As 2025 unfurls, the gaming industry appears to be healthy. The American Gaming Association reported record revenue of $71.92 billion in 2024. The total surpasses 2023’s previous high of $66.5 billion by 7.5 percent and is the fourth straight year gaming revenue rose.
But that doesn’t mean 2025 will be a year of prosperity for everyone.
“I think we’re going to continue to see consolidation, of suppliers and the B-to-C operators globally” says Davis Catlin, Discerning Capital Managing Partner and Co-Founder during a CDC Gaming roundtable discussion. “I think we’re going to continue to see the long tail become an oligopolistic market. The areas that most people think about, the U.S. is moving there naturally.
“But I think you’re also going to start to see that with suppliers, like slot machines as an example, and affiliates. You’re going to see lot of transactions with affiliates this year.”
According to Jonathan Michaels, the founder and principal of the consulting group Michaels Strategies, a senior executive recently told him that the definition of gambling is prize chance consideration, which doesn’t fit what this industry and what the space is right now.
“Things critically bleed into each other,” says Michaels. “So much of the discussion is going to be just around competitive threats. You see that with igaming now, where it’s going nowhere but there’s a lot of competition out there and everyone is trying to get whatever share they can.”
Catlin and Michaels expect that sports betting operators especially will consolidate their portion of the gaming industry. Noting that sports betting operators “tend to be oligopolistic,” Catlin says the industry is starting to see sports betting consolidate in Australia and the number of scaled operators in Europe is continuing to shrink
“I think the big question is what happens in the U.S. with that sort of long tail of subscale operators here,” Catlin says. “They have to find a way to scale, and being acquired is the way to do that.”
Catlin noted that most industries undergo a “hype cycle” where the interest surpasses the opportunity for profit in the next five years.
“I think in one year from today, we’re going to be talking about FanDuel, DraftKings BetMGM and Caesars in the U.S. being profitable. … You’ll likely have more information out there on Prize Picks and Underdog and sort of where they are. I think you’re going to additional interest into this market. I think that will drive another round of innovation and the next generation of betting and live betting, video betting and things like that.”
Catlin pointedly did not mention Penn Entertainment and its alliance with ESPN as possibly being profitable.
“When I look at (Penn’s) ability to destroy value over the last five years, it’s been impressive,” he added. “I used to work at a big public market fund, and when your share price goes up because you say you can cancel your multi-billion dollar bet you made, then something has gone really wrong with your management.”
Another segment of the industry that has received extensive coverage in the last years is sweepstakes and whether or not they are legal. Michaels thinks in the next year, there will be clarity around that segment of the gaming market.
Recent interest, he thinks, is because of the recent growth of sweepstakes.
“A lot of that interest is because some of the players are really shining a light on it,” Michaels says. “They’re doing it to protect their social casino business. Ultimately, I think there will be a lot of states that action to significantly restrict or outright ban the sweepstakes casino model.
“That being said, there’s plenty of others that don’t really touch it. There’s still going to be a viable market in it.”
Michaels noted that Connecticut recently challenged the legality of High 5 Games in the state.
“High 5 Games has a commercial gaming license,” Michaels said, “and if they can’t get their KYC and compliance straight, there’s probably a lot of others that aren’t even close to that level. I think regulators and attorneys general are starting to look really closely at that category.”
One of biggest possibilities – and questions – the gaming industry will face is the viability of legal gambling in California, Florida, and Texas, states that considered to be lucrative jurisdictions.
Catlin says he has talked to some groups in Texas that have pointed out how Oklahoma tribes, through sponsorships and arenas they are putting their names on, are positioned for eventual legalization.
“But I also think that could in 10 years,” Catlin says. “Tribes and a lot of these operators can think it five- and 10-year horizons, but I haven’t heard about anything in the short term.”
Michaels thinks that legalization via compact is a possibility in Florida, but it could take much longer in California and Texas.
“I don’t see a 2026 referendum coming to California around anything sports betting related,” Michaels says. “And then in Texas … Jackpocket was pretty much targeted by the lieutenant governor, Dan Patrick. Within a week, they were out of business. And I don’t really see any legalization momentum coming out of how that played out.”
