The U.S. online casino and sports betting markets will grow revenue a combined 14% in 2026, according to Truist‘s 2026 US Gaming Sector Outlook.
Growth from both markets in 2025 came in “well above” expectations, Barry Jonas wrote. Online casino revenue jumped 27%, excluding Rhode Island, compared to his 7% estimate. Sports betting revenue grew 18% compared to his 11% forecast.
That unexpected growth was from operators proving they can “extract” value out of current online casino states while sports betting saw hold increase 0.45 percentage points. Similar hold growth is expected this year, Jonas said.
Jonas also made some target updates for the online segment as he increased his DraftKings target to $45 from $43 and maintained his buy rating. He lowered his target for buy-rated FanDuel parent Flutter, to $260 from $280, and lowered both MGM Resorts‘ ($38, -$7) target and stock rating to hold from buy.
DraftKings favored for online casino, betting
Jonas selected DraftKings as its favored digital stock to own in 2026, calling consensus EBITDA expectations “reasonable.”
Market share gains should become more evident, Jonas said. DraftKings’ North American focus means it will not be dragged like others from tax increases in the United Kingdom.
Jonas thinks digital operators may be a bit conservative when dishing out 2026 guidance to avoid downward revisions. While states raising taxes may not be as big of a headline this year as it was last year, there is not much of a pathway for online casino or sports betting legalization right now.
2026: Online casino not likely, defense is
Instead of states expanding into new markets, Brendan Bussmann of B Global tells Truist he expects legislatures to be defensive this year.
That means bills or posturing against both prediction markets and sweepstakes casinos. The shortened legislative cycles due to midterm elections also hurts expansion possibilities.
Maine legalizing online casino likely will not lead to more states doing the same, with neighboring New Hampshire a potential exception.
MGM downgraded on Las Vegas
The outlook for Las Vegas is improving, but not fast enough for Jonas to remain buy-rated on MGM.
He currently expects Las Vegas EBITDAR to fall 9% in the fourth quarter and 1% in 2026. The Con/Agg conference returns in the first quarter for the first time since 2023, but Jonas thinks “continued leisure malaise will overcome the group mix.”
Las Vegas visitors are down 7.4% through November.
BetMGM remains a “bright spot” for MGM, he added.
Watch data supplier stocks
Jonas called out the tough last four months of 2025 that data suppliers Sportradar and Genius Sports saw, with stocks down 24% and 20% respectively, but he puts that primarily on concerns over prediction markets.
The two stocks had each grown significantly through August, with Sportradar up 77% and Genius up 54%.
Investors are missing that prediction markets are actually positives for both companies, Jonas said, as their needs for live data and integrity services should increase. He also noted the expected continued growth of live betting as a mix of overall handle.
He also favors the two stocks because of their “consistent earnings growth and limited volatility in the digital gaming realm.”
