2025 US Gaming Stock Trends: The Odds Look Strong

Key Takeaways

• Gaming stocks like Caesars CZR, MGM MGM, and DraftKings DKNG remain cheap despite winning performance across the broader market.
• US commercial gaming revenue growth has averaged 7.3% over the past six quarters (through first-quarter 2025), compared with just 2.2% for US gross domestic product.
• While sports betting is already legal in 39 states, we forecast seven additional states to allow athletic wagering by 2028.

Despite lower consumer confidence, demand for sports and i-gaming wagering has not abated.

The first quarter saw a 20% increase in digital sales for the industry. This happened even though there were challenges from favorable sports betting outcomes for consumers. These outcomes increased sports revenue by 14%, which is slightly less than the 42% increase seen in the third quarter of 2024.

Meanwhile, i-gaming sales increased 27% in the first quarter, in line with the average during the last six quarters. We expect lasting double-digit industry sales growth, driven by user and wagering volume increases in existing and new states legalizing sports betting and i-gaming.

US commercial gaming revenue growth has also averaged 7.2% over the past six quarters, averaging 3 times gross domestic product growth during that time.

With a deeper understanding of the latest gaming industry trends, institutional investors can make better investment decisions.

In the Q2 2025 Gaming Industry Pulse, we dive into the trends around sports and i-gaming, industry outlooks, and more.

There’s ongoing strength in US sports and i-gaming betting, providing growth drivers for the domestic gaming industry this year.

Still, shares of Morningstar’s US-listed gaming coverage have dropped year to date due to angst over US regulatory changes—as well as declining sales in US regional casinos after a strong demand recovery in 2021-23.

In this vein, shares within our coverage were down 10.1% on average for the year to date through June 6 on a market-cap-weighted basis, versus a 5.9% lift for the Morningstar Global Markets Index. As such, 71% of our gaming-related coverage traded in 4- or 5-star rating territory.

Stock performance has been mixed across our US gaming-related coverage during the past year through June 6.

On one hand, investors have cheered Flutter’s FLUT leading, pure-play exposure in the growing digital gaming markets. Conversely, companies exposed more to physical gaming assets, such as MGM and Caesars, have seen their shares decline, as revenue growth has slowed because of tough comparisons and intense competition.

Gaming Activities Continue to Draw Consumer Spending in Excess of Economic Growth

We believe that healthy employment will buoy gaming demand in 2025. In this vein, US job growth has been strong over the past three years. In fact, the unemployment rate has held around 4% for the longest stretch in more than 50 years.

Because of this job growth, US GDP and retail sales continue to grow, averaging 2.2% and 1.5%, respectively, over the past six quarters through first-quarter 2025. That said, a 0.2% drop in the first quarter of 2025 GDP bears monitoring.

We think this speaks to the enduring consumer demand for gambling activity. This thirst for gaming may also be stoked by expanding legalization of sports and i-gaming betting and more types of wager offerings (in-game and casino play).

Sports Betting and I-Gaming Are an Expanding Presence Within Commercial Sales, While Vegas Slowly Shrinks

In our view, Las Vegas is no longer the only game in town, as sports betting and i-gaming also offer a winning hand.

Las Vegas’ share of US commercial gaming revenue has moved to about 18% from 21% in the fourth quarter of 2023, even as the region adds sporting and entertainment events that attract visitation and wagering. Meanwhile, sports and i-gaming sales share has increased to 21% and 13% in the first quarter of 2025, respectively, versus 20% and 10% in the fourth quarter of 2024, aided by further state and user adoption.

Las Vegas trends are specifically important to MGM (given that we estimate 51% of its revenue in 2024 came from the region), Caesars (39%), and Wynn WYNN (36%).

DraftKings and Flutter are pure plays in digital gaming. But 15% of PENN Entertainment PENN, 11% of Caesars, and 9% of MGM’s 2024 sales came from sports and i-gaming.

Outside Vegas, other US regions collectively made up 85% of Penn’s 2024 sales, 50% of Caesars’, and 22% of MGM’s.

What Challenges Is Las Vegas Facing in 2025?

Las Vegas visitation had generally been growing since spring 2021, when covid-19 restrictions were removed. That said, growth has turned negative in each of the past four months through April 2025, with January down 1.1%, February lower by 11.9%, March decreasing 7.8%, and April dropping 5.1%.

In our view, the trend change is due to economic uncertainty and tougher comparisons, but it doesn’t tarnish our stance that the region’s enclave of resorts will attract visitation growth near GDP levels over the long term.

