to buy virtual currency and redeem winnings as cash prizes. However, legal challenges are increasing.

Regulated gaming operators view sweepstakes casinos as unfair competition. Lawmakers are beginning to consider bans. Some states may introduce new restrictions to limit their growth. Legal battles over sweepstakes gaming could shape iGaming discussions in 2025. If states fail to regulate iGaming, alternative models will continue to grow.

Where does the industry go from here?

iGaming is a proven revenue driver, yet legislative battles continue. The next steps depend on political pressure, economic conditions, and industry lobbying. Operators must address union concerns. More data is needed to prove that online casinos create new jobs rather than replace existing ones. Lawmakers must be convinced that iGaming can complement land-based casinos.

Budget shortfalls could accelerate legalisation. If states face revenue gaps, iGaming could become a financial solution. The longer states delay, the more they may need gambling expansion to fill budget deficits. The success of sweepstakes casinos could influence future policy. Lawmakers may feel pressured to act before unregulated platforms gain further traction.

The industry’s next challenge is breaking the political deadlock. The demand for online casinos is clear. Whether states will listen in 2025 is another question entirely. With billions in potential tax revenue at stake, the pressure to act is rising. Failure to legalise iGaming may strengthen unregulated markets, leaving states without desperately needed tax benefits.

If you missed part one of our series, U.S. sports betting in 2025 faces expansion hurdles and tax hikes, dive in to discover the shifting landscape of U.S. sports betting, from states leading the charge to rising tax pressures and efforts to rein in offshore operators. Part three tackles the bigger picture and looks at market consolidation, payment challenges, and the rise of sweepstakes platforms as regulators race to keep up.