Which States Could Legalize Sports Betting and iGaming Next?

The U.S. sports betting market is becoming harder to expand, with most of the obvious states already having some form of legal wagering. Online casino gaming remains even more difficult, with only a small number of states allowing regulated iGaming.

Still, industry lobbyists believe several states could make progress over the remainder of 2026 and into 2027. Nebraska is currently one of the biggest states to watch for online sports betting, while Alabama and Georgia could also make moves. On the iGaming side, Virginia, Washington, D.C., and New York remain among the jurisdictions with the most potential.

The rise of prediction markets has also changed the conversation. Platforms such as Kalshi and Polymarket are offering sports event contracts in states where traditional sports betting remains illegal, giving legalization advocates another argument to take to lawmakers.

Nebraska Is The Biggest Sports Betting Market To Watch

According to Sports Betting Alliance (SBA) Chairman Jeremy Kudon, the U.S. could see three or four new sports betting states in the near future. Nebraska is arguably the most immediate opportunity.

Nebraska already allows retail sports betting, but online wagering remains unavailable. Industry groups are now backing an effort to put a constitutional amendment before voters that would allow online sports betting.

The campaign has already attracted significant financial support. FanDuel and DraftKings reportedly donated around $3.5 million each to the ballot initiative, while a petition seeking the constitutional amendment collected more than 201,000 signatures.

Kudon said polling has given him confidence that the proposal could succeed, although opposition remains the biggest variable.

iDEA Growth State Advocacy Director John Pappas also believes Nebraska could provide an important indication of how much public support remains for expanding online sports betting.

“The Nebraska ballot initiative will certainly be an interesting barometer of public support for [online] sports betting.”

The November vote could therefore become one of the most important tests for the U.S. sports betting industry's next phase of expansion.

Alabama And Georgia Could Be Moving Closer

Alabama is another state drawing attention ahead of 2027.

The state has historically been one of the major holdouts when it comes to legal gambling, but recent comments from lawmakers have suggested that the issue could finally receive serious consideration. Kudon believes Alabama could make a major push for sports betting and potentially a state lottery next year.

The situation in Georgia is slightly different. Sports betting legislation reached the state House floor for the first time in 2026 before eventually stalling, which Kudon described as significant progress despite the failure to pass a bill.

Prediction markets may have helped move that conversation forward.

According to Kudon, some Georgia lawmakers were already pointing to Kalshi as evidence that sports wagering was taking place in the state regardless of whether traditional sportsbooks were legal.

“A lot of members were saying to us, ‘Kalshi’s out there, we should do this.’”

That argument could become increasingly important in states that have resisted legal sports betting. Traditional gambling operators can now point to prediction markets and argue that residents already have access to sports-related financial products, even without a state-regulated sportsbook market.

Pappas believes that reality makes the issue more difficult for lawmakers to ignore.

“It’s very apparent that there is some form of sports wagering occurring in their state.”

For legalization advocates, the argument is straightforward: if residents are already betting on sports through prediction markets or illegal operators, states could instead regulate the activity and collect the associated tax revenue.

Prediction Markets Are Changing The Legalization Debate

The rapid expansion of prediction markets has become an unexpected factor in the traditional sports betting industry's lobbying efforts.

States that have refused to legalize sportsbooks are now watching platforms such as Kalshi and Polymarket offer sports contracts to residents under a federal regulatory framework. That has created an awkward situation for lawmakers who have spent years debating whether sports betting should be permitted.

Pappas believes prediction markets can actually help the industry's legalization efforts because they make the issue more visible.

“We already knew it was happening with the illegal market, but with all the advertising and popularity of these [prediction market] products, it’s much more in the face of lawmakers now.”

The situation is particularly relevant in states where sports betting has repeatedly stalled. Prediction markets have effectively added another competitor to the debate, while also giving sports betting advocates a new reason to argue for state regulation.

That does not necessarily mean every state will suddenly legalize sportsbooks. Tribal gaming interests, existing casinos, political opposition and questions surrounding tax structures can all complicate the process. But the prediction market boom has made it increasingly difficult to argue that sports wagering is simply absent from states without legal sportsbooks.

Kudon believes the industry could see a couple of victories before the end of 2026, but said the larger focus should be on 2027.

Virginia Leads The iGaming Conversation

Online casino gaming is a much tougher proposition.

Maine became the eighth state to formally legalize iGaming in January, although its tribal-led market is facing a legal challenge. That leaves a relatively small number of states where online casinos are fully regulated compared with the more than 30 states that now have legal online sports betting.

Virginia came closest to joining that group in 2026.

Lawmakers considered online casino legislation, but the bills ultimately died during the conference process. That does not appear to have ended the state's prospects, however. Kudon described Virginia as “a makeable putt,” suggesting another push could succeed.

The SBA's priorities have also shifted heavily toward iGaming. Kudon said roughly 80% of the organization's budget priorities are now focused on online casino legislation, reflecting the industry's belief that iGaming represents the next major area of U.S. gambling expansion.

The problem is that online casino legalization creates more competition between existing gambling interests than sports betting did.

As Pappas explained, casino-style gaming already exists in many states through tribal casinos, commercial casinos, video lottery terminals and historical horse racing machines. Adding an online casino therefore raises a more complicated question: who gets to operate it, who controls the market and who receives the revenue?

“When you’re adding the digital element to it, there becomes a lot more competitiveness as to who gets it, who controls it, who benefits from it.”

That competition is one reason iGaming legislation has moved more slowly than sports betting.

New York And D.C. Could Also Make A Push

Washington, D.C. is another jurisdiction worth watching.

The District expanded its online sports betting market in 2024, and Pappas believes lawmakers could seriously consider online casino gaming once the Council reconvenes this fall.

The main motivation is familiar: revenue.

Pappas said D.C. is facing significant financial pressure and that lawmakers are increasingly hearing arguments about the illegal gambling market and the advertising surrounding it.

New York has an even larger potential financial incentive.

The state has considered iGaming legislation repeatedly, but has yet to approve online casinos. Kudon believes New York is always worth watching because of its significant budget deficit, which he estimated at around $12 billion.

For supporters of online casinos, the potential tax revenue makes New York difficult to ignore. But the state's existing casino and gaming interests also make legalization politically complicated.

As Pappas pointed out, lawmakers can hear strong arguments from both sides and decide that leaving the existing system untouched is easier than deciding who should control a new digital casino market.

The problem with that approach, he said, is that online gambling is not disappearing.

“The reality is it’s not going away.”

2027 Could Be The Bigger Year For U.S. Gambling

The U.S. gambling expansion story is becoming less about opening completely new markets and more about convincing the remaining holdouts to make a move.

For sports betting, Nebraska could provide the clearest immediate test, while Alabama and Georgia remain states to watch as lawmakers become more comfortable discussing legalization.

For iGaming, Virginia appears to have one of the clearest paths after coming close in 2026, while D.C. and New Yorkhave their own financial incentives to revisit online casino legislation.

Prediction markets have added another layer to the debate. Their growing presence means lawmakers in states without regulated sports betting are increasingly being forced to confront the fact that residents can already access sports-related event contracts.

That does not guarantee a wave of new legalization in the next few months. But with industry lobbying increasingly focused on the remaining states, 2027 could become a much bigger year for U.S. sports betting and iGaming expansion.

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