First-quarter Las Vegas EBITDA margins of 38.8% were near the 39.0% average over the past six quarters. We believe that lasting cost efficiencies are offsetting higher industry labor costs and tougher revenue comparisons in an ominous economic landscape.

Further Legalization at the State Level Is Boosting Growth in US Sports Betting

Sports betting is already legal in 39 US states and the District of Columbia, and this encompasses about two-thirds of the adult population.

Based on our analysis of the legislative process, we forecast that seven more states will allow sports wagering between 2025 and 2028. Of these seven states, Texas is the largest opportunity, with an estimated 7.1% revenue share in 2028, helping drive our industry revenue growth forecast to more than $30 billion in 2030 from about $14 billion in 2024.

Outlook for I-Gaming Legalization

We believe the number of states with i-gaming can expand to 10-15 by 2029, from seven currently, helping stoke our industry revenue estimate to $26 billion in 2030 versus more than $8 billion in 2024. In our view, the largest potential state approval is New York, which we estimate will represent 19% of the i-gaming revenue market in 2028. We also see Ohio and Illinois passing i-gaming by 2028, amounting to about 14% and 13% respective revenue shares at that time.

How Has Increased Digital Growth Affected the Gaming Industry Revenue Forecast?

The gaming industry is on the cusp of an impressive upswing as revenue forecasts reveal a vibrant future underpinned by robust digital growth.

A spotlight shines brightly on the digital segment, which emerges as the key driver of growth through 2025-26. The US gaming market witnessed a notable 11% revenue increase in 2024, setting the stage for a projected 12% rise in 2025 and a 9% growth in 2026. This forward momentum is largely thanks to the stellar performance anticipated in the digital sector, with sales expected to surge by 28% in 2025 and 20% in the following year.

The digital gaming segment is set to maintain its formidable double-digit revenue growth through 2026, fueled by an expanding user base and heightened revenue per user across states where digital gaming is legalized. The forecast also factors in the potential for more states to embrace digital gaming legislation, which could further amplify growth.

On the other hand, the iconic Las Vegas gaming market reflects a different trajectory. After a strong 8.5% upswing in 2023, sales plateaued in 2024, and restrained growth of 0.9% is anticipated for 2025, tempered by prevailing macroeconomic uncertainties. However, a gentle rebound is on the horizon for 2026, with a 2% increase in sales expected, paralleling GDP growth projections.

Regional gaming markets, which have already experienced a robust demand recovery during 2021-22, encountered a 1.8% sales downturn in 2024 due to relentless competition. Nevertheless, a recovery is on the agenda, with anticipated growth of 0.1% in 2025, climbing to 1.9% in 2026. As the gaming industry embraces the digital frontier, the pathway to sustained revenue growth appears promising.

Key Takeaways for Financial Advisors

As financial advisors navigate the landscape of investment opportunities, the intricacies of the gaming industry can unlock potential for client portfolios.

The gaming sector is witnessing substantial growth, particularly in the digital space, which promises to reshape investment strategies. Here’s a look at some key takeaways from the latest updates in the gaming industry:

• Growing revenue potential: The gaming industry is set for a robust revenue growth trajectory, with commercial gaming revenue outpacing US GDP growth. The sector’s expansion is driven by increasing digital sales, suggesting a strong appetite for gaming, particularly in legalized states. Advisors should note that the digital segment is expected to see significant growth, with sales projected to surge 28% in 2025 alone.
• Investment opportunities in gaming stocks: Despite mixed performance in recent quarters, stocks like Caesars, MGM, and DraftKings are trading at attractive valuations. With ongoing strength in US sports and i-gaming betting, these stocks present a compelling opportunity for value-seeking investors. The legal expansion of sports betting in more states will further bolster this growth.
• Significant growth in sports and i-gaming: The legal landscape for sports betting continues to evolve, with expectations for more states to join the fray by 2028. I-gaming is also on the rise, with the potential for additional states to legalize online gaming by 2028. This presents a burgeoning area of investment as the adoption of these activities widens across the US.
• Implications of Las Vegas trends: Las Vegas remains a big player in the gaming industry, yet its revenue shares are slightly declining as digital and regional markets expand. Financial advisors should consider the broader shifts within the gaming landscape, as growth opportunities are no longer confined to the traditional Las Vegas market.

The gaming industry presents a dynamic and growing landscape ripe for investment. Financial advisors can provide value to their clients by leveraging insights into the industry’s digital expansion and the shifting dynamics of state-level legalization.