Snapshot

US sports betting generated $17.0 billion in gross gaming revenue (GGR) on $165 billion in handle (total wagers placed) in 2025, up 23% and 11% respectively year-over-year. iGaming (online casino) added another $10.7 billion in GGR, growing 28% YoY. Combined, these two online verticals produced $27.7 billion in GGR within a total US commercial gaming market of $78.7 billion. Sports betting is legal in 39 states; iGaming in only 8. Two operators — FanDuel (Flutter) and DraftKings — hold a combined ~78% of the US online sportsbook market est.. The industry-wide average win rate (hold) hit a record 9.7% in 2025.

Sports betting handle = total dollars wagered. GGR = handle minus payouts to winners (what the house keeps). The "win rate" or "hold" is GGR / handle. A 9.7% win rate means the operator retains $9.70 per $100 bet before operating costs and taxes.

The product & how money is made

Sports betting: Customers place wagers on sporting events through mobile apps or retail locations. The operator sets odds (prices) on each outcome. The difference between what customers wager (handle) and what is paid back to winners is GGR. In 2025 the US industry kept 9.7 cents of every dollar wagered, up from roughly 7–8% historically est.. Parlay bets (multi-leg wagers that must all hit) carry structurally higher margins, typically 15–30% est., versus 4–7% on single-game straight bets est.. Operators promote parlays through AI-generated "same-game parlay" suggestions.

iGaming (online casino): Slots, table games, and live dealer games played through apps in the 8 states where it is legal. iGaming carries higher hold rates than sports betting — typically 3–10% depending on game type est. — and generates revenue more predictably because outcomes are driven by known mathematical edges rather than sporting results. iGaming produced $10.7 billion in US GGR in 2025, growing 28% YoY.

Revenue to cash conversion: GGR is the top line. From GGR, operators subtract: (1) state taxes (ranging from 10% in Nevada to 51% in New York, with most states at 15–25%), (2) promotional credits and free bets, (3) customer acquisition costs (advertising), (4) platform and technology costs, (5) market access fees (payments to casinos or leagues for the right to operate). The industry collectively paid $3.7 billion in state taxes on sports betting alone in 2025.

Prediction markets: DraftKings launched "Predictions" (event contracts) in 2025. Annualized consumer volume exceeded $1 billion by Q1 2026, with total volume exceeding $2.3 billion.

AGA 2025 annual report; DraftKings Q4 2025 earnings release (Feb 2026); SportsHandle.com 2025 recap.

Demand

Contracted / actual (2025)

• $165 billion in sports betting handle placed in 2025, up 11% from ~$149 billion in 2024. actual
• $17.0 billion in sports betting GGR, up 23% YoY. GGR grew faster than handle because the win rate rose to 9.7%. actual
• $10.7 billion in iGaming GGR, up 28% YoY. actual
• NFL season drives the cycle: October and November 2025 each saw $17+ billion in monthly handle. July was the trough at $8.8 billion. actual
• DraftKings Q1 2026 revenue of $1.65 billion, up 17% YoY. April 2026 handle up 6% YoY, revenue up 22% YoY. actual

Demand drivers (forward-looking)

• State legalization runway: 39 of 50 states have legal sports betting; ~11 remain including Texas, California, Georgia, and Oklahoma. Missouri launched December 2025 with 8 sportsbooks. est.
• iGaming expansion: Only 8 states have legal iGaming vs. 39 for sports betting. iGaming GGR per capita is higher than sports betting GGR per capita in states that allow both. est.
• Penetration deepening: DraftKings' ARPMUP (average revenue per monthly unique player) rose 43% YoY to $139 in Q4 2025 while MUPs were flat. actual
• DraftKings 2026 guidance: Revenue $6.5–$6.9 billion; adjusted EBITDA $700–$900 million. guidance
• BetMGM 2026 guidance: Revenue $3.1–$3.2 billion; adjusted EBITDA $300–$350 million; 2027 EBITDA target of $500 million. guidance

AGA 2025 report; SportsHandle.com; DraftKings Q1 2026 earnings call (May 2026); BetMGM FY 2025 business update (Feb 2026).

Supply

What constrains the number of operators

• State licensing: Each state requires a separate license, typically tied to a partnership with an existing casino or tribal operator ("market access"). Licenses are limited in number in most states.
• Brand and customer acquisition cost: Building a sportsbook brand requires hundreds of millions in marketing est.. PENN spent heavily on ESPN Bet (launched late 2023) and terminated the ESPN alliance in late 2025, rebranding to theScore Bet.
• Technology stack: DraftKings runs a proprietary in-house platform. FanDuel uses Flutter's global technology. PENN/theScore Bet uses theScore's proprietary platform. BetMGM uses Entain's technology. Operators using third-party platforms (e.g., Kambi, GAN) have less control over pricing and personalization.
• Promotional spending: DraftKings' Pick6/Predictions investment alone is $200–$300 million planned for 2026.

Effective US operator landscape

FanDuel (~43% share est.) and DraftKings (~35% share est.) together hold ~78% of online sports betting GGR. BetMGM holds ~8% of online sports betting and ~21% of iGaming. theScore Bet holds ~4% est.. Caesars, Fanatics, bet365, and others split the remainder.

iGaming Pulse market share data (2025); BetMGM FY 2025 business update.

The gap

Volume and extraction both rising: Handle grew 11% in 2025, GGR grew 23%, and the win rate hit a record 9.7%.

