Sports Betting Legal Landscape [2026]: Which States Allow It and What's Changed

Legal sports betting in the United States has expanded dramatically since the Supreme Court's 2018 Murphy v. NCAA decision struck down the Professional and Amateur Sports Protection Act (PASPA), which had effectively banned sports betting outside Nevada. In the six years since, over 35 states and Washington DC have legalized sports betting in some form, creating a market that generates tens of billions of dollars in annual handle (total amount wagered). Here is the honest guide to the current legal landscape, how it works, and what's still evolving.

The Murphy v. NCAA Decision: What It Actually Did

PASPA (1992) prohibited states other than Nevada, Oregon, Montana, and Delaware from authorizing sports betting. The law didn't make sports betting illegal at the federal level — it prohibited states from legalizing it. New Jersey challenged the law after voters approved a 2011 referendum to allow sports betting at casinos and racetracks; the Murphy case was the culmination of that challenge, with the Supreme Court ruling 6-3 that PASPA violated the anticommandeering doctrine of the 10th Amendment by forcing states to maintain laws against sports betting they no longer wanted.

The decision returned sports betting regulation entirely to states, with no federal framework. This has produced a patchwork of different rules, tax rates, licensing requirements, and permitted betting types across states — similar to the varying state approaches to alcohol regulation after Prohibition ended.

The Current State-by-State Landscape

As of 2026, over 35 states have legalized sports betting in some form. The most established markets by handle volume: New York (which legalized mobile betting in 2022 and quickly became the highest-revenue state), New Jersey (the original post-PASPA state, consistently among the highest volume markets), Illinois, Pennsylvania, and Arizona. Several large states remain without legal sports betting: California (where voters rejected two competing ballot measures in 2022, primarily due to tribal gaming industry opposition to online betting), Texas (where the legislature has not passed enabling legislation despite repeated attempts), and Florida (where a complex legal dispute between the state, the Seminole Tribe, and competing interests has produced ongoing litigation).

The tax rates on sports betting revenue vary significantly between states, from Nevada's 6.75% to New York's 51%. High tax rates (above 20-25%) have been criticized as driving operators to reduce promotional spending that benefits customers and potentially encouraging continued illegal offshore betting that pays no taxes. The optimal tax rate for maximizing legal market participation versus state revenue is debated among gambling economists.

The Operator Landscape

The legal sports betting market is dominated by a small number of large operators. DraftKings and FanDuel (which entered sports betting from daily fantasy sports) are the two largest US operators by market share. BetMGM (MGM Resorts' online betting arm), Caesars Sportsbook, and ESPN Bet (Disney's partnership with Penn Entertainment) are significant competitors. The concentration of the market among a few large players reflects the scale advantages of mobile betting — a national customer acquisition and retention infrastructure produces lower customer acquisition costs than smaller regional operators can achieve.

The promotional spending that characterized the 2018-2022 market expansion phase — "risk-free" bets, deposit matches, and other new customer offers — has significantly reduced as operators have shifted focus from customer acquisition to profitability. New bettors in 2026 receive less generous introductory offers than those who signed up in the early market expansion years.

What's Still Evolving

Federal gambling regulation remains an active discussion. The Gambling Addiction and Treatment Act and similar federal legislation have been proposed in Congress, addressing problem gambling funding requirements for operators. In-game betting (wagering on specific events within a game in real time) continues to expand and has been particularly controversial for its potential interaction with problem gambling, as the speed and frequency of available bets increases.

Honest Bottom Line: Murphy v. NCAA (2018) returned sports betting regulation to states by striking down PASPA; no federal framework exists, producing a patchwork of varying state rules. Over 35 states have legalized sports betting; California, Texas, and Florida remain major holdouts due to tribal gaming interests, legislative resistance, and ongoing litigation. New York became the highest-revenue state after 2022 mobile legalization at a 51% tax rate that some critics argue is too high for sustainable market development. DraftKings and FanDuel dominate market share. The promotional spending that benefited new customers during 2018-2022 market expansion has significantly reduced as operators focus on profitability.