Managing Editor
After several years of disappointing failures in online poker legislation, the first two months of 2026 have already produced a quick win in Maine and some promising momentum in Virginia. Although the Virginia House and Senate have each passed an online gambling bill, the two will need to be reconciled before we can officially call it a done deal. However, even if nothing else happens for the rest of the year, 2026 will still go down as dramatically different from previous years, as promising bills in multiple states have either stalled out in committees or been rejected outright.
That leads to the obvious question: What is different this time?
Coming into 2026, I was ready to call the year a dud before legislative sessions had even begun. At the time, I could see no reason that states would be able to circumvent the obstacles of previous years, and plenty of reasons that the challenge would be even harder. The NBA and NCAA basketball scandals have given regulated sports betting a black eye, and it was my view that state authorities’ frustrations with sweepstakes sites and prediction markets would sour them against gambling more generally.
I’m now left wondering whether I was wrong on the latter front. Could the federal government’s support of prediction markets be lighting a fire under states to expand the array of locally-available gambling options, or convincing the skeptics in the retail sector to accept the lesser of two evils?
It’s too early for me to say that with conviction. But it certainly feels like that may be the case. The counter-argument would be that Maine and Virginia each have their own more specific reasons for doing it. Let’s start by looking at that aspect of things.
Smaller Markets Have Fewer Moving Parts
Although many, including myself, expected Governor Janet Mills to begin 2026 by vetoing last year’s online casino bill, it’s relatively less surprising that Maine prevailed than it will be if Virginia does. The pattern of the last five years has been that small states find it easier to legalize iGaming than big ones.
That’s because the number of stakeholders in the larger markets makes it harder to find a solution that satisfies everyone. Even getting all the commercial casino operators on the same page is a challenge, when those whose iGaming products have previously been rejected by consumers in existing markets end up opposing the opening of any new ones. On top of that, retail casino workers’ unions typically emerge as opponents, as small business owners who count on lottery ticket sales or video gaming terminals for revenue.
Between 2021 and 2026, there were only two states that successfully legalized online casinos: Connecticut and Rhode Island.
Connecticut is a tribal gaming duopoly, and the Mashantucket Pequot and Mohegan Tribes were very happy to partner with DraftKings and FanDuel to divide up the market between themselves. Rhode Island is a state lottery monopoly. In both cases, it was easy for the iGaming proponents to present a united front.
The story is similar in Maine, where the exclusive rights to online casino gaming will be held by the Wabanaki Nations. Although there are four of these, rather than two as in Connecticut, it was their concerted argument that iGaming would be economically beneficial to them that swayed the governor.
Change in Governor May Make the Difference in Virginia
Virginia, on the other hand, will be the biggest state to adopt iGaming since Michigan in 2021. With nearly as many residents as New Jersey, it would represent a significant expansion of U.S. iGaming. It also only recently legalized retail casinos, so one might have expected an adjustment period would be necesssary.
If we’re looking for local reasons that Virginia might be quicker to embrace iGaming than other states, last year’s change in gubernatorial leadership is one possibility. Republican Governor Glenn Youngkin’s term limit was up, and his successor, Winsome Earle-Sears, lost to her Democratic challenger, Abigail Spanberger.
The new Governor herself hasn’t taken a particular position on iGaming, although her office is keen on establishing a dedicated regulator. Currently, the state Lottery is responsible for oversight.
However, her party members might have good reasons to establish a new source of revenue, based on the outgoing Gov. Youngkin’s final budgetary decisions. Compared to some other states that have been eyeing iGaming, Virginia’s economy is in pretty good shape. However, Gov. Youngkin’s final budget included a number of tax cuts that could eventually hurt the state’s coffers, especially as it scrambles to solve the problems created by the federal government’s cuts to Medicare.
It’s a common political ploy to make popular but costly moves on one’s way out, leaving the next administration to pick up the tab. Democrats would upset voters by rolling back the cuts, but they also know that Republicans will blame Democrat spending if those cuts lead to a shortfall in future years.
Knowing that iGaming can take several years to implement, it may be that proponents are trying to get out ahead of a foreseeable budget crunch. Indeed, the House version of the iGaming bill doesn’t call for the market to launch until 2028.
The Prediction Market Effect
But what if there is more to this than two states that overcame legal iGaming’s systemic challenges for idiosyncratic reasons? Some of the other usual suspects will try again this year: New York, Maryland, and Indiana, to name three. If any of those efforts begin to make more progress than they have in the past, we might be seeing a shift in the underlying political situation.
My intuition was that the proliferation of sweepstakes casinos and prediction markets would be bad for the chances of further gambling expansion. Those products’ popularity is a direct consequence of states’ failure to provide legal options for people who want to gamble. However, the general public is not likely to see it that way. Negative press about gambling makes things more difficult for the industry as a whole, not just for the specific operator or product category that’s under the microscope.
That said, within the political class, these quasi-legal gambling alternatives may be making the regulated industry’s arguments harder to ignore. The main argument for legalization is that people are going to gamble regardless, and that money just leaves the state to no benefit if it’s happening on unregulated sites. In the past, that meant the offshore black market. And the thing about the offshore black market is that it’s essentially invisible if you’re not looking for it.
Sweeps and prediction markets, on the other hand, are impossible to ignore. It’s now impossible for a politician not to recognize the reality that their state’s residents are spending money on sweepstakes gambling and predictions. Donald Trump’s presidency also sees state politicians — especially Democrats — increasingly at odds with the federal government. That may give rise to a sense that if the state doesn’t take the reins on gambling, it is ceding them to the federal government.