Why the win rate is rising: Parlay mix is increasing (higher-margin bets are a larger share of handle). AI-driven pricing engines are setting tighter odds. Live in-game betting — which carries higher hold — is growing as a percentage of total handle. DraftKings reported parlay handle mix up ~300 bps and adjusted gross margins up ~200 bps YoY in Q1 2026.

iGaming supply is artificially constrained: Only 8 of 50 states allow online casino. In the states where iGaming is legal, it generates more GGR than sports betting. New Jersey alone produced over $2 billion in iGaming GGR in 2025. The same three operators (FanDuel, DraftKings, BetMGM) dominate in every state where iGaming is legal.

Offshore competition: The illegal/offshore market remains larger than the legal market est.. Blask estimated FanDuel is the second-largest US online gambling brand behind Bovada (an offshore operator) est..

State taxes as countervailing force: The operator "take rate" (GGR/handle) has risen from ~7% historically to 9.7% in 2025. State tax rates are moving in the opposite direction — New York charges 51%, Illinois raised its rate to a sliding scale up to 40%. Rising state taxes compress operator margins even as win rates increase.

AGA; SportsHandle.com; Blask.com competitive estimates; DraftKings Q1 2026 call.

The players

StockAnalysis.com; DraftKings Q4 2025 earnings; MGM Q4 2025 earnings; BetMGM FY 2025 update; PENN Q4 2025 earnings; iGaming Pulse.

The price of exposure

What you buy with each ticker

DKNG — DraftKings ($12.5B market cap, $13.4B EV): Pure-play US online sports betting and iGaming. FY 2025 revenue $6.1B, adjusted EBITDA $620M. Guiding to $6.5–$6.9B revenue and $700–$900M adjusted EBITDA for 2026. First annual GAAP profit in 2025 ($3.7M). Operating cash flow $663M. Long-term debt ~$1.8B; cash $1.1B. 886M diluted shares est.. EV/Revenue = 2.2x on 2025, ~2.0x on 2026 midpoint. EV/EBITDA = 21.6x on 2025, ~16.8x on 2026 midpoint ($800M).

FLUT — Flutter Entertainment ($17.5B market cap, $28.5B EV): Global gambling conglomerate. FanDuel is the #1 US sportsbook (~43% share est.). FY 2025 total revenue $16.4B. GAAP EBITDA ~$1.5B. GAAP net loss -$489M. ~173M shares est.. EV/Revenue = 1.7x. The US business (FanDuel + US iGaming) is roughly 45–50% of group revenue est.. The rest is international: UK/Ireland, Australia, international online. Betfair Exchange (peer-to-peer betting) is a distinct asset. Net debt ~$11B.

MGM — MGM Resorts ($12.4B market cap, $41.6B EV): Primarily a physical casino and resort company. Las Vegas Strip generated $8.4B in revenue; MGM China (Macau) $4.5B; regional casinos $3.8B. Online exposure is BetMGM, a 50/50 JV with Entain. BetMGM generated $2.8B in revenue and $220M in adjusted EBITDA in 2025. MGM's digital segment lost $90M at the EBITDAR level. BetMGM guides to $300–$350M EBITDA in 2026 and $500M in 2027; MGM captures 50%. The $41.6B EV reflects ~$29B in net debt from the physical casino/resort business.

PENN — PENN Entertainment ($2.5B market cap, $13.0B EV): Regional US casino operator (Hollywood Casino brand, ~43 properties) with an unprofitable online business. Interactive segment lost $268M in adjusted EBITDA in 2025. Total company FY 2025 revenue $7.0B; GAAP net loss -$843M. ESPN Bet alliance terminated November 2025; rebranded to theScore Bet. PENN targets interactive EBITDA breakeven in 2026. The $13.0B EV on a $2.5B market cap reflects $10.5B in net debt/leases est.. Retail segment adjusted EBITDAR margin was 32.3% in Q4 2025 ($456M on $1.4B retail revenue).

Valuation arithmetic

DKNG is the only pure-play US online betting stock. FLUT is pure-play global gambling but carries ~$11B net debt. MGM and PENN are primarily physical casino operators; online betting is ~16–17% of revenue for each.

StockAnalysis.com; company filings and earnings releases.

What to deep-dive next

• State tax trajectory: New York (51%), Illinois (up to 40%), and other states are ratcheting tax rates upward. Map out the after-tax GGR per state for each operator to see how much of the rising win rate reaches operator margins vs. state treasuries.
• iGaming legalization probability: 31 states have legal sports betting but no iGaming. Which are most likely to legalize next? Each one is a step-function revenue event for FanDuel, DraftKings, and BetMGM.
• Parlay and AI-pricing margin expansion: The record 9.7% win rate is driven partly by parlay mix and partly by AI pricing. Quantify how much is structural (AI + product mix) vs. favorable sporting outcomes (March Madness 2025 had a 6.13% win rate, showing outcome variance).
• Flutter's debt and US extraction: FLUT carries ~$11B in net debt on $17.5B market cap. How much of FanDuel's US cash flow is consumed by debt service vs. available for reinvestment?
• PENN's path to interactive breakeven: PENN targets interactive EBITDA breakeven in 2026 after -$268M in 2025 and -$500M in 2024. Is theScore Bet gaining or losing share after dropping the ESPN brand?
• Offshore-to-legal conversion rate: The offshore/illegal market is reportedly larger than the legal market. What is the realistic conversion rate over time?
• BetMGM standalone valuation: BetMGM generated $2.8B revenue and $220M EBITDA in 2025, guiding to $500M EBITDA by 2027. MGM and Entain each own 50% — a potential IPO or sale catalyst.

Sources & confidence