FanDuel (30%) and DraftKings (23%) are expected to be market share leaders in 2025.

In the “US Sports Betting and Online Gambling Primer 3.0” released in May, Morgan Stanley analysts took a deeper look at the sports betting and iGaming industries and forecasted the future.

Today, iGaming is legal and live in seven states including Pennsylvania and New Jersey. Analysts at Morgan Stanley only believe four more states will join due to “less public and industry support and louder industry opponents.”

Analysts expect the U.S. iGaming market to grow to $7.8 billion in 2025.

Top 4 states in 2025 for iGaming revenue

Michigan: $1.495 billion

New Jersey: $1.490 billion

Pennsylvania: $1.460 billion

Illinois: $1.336 billion

New York was not included in the report. During the iGaming Next conference last week, State Sen. Joseph Addabbo said: “iGaming is the next step for New York. It’s not a question of if, but when. Neighboring states are doing it very well.”

What states will lead for sports betting revenue in 2025?

Prior to U.S. Supreme Court’s repeal of the Professional and Amateur Sports Protection Act (PASPA), which banned sports betting outside of Nevada, the American Gaming Association (AGA) estimated that $150 billion per year was bet illegally on sports. The trade group for US casinos suggested it could be a $7.5 to $15 billion per year revenue market at a 5-10% gross win margin.

 May 14 marked four years since the repeal of PASPA. Currently, there are 30 states, including Washington D.C., where sports betting is legal. Five more have legalized but are not yet up and running.

Morgan Stanley analysts expect that by 2025, there will be 42 states with legalized sports betting.

Top 5 states in 2025 for sports betting gross gaming revenue

(Texas was not included in report. California is forecasted to be retail only in 2023.)

New York: $1.7 billion

Illinois: $852 million

New Jersey: $784 million

Florida: $755 million

Pennsylvania: $701 million

Analysts based their long-term predictions of the US sports betting market on the more mature European and Australian markets. In addition, a survey conducted in 2021 by Morning Consult showed that about 20-25% of Americans wager on sports compared to 45% in the UK.

In line with current trends, most (85%) of the wagering will be done online in the next few years. Since the start of online sports betting in Pennsylvania about 92% of all bets have been placed online.

What is the best sportsbook?

Through research, Morgan Stanley deemed FanDuel Sportsbook the best-in-class for the following four reasons:

A large tech staff of 4,000 employees

An early leader in product development

Greater depth of betting markets

More competitive odds

Morgan Stanley analysts stated: “In the US, FanDuel led the development of the Same Game Parlay (SGP) product, which enables wagering on multiple correlated events within a single game for customers, while delivering higher margins for FanDuel. SGPs are very popular among customers with over 50% placing a SGP during the 2020/21 NFL season. With greater market depth, pricing and availability of SGPs, FanDuel saw significant app download market share gains in 1H21, while generating higher gross win percentages vs. competitors.”

Brand awareness and the fight for future market share

Companies that trace their roots to daily fantasy sports are the far-and-away leaders when it comes to brand awareness. FanDuel and DraftKings ranked first for “spontaneous brand awareness” with 54%. Bet365 and BetMGM were a distant third at 11%. Morgan Stanley expects DraftKings and FanDuel (Flutter Entertainment) to remain market share leaders in 2025 with the Top 5 sports maintaining 85% market share.

By Katie Kohler