News writer
Over the past seven years, sports betting has taken the US by storm. The latest numbers tout a meteoric rise of the hobby in 39 states, Washington, D.C., and Puerto Rico.
State lottery commissions have watched the growing trend from the sidelines, with some trepidation. If the betting public is flocking to sports, what does it mean for lottery ticket sales?
The history of the sports betting explosion
In 1992, the Professional and Amateur Sports Protection Act (PAPSA) illegalized all sports betting in the country. The act was signed into law under President George W. Bush, making it illegal to “sponsor, operate, advertise, promote, license, or authorize by law or compact" sports wagering. While supporters of sports betting touted state revenue, detractors have cited serious addiction and moral corruption.
In 2018, the legal landscape for sports betting shifted dramatically.
New Jersey brought a case to the Supreme Court called Murphy v. National Collegiate Athletic Association, proposing that PASPA commandeered state regulatory rights. The Supreme Court agreed, lifting the decades-long federal ban and ushering in a brand new market across the country.
What exactly is sports betting?
Sports betting refers to placing wagers on the outcome of a sports event, such as football, hockey, soccer, and fantasy leagues. Bettors can review odds and place wagers on licensed platforms like DraftKings, FanDuel, and BetMGM.
Sports betting ranges from straightforward wagers on winning teams to more complex bets on specific moments or individual players in a sporting event. Platforms offer live betting, allowing them to bet as a game unfolds in real time.
Once sports betting became legal, states moved to allow it through casinos, mobile apps, retail sportsbooks, or a combination of all three.
Supporters tout the tax revenue potential, while detractors raise concerns about problem gambling.
382% revenue increase
In participating states, sports betting revenue has skyrocketed since its legalization.
According to the US Census Bureau's Quarterly Summary of State and Local Tax Revenue, the total national tax revenue has soared by 382% from 2021 to the second quarter of 2025 - from $190 million to $917 million. Total industry revenue has gone up from $11.04 billion in 2023 to $13.7 billion in 2024.
On a state level, the success is hard to ignore. In Virginia, sports and casino revenue clocked in at $82.4 million in November 2025, representing almost a 30% increase year-over-year. In Montana, sports betting is raking in at least $1.5 million a week, with football being its most successful sport.
The biggest sports betting states are New York, New Jersey, Illinois, and Nevada, according to Legal Sports Report.
New York's revenue reached $238.9 million in October 2025, after starting in July 2019 with just $349,468.
New Jersey shot out of the gate in June 2018 with $3.5 million in revenue, hitting $89.8 million in September 2025.
Illinois started later with $120,054 in revenue in March 2020, which shot up to $102.7 million in September 2025.
Nevada was always a sports betting state, starting at $20.2 million in June 2018, with $54.3 million in revenue in September 2025.
Relationship between state lotteries and sports betting
In about a dozen jurisdictions, lotteries play significant roles in sports betting, according to the North American Association of State and Provincial Lotteries (NASPL). Models vary widely. Some lotteries directly operate retail or digital sports betting platforms, while others regulate private operators. A few do both.
For example, in Connecticut, the state lottery owns and runs retail betting locations while partnering with private online platforms.
Delaware's lottery integrates sports betting into its retail network to maximize state revenue.
In the District of Columbia, the lottery oversees and operates citywide online sports betting. Other lotteries serve primarily as regulators or licensing authorities, like in Maryland, Ohio, and Virginia. Montana's lottery operates both retail and online sports betting.
Lottery players vs. sports bettors
Studies show there's a significant overlap between sports bettors and lottery players. One study showed that 89% of sports bettors also play the lottery, according to the Fantasy Sports and Gaming Association.
The lottery, however, presents an even split between men and women, while 80% of sports bettors are male. Sports bettors tend to have a higher income and education level than lottery players. Sports bettors also tend to be younger, around 38 years old on average, while lottery players are about 48 years old on average, with players over 55 featuring more frequently.
This means the demographics won't always directly compete with one another, but it could mean that lottery players eventually age out.
Not at the lottery level, yet
In fiscal year 2024, states took in over $30.6 billion in revenue thanks to lottery games, according to NASPL.
