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- A new analysis estimates that California, Texas, Florida, Georgia, and Minnesota represent the five largest untapped markets for regulated online gambling in the U.S., with California alone capable of generating roughly $12 billion in annual revenue.
- Based on models drawn from mature markets like New Jersey and Pennsylvania, the report highlights the massive tax revenue being left on the table as these states continue to hold off on full iGaming and sports betting legalization, leaving residents to instead utilize offshore sites, sweepstakes casinos, and federally overseen prediction markets like Kalshi and Polymarket.
A new analysis says California, Texas, Florida, Georgia, and Minnesota are the five states with the largest untapped regulated online gambling revenue, with California alone estimated at roughly $12 billion a year.
The report, published Oct. 6 by Cole Rush for Bodog and cited by the Quad City Herald, argues that states without full regulated online casino and sports betting are leaving taxable revenue to illegal, offshore, sweepstakes, and prediction-market channels. It says California could generate more than $1 billion in annual state tax revenue at a 10% tax rate, while Texas could support a market worth about $9.5 billion.
How the estimates were calculated
The model uses 2025 online gambling revenue from four mature regulated markets: New Jersey, Pennsylvania, Michigan, and Connecticut. According to the analysis, those states produced a combined per-adult average of about $435, which the author discounted to a conservative benchmark of $390 per adult.
The underlying state results cited in the analysis were:
- New Jersey: $2.91 billion in iGaming revenue and $1.18 billion in sports betting revenue, or $4.09 billion combined
- Pennsylvania: about $2.93 billion in iGaming revenue and $867.8 million in sports betting revenue
- Michigan: $3.77 billion in combined online casino and sports betting revenue
- Connecticut: $973.4 million combined
The methodology applied that benchmark to each state’s estimated adult population using 2024 Census population figures and a uniform 78% adult share. Florida was treated differently because it already has legal mobile sports betting through the Seminole Tribe compact, so the model used a lower casino-only rate of about $300 per adult instead.
The five states at the top of the list
The analysis puts California first, followed by Texas, then Florida, Georgia, and Minnesota.
For states outside the top five, the article also estimated potential annual regulated online gambling revenue of about $1.7 billion for South Carolina, $1.6 billion for Alabama, $1.1 billion for Utah, and $440 million for Hawaii.
The report notes that Georgia currently has no regulated online sports betting or online casino products. Its House rejected a sports betting constitutional amendment in March, with 63 votes in favor, short of the 120 required. In Texas, the legislature adjourned in June 2025 without advancing a gambling bill, and the article said the next real chance for action is 2027.
Why the estimates matter
The broader argument is that gambling demand already exists in states that have not legalized regulated products. The American Gaming Association estimates illegal and unregulated gaming generates $53.9 billion nationally and costs states more than $15 billion in lost tax revenue each year.
The article also points to offshore and bookie-run sports betting, which the AGA estimates at $84 billion in handle and roughly $5 billion in revenue. It says sweepstakes casinos remain available in Texas, Florida, and Georgia, while California banned sweepstakes-style platforms starting Jan. 1, 2026.
The analysis further notes that Kalshi and Polymarket self-certify under Commodity Futures Trading Commission oversight rather than state gambling law, allowing residents in states including Texas, California, Georgia, South Carolina, and Alabama to trade event contracts.
The report says its state figures are estimates from a simple model and should not be treated as forecasts.
Source: As reported by Cole Rush for Bodog.
