���������

The U.S. gambling industry faces unprecedented threats and opportunities as rapidly expanding sweepstakes and prediction-market platforms steal a march on an iGaming segment struggling to gain legislative approval.

Sweepstakes platforms offering casino games and sports betting, as well as federally-regulated prediction markets, represent the most serious threats to the regulated U.S. gaming industry, according to several legislators and gaming executives that spoke Tuesday (April 15) at the East Coast Gaming Congress in Atlantic City. 

In contrast, expansion of regulated online casino gaming may still be the industry’s largest opportunity as more state legislatures considered iGaming bills this year than ever before, but still only seven states have legalized iGaming and legislative momentum has stalled.

“I wouldn’t say that iGaming necessarily is languishing in the sense that states are turning them back,” said Shawn Fluharty, a Democratic state lawmaker from West Virginia and president of the National Council of Legislators from Gaming States (NCLGS).

“In fact, there’s been more iGaming bills around this past legislative session than any other year, so it’s clearly catching on now.”

Still, Fluharty explained that “passing bills is not easy” as thousands of measures can be introduced in a legislative session but only hundreds may pass in a given year.

So far in 2025, iGaming bills have been rejected by lawmakers in Indiana, Maryland, New Hampshire, Virginia, Maine and Wyoming. Bills are still pending in Illinois, Iowa, Massachusetts and New York, but they are highly unlikely to be approved.

Fluharty said he understood the concerns of unionized casino workers who believe their jobs are threatened by iGaming being legalized in Maryland and other gaming states, but he told conference attendees that the elephant in the room was the Trump administration.

“Because everybody knows he has essentially told the states that you are on your own, and if you’re a legislator, what do you do?” said Fluharty, who also serves as head of U.S. government affairs for online gaming suppliers Play'n Go.

“Do you want to raise taxes on your constituents? No. So let’s look at raising revenue. [Through iGaming] you can essentially flip the switch, and you can partner with your brick-and-mortar casinos.

“Revenue goes up for everybody. Rising tides raise all ships, not just yachts.”

Fluharty believes the “formula is there” for approving online gaming bills, even though proponents are not at the point of seeing advocacy efforts turn into legislative approval at this point.

“I think as we move forward, states will need the revenue, and they will realize that iGaming is already taking place in their state,” said Andrew Winchell, head of government affairs at Betr and a former director of the gaming committee in the New York Senate. “Over time … they will move in that direction. I can definitely see this as being, what is my neighbor doing?”

Winchell believes legalization will expand when one state in the Midwest or Southwest legalizes iGaming and then that is followed by two or three neighboring states passing bills.

Sweeps Bans Struggle To Pass Legislatures

Panelists were split on how states should address the rise of sweepstakes casino platforms, with Lynne Kaufman, a partner at law firm Cooper Levenson in Atlantic City, stating her belief that sweepstakes sites should be regulated by states.

Fluharty said states should instead crack down on unregulated forms of gaming.

Referring to the efforts of Michigan, Connecticut, Delaware and other states to prevent sweepstakes sites from operating in their jurisdictions, Fluharty noted that “states that have iGaming on the books have had more success ridding themselves of bad actors”.

He reminded regulators that they can send cease-and-desist letters to unlicensed sites, but if there is not clear legal prohibition on the books to back it up, “good luck”.

“I believe you pass an iGaming bill, and you include a ban on sweepstakes, and you include penalties as well. You tell people, if you’re operating sweeps, you’re not going to come into the regulated market once it passes.”

Winchell cautioned regulators and lawmakers to take a step back when considering any sort of emerging vertical and how to address it through legislation or enforcement action.

“Are you trying to use it as a shield to protect … your constituents? Or are you trying to use it as a soldier to pick out winners and losers in the gaming market yourselves?” he asked.

Mary Jo Flaherty, interim director of the New Jersey Division of Gaming Enforcement (DGE), participated in the panel discussion on the unprecedented changes in the gaming industry, but declined to participate in a conversation about prediction markets.

Prediction market Kalshi filed a lawsuit against the DGE and the Nevada Gaming Control Board (NGCB) following cease-and-desist orders. A federal judge is expected to hear Kalshi’s request for a temporary restraining order against the DGE on April 30. 

Kalshi won the first round of its legal fight in Nevada after a federal judge last granted the company's request for a preliminary injunction and suggested that the permissibility of sports-event contracts was a matter for federal regulators or Congress to determine, not state gaming agencies.

Fluharty said he expected states to pursue more litigation against sports-event contracts.

“They’re going to say we have licensees who have gone through the sports-betting regulatory process, and we’re going to defend them,” Fluharty said. “It’s going to just be something [fought] through litigation.”