For the first time since sports betting was legalized federally in 2018, the industry’s momentum is expected to cool during the upcoming NFL season.
The American Gaming Association (AGA) estimates that Americans will wager $29.5 billion at legal sportsbooks during the 2026 NFL season.
Key Takeaways
- The sports betting industry underperformed last year’s estimate by about $600 million.
- Prediction markets have emerged as a source of significant market competition.
- Prediction traders below the legal sports betting age in most states risked over $5 billion as of Sept. 1.
The early days of widespread sports betting created fierce competition following successful legalization efforts in 39 states and Washington, D.C. But with the rise of prediction markets and the familiarity of sports betting, the AGA feels that sportsbooks will experience a very similar year to the one they just had.
The AGA estimated last August that legal sportsbooks would take $30 billion in bets by the end of the season. That proved to be slightly overconfident, as the total was eventually counted at $29.4 billion.
The $29.5 billion in wagers would only mark a 0.3% improvement in year-over-year handle, easily the lowest increase since federal legalization occurred.
“We're excited for the NFL season to kickoff, as are millions of fans eager to engage with their favorite teams,” AGA president and CEO Bill Miller said in a press release. “Since the Supreme Court struck down the federal sports betting ban in 2018, legalized sports betting had seen tremendous growth.
“But this year is different. Since the widespread launch of backdoor sports betting on so-called ‘prediction markets,’ the growth of legal handle has stalled.”
Although the return of the NFL and college football will inevitably drive sportsbooks to their busiest time of the year, the release noted that the legal commercial sports betting growth rate has already declined significantly. And with prediction markets in a stage of growth similar to when sports betting was first legalized, that should impede operators’ bottom lines.
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Prediction markets taking business from sportsbooks
Prediction market outlets routinely argue that they do not offer sports betting services. Their sports event contracts don’t represent their entire product offerings, but they represent about 80% of the business of the top operators. Platforms such as Novig also exclusively offer sports contracts and do not have markets for entertainment, politics, finance, or other industries.
Some prediction markets also allow traders 18+ to engage with their offerings. That’s below the minimum gambling age of 21 in place in 35 of 40 legal jurisdictions.
The AGA previously estimated that 18-20-year-olds were responsible for $5.1 billion in sports contract trading volume as of Sept. 1. That’s 20.5% of the total sports betting handle projection for the upcoming NFL season.
Legal sportsbooks, which are licensed and regulated at the state level, also contribute significant tax revenue to local governments. The AGA’s release claimed they provided about $18 billion annually, whereas prediction platforms such as Kalshi and Polymarket have already deprived states of over $1.3 billion in taxes since 2025.
“These ‘prediction market’ platforms are dangerously misleading consumers by marketing sports wagers as an investment, rather than what it is: entertainment,” Miller added. “Kalshi and other ‘prediction markets’ say they don't need to follow state- and tribal-regulated sports betting laws or pay state gaming taxes. Their defiance means consumers, including teenagers and freshmen, placing bets without the protections, oversight, and accountability that the legal market provides.”
Future of NFL prediction markets
While sports betting may not be poised for the growth to which it had become accustomed, Kalshi, Polymarket, and other operators are dealing with potential legal hurdles.
Several recent court results have gone against the prediction industry, including decisions to deny preliminary injunctions against state gaming enforcement officials and to limit the authority of federally regulated prediction markets.
Despite that, prediction operators are still handling massive amounts of money from customers. Kalshi’s Super Bowl market has already generated more than $80 million in trades, more than five months before the game and one week before the regular season kicks off.
