iGaming Weekly Recap (January 27–February 2, 2025): Navigating Uncharted Waters
The U.S. sports betting industry has set sail into uncharted waters, and it’s hard to predict what lies ahead. Icebergs are plentiful, and it remains to be seen whether the “unsinkable” business can withstand a potential collision. We dive deeper into the rising threats facing the industry in 2025 in the bonus section of this week’s newsletter. Be sure to check it out. But first, here’s a quick recap of last week’s most important developments.
HG Vora Capital Management, which holds a 4.8% stake in Penn Entertainment, has launched a proxy battle by nominating three new directors. The firm accuses Penn Entertainment’s board of mismanaging its interactive gaming strategy. This, it claims, led to massive financial losses and an 81% decline in stock value over four years. HG Vora is proposing industry-experienced candidates to overhaul the company’s strategy with a focus on profitability and financial oversight. Shareholders will make the final decision at the 2025 Annual Meeting.
Kalshi plans to expand its prediction market offerings with contracts on athlete and team performance. This move follows regulatory shifts in the U.S., including Donald Trump’s return to the presidency and Caroline Pham’s appointment as CFTC chair. Pham supports regulation over banning such markets. Encouraged by positive reception to its initial prediction markets, Kalshi hopes for CFTC approval despite past hurdles faced by similar firms. The contracts will rely on results verified by reputable sources. Athletes and league employees will be barred from participation. The venture’s success depends on the CFTC’s final decision.
Evolution closed 2024 with an impressive net revenue of €533.8 million, despite challenges like employee strikes, cyberattacks, and regulatory scrutiny. Growth came primarily from its Live Casino segment. Although the company’s EBITDA margin declined, it plans aggressive expansion into Brazil and the Philippines while introducing new games in 2025. A share buyback program and dividend payouts will support these initiatives.
In North Dakota, Senate Bill 2224 proposes dissolving the Gaming Commission and transferring its authority to the Attorney General. Supporters believe this would streamline gambling regulation and reduce bureaucracy. However, opponents fear concentrating power in one office could weaken oversight and harm the industry and public interest. Even if the commission is dissolved, new regulations would still require approval from the appropriate committee.
Indiana’s HB 1432, a bill to legalize online casinos and digital lottery services, is making progress. The proposal includes operator licensing fees, a progressive tax system, and funding for problem gambling programs. The bill has sparked mixed reactions. Supporters emphasize revenue growth and consumer protections, while opponents fear losses for brick-and-mortar casinos and increased gambling addiction. Its future remains uncertain as it must still pass Senate votes and receive the governor’s signature. Meanwhile, discussions on other gambling-related regulations in the state continue.
Bonus: Betting on the Unknown
Today’s newsletter introduction may have sounded dramatic, but the U.S. sports betting and iGaming industry is facing serious challenges. What is the newest and potentially most disruptive development? Contracts on sports events.
Companies in this space have grown bolder ever since it became clear that Donald Trump is returning to the White House. Crypto.com, however, may have taken that confidence too far. After rolling out its services in all 50 states, it outright ignored the CFTC’s order to suspend its markets until a final decision is reached. The company essentially stated it would disregard any commission actions until the upcoming leadership changes take effect.
A Shifting Regulatory Landscape
Crypto businesses are placing their bets on Acting Chair Caroline Pham, who replaced Rostin Behnam. With Trump’s return, a shift in the CFTC’s stance toward crypto and sports contracts was expected, and it’s happening. Pham has made it clear that these markets should be properly regulated, not banned.
Kalshi, which previously clashed with the CFTC, is now pushing forward with confidence. Last week, the company launched its first sports event markets. This week, it filed plans to introduce contracts based on individual player milestones. Things are moving fast, and at this pace, companies like Kalshi, Robinhood, and Crypto.com seem unlikely to face major roadblocks.
This is where we truly enter uncharted territory. On one hand, Kalshi’s current offerings aren’t exactly groundbreaking, raising questions about what kind of customer base the company is targeting. On the other, the market is expected to grow, and competition could drive further innovation.
So how should sportsbooks react? Could sports contracts become a complementary product for online operators? Or will the biggest players decide it’s time to make acquisitions? FanDuel holds a natural advantage thanks to its parent company, Betfair, but how the broader industry responds will be a key storyline to watch.
The Return of the Sweepstakes Debate
Sports contracts may be the hottest topic right now, but they’re not the only regulatory challenge on the horizon. New York and New Jersey have recently decided to take on the long-debated issue of sweepstakes, a subject that has frustrated both regulators and operators for years.
Moving toward regulation raises a critical question: Can authorities simply welcome with open arms the same operators they once fought so hard to shut down? If that happens, it sets a precedent where exploiting loopholes becomes a winning strategy. The sweepstakes debate faded into the background at the end of last year, but it won’t stay there for long, sooner or later, lawmakers will have to address it.
The Growing Tax Burden on Operators
State governments are adding even more pressure. Raising sports betting taxes has become the go-to solution for filling budget gaps. So far, only Ohio and Illinois have pulled the trigger, but tax hike proposals are landing on more legislative desks. Most recently in Maryland and Massachusetts.
Naturally, operators are pushing back. DraftKings has been at the forefront, first with its controversial surcharge proposal and now with its pivot to a Sportsbook+ Subscription. While New York lawmakers have responded positively to the subscription idea, it’s unclear whether other states with high tax rates would be as receptive.
Is Federal Intervention on the Horizon?
For now, Washington is watching from the sidelines. But last year’s Senate hearing signaled that federal intervention could be coming. Trump’s return may have given the industry hope that regulation will remain at the state level, but that’s not a sure thing.
Adding to the uncertainty, the industry isn’t doing itself any favors. One major concern is the departure of Keith Whyte, a key figure in last year’s Senate hearing and a crucial voice for regulatory balance. His exit from the National Council on Problem Gambling (NCPG) removes a stabilizing force, one that lawmakers might feel the need to replace with federal oversight.
The game is getting riskier for operators. Challenges keep piling up, while solutions remain scarce. This isn’t a doomsday scenario—at least not yet. But one thing is clear: 2025 will be a busy year for both lawmakers and the industry.
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