# 35% of Respondents Use Sportsbooks Less as Tax Fight Grows

By Riza Dagoc

Canonical URL: https://www.tokenpost.com/news/regulation/24236
Published: 2026-09-25T18:34:25.000Z
Updated: 2026-09-25T18:34:25.000Z
Section: Regulation

> A September survey found that prediction markets are changing sportsbook use, while conflicting estimates put potential state tax effects at more than $500 million.

Prediction markets are changing how Americans use traditional sportsbooks, with 35% of survey respondents saying they use them less often as states challenge the sector’s tax and regulatory treatment.

A September survey of more than 1,000 U.S. consumers found that 60% said prediction markets were changing how often they use traditional sportsbooks. Another 25% said they use prediction markets and sportsbooks for different types of events.

Sports were the most popular category among prediction-market users at 62%, followed by financial and economic events at 42%, politics and elections at 41% and entertainment and pop culture at 26%.

Trust and reputation ranked as the leading factor in platform selection at 60%, ahead of ease of use at 59% and potential payouts or odds at 51%. Seventy-seven percent said they had switched gaming platforms because of user experience.

The shift has intensified debate over state tax revenue. An industry estimate put potential sports-betting tax revenue affected by sports-event prediction markets at more than $500 million as of Feb. 26, 2026. The figure is an estimate rather than an audited calculation of transferred funds.

Separate estimates cite conflicting figures, including more than $1.3 million in potential gaming taxes since the start of 2025 and $250 million in estimated lost tax revenue for 2025 alone. The figures are not reconciled.

Americans legally wagered $166.94 billion on sports in 2025, generating $3.71 billion in state sportsbook taxes.

State officials and gaming-industry groups argue that sports event contracts function like gambling while avoiding state licensing, consumer-protection requirements and betting taxes. Prediction-market operators use a different legal structure from state-licensed sportsbooks.

KalshiEX LLC was designated by the Commodity Futures Trading Commission as a designated contract market on Nov. 4, 2020. Its sports products are structured as event contracts rather than state-licensed sportsbook wagers.

The dispute resembles the earlier legal fight over paid daily fantasy sports. A 2006 federal law excluded certain fantasy-sports activities from its definition of a bet or wager, while states, including New York, challenged whether paid contests fell within state gambling and consumer-protection laws.

New York sued FanDuel in 2015 and obtained a preliminary injunction barring the company from accepting entry fees. The state legalized and regulated paid daily fantasy sports in 2016.

The survey measures reported changes in sportsbook use, not confirmed transfers of users, money or betting volume. It shows that some consumers are using sportsbooks less often, but does not establish how much money has moved between the platforms.