Sports betting isn't there yet, but it's inching ever closer.
Plus, state lotteries have been around for decades, steadily building strongholds in each participating state. Meanwhile, sports betting has only just begun in the US, and its rate of growth is formidable.
It might just be a matter of time before sports betting surpasses the lottery, unless drastic measures are taken.
Declining lottery sales
Though results vary across the country, a detailed view reveals some sales declines among state lotteries.
Nebraska lottery sales dipped between 2024 and 2025 by $36M, according to an audit from the Nebraska Auditor of Public Accounts. State Auditor Mike Foley, whose team conducted the research, explained:
If I were a betting man, I'd lay odds that the increasing popularity of [sports betting] online activities, some of which occur outside of the State of Nebraska's authority, will result in ever more gambling dollars being siphoned away from the Lottery and its intended beneficiary funds.
Other states saw declines, including New Jersey, which lost 7.9% in fiscal year 2025, according to November numbers. Pennsylvania's game sales tumbled by 19.9%, while Massachusetts saw a Powerball sales drop by $121.1 million. Mega Millions fell by $36.4 million.
The digital divide
Online play is one of the biggest sources of debate when it comes to sports betting and the lottery.
Sports betting is very online. In some states, such as New Jersey, 90% of sports betting is online, according to the National Conference of State Legislatures.
This is in stark contrast to the lottery, which has faced a lot of legislative hurdles in going online in some states, largely due to efforts to protect the stature of brick-and-mortar retailers.
Sixteen states currently have iLottery - or online lottery - in some form. A few states allow the operation of lottery couriers, which are third-party, independent online platforms that purchase tickets from retailers on behalf of players. This is not very many. New Jersey, ironically, is actually rolling back direct-to-consumer, state-run, online lottery sales in an effort to uplift retailers.
While it's critical to protect small businesses, there's no denying that, if lottery players are getting older, and the younger sports bettors are online only, it could pose a threat to traditional lotteries down the line.
Dependence on huge jackpots
Lottery sales rise and fall with jackpots. The bigger the jackpot - and the longer the rollover run - the better the sales.
Powerball and Mega Millions jackpots are getting bigger than ever. This year, there have been three billion-dollar-plus jackpot Powerball runs, and two of them have been back-to-back, with one of them smashing records for rollover length.
Mega Millions reached $983 million, the eighth largest in the game's history. These massive numbers attract people who don't regularly play the lottery.
However, these runs are completely unpredictable and based on luck. Powerball and Mega Millions could just as easily experience a year with no massive jackpots and only short rollovers, which would devastate sales.
Sports betting, on the other hand, depends only on the continued existence of sports, especially major seasonal events like the Super Bowl and the NCAA's March Madness. Only rare catastrophic events, like the COVID-19 pandemic, could stop the sports engine from running.
Many states are changing the landscape in February 2026 by launching the new game Millionaire for Life. The draw game comes with an annuitized, consistent grand prize of a million dollars every year, with higher odds than the national draw games. Perhaps this is a step toward weaning states off of huge jackpot runs.
The randomness factor
Most lottery games are completely based on random luck every time, while sports betting, arguably, has more basis in historical outcomes. Human teams are involved, with all of their foibles, performative skill sets, and past stats. For bettors, this may offer a feeling of more predictive control.
What should lotteries do?
In order to compete, lotteries should stay on top of sports betting trends to see what's working. This includes online adaptation, which has been slow on the uptake in the lottery world. The lottery must figure out how to get online in order to court younger players, without destroying local businesses.
It wouldn't hurt to change some lottery games by making them more statistics and predictive-oriented, like sports. Leaning into games like Millionaire for Life could help offset the total dependence on massive Powerball and Mega Millions jackpots for sales.
It also doesn't hurt to create an integrated system where lotteries and sports betting are intertwined under state command, so they feel less like rivals and more like partners.
Responsible play
Gambling in any form can be the source of addiction, and legalized gambling - especially online - has been linked to widespread irresponsible, compulsive financial behaviors, according to the University of California, San Diego. Lotteries and sports betting platforms must work to curb this behavior as they scale and grow. Otherwise, new innovations could cause widespread catastrophe among families and communities.
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