The SAFE Bet Act headlines a year of major shifts in America’s sports betting landscape in 2025. Federal tax changes, new state legalizations, and heated debates over consumer protection and market products all combine to create a complex environment for the industry. This article explores what’s driving these significant changes and what they mean for participants across the betting world.
Major league sports have always been a balance between offense and defense, with constant change shaping the game’s character and history. The sports betting industry mirrors this sense of motion. Billions of dollars move through it every year, and the rules, taxes, and market structures never stand still. In 2025, political ambitions, evolving technology, and social concerns create an intricate system for both sports economists and everyday bettors. Understanding these movements is essential for anyone tracking the financial side of American sports.
More States, Missouri’s Arrival
When you hear about new casinos in the US, the biggest news regarding new states allowing sports betting usually involves Missouri. This state is preparing to become the 39th with legal sports betting in 2025. Voters approved a ballot measure in November 2024. This opens the door for both online and in-person betting, with a launch set for summer 2025. This expansion highlights a trend continuing nationwide.
As of 2025, 38 states and Washington, D.C. already permit some form of sports betting. States like Alabama, Alaska, and Texas still lack legal sports betting. Texas, for example, saw a bill pass its House in 2023, only to halt in the Senate. It might return in 2025. Discussions to legalize iGaming, which includes online casinos, are also happening in several states, including New York, Maryland, and Louisiana. This varied state-by-state approach continues to shape the market’s growth.
Federal Tax Changes for Gamblers
A notable federal change will alter how taxpayers handle gambling losses. President Trump’s “One Big Beautiful Bill (OBBB)” Act, signed into law on July 4, 2025, places a cap on deducting gambling losses. Starting January 1, 2026, taxpayers can only deduct 90% of their gambling losses against their winnings for federal taxes. This new rule brings a curious point.
Think about this: even if you break even for the year, you could still have taxable income. This happens because 10% of your losses become non-deductible. It creates an unusual tax burden. Efforts to undo this rule have stopped in the Senate, suggesting it will likely go into effect. And this measure will affect betting behavior. Gamblers might adjust their methods to limit their tax exposure, especially those who bet a lot.
The SAFE Bet Act and Consumer Protection
Senators Richard Blumenthal and Representative Paul Tonko reintroduced the “Supporting Affordability and Fairness with Every Bet (SAFE Bet) Act” in March 2025. This law seeks to create nationwide consumer protections and standards for mobile sports gambling. Its various parts address several worries.
Key points include federal rules for marketing, making betting more affordable, and the use of AI in sports betting. There’s a proposal to ban prop betting on college sports to protect student-athletes, plus a National Self-Exclusion List for people looking to stop betting. This interest from the federal government could really impact industry practices in the future.
Prediction Markets and Unclear Rules
Rules around “sports-based event contracts,” also known as prediction markets, are facing stronger debate than ever before. In September 2024, a U.S. District Court ruled that Kalshi’s “Congressional Control Contracts” could be treated as futures products rather than gambling activity. This decision was groundbreaking, because it suggested that prediction markets might not always fall under traditional gaming laws. If applied more broadly, the ruling could open the door for other sports-based event contracts to operate in a legal gray area, offering products that function more like financial trading than betting.
Despite that legal victory for Kalshi, state officials remain skeptical. Several states have issued cease-and-desist orders, arguing that these types of markets run directly against state gambling regulations. This conflict highlights the tension between state-level control and federal interpretations of what counts as gambling versus financial speculation. The Commodity Futures Trading Commission (CFTC), which oversees futures markets, has yet to give a clear and consistent stance. Without strong guidance from the CFTC, operators and bettors remain stuck in uncertainty, unsure whether prediction markets will be allowed to expand.
The debate also connects back to broader federal efforts like the SAFE Bet Act, which places consumer protection at the center of U.S. betting discussions. While the SAFE Bet Act focuses primarily on mobile sports betting, marketing practices, and player safeguards, its underlying goal of creating nationwide standards has relevance here. If prediction markets continue to blur the line between trading and wagering, lawmakers could look to the SAFE Bet Act as a model for regulating new betting products. Until clarity emerges, both regulators and operators face a delicate balancing act, trying to encourage innovation without undermining state gaming laws. This makes prediction markets one of the most unpredictable elements of the 2025 sports betting landscape.
Increasing Taxes and Operator Fees
Alongside regulatory uncertainty, taxation is becoming one of the most pressing challenges for the sports betting industry. In several states, lawmakers have already moved to increase tax rates and add new fees to capitalize on the growing market. Illinois and Ohio raised their tax rates in 2024, setting a precedent that others are now considering. These higher costs create significant financial pressure on sportsbooks, who often respond by passing fees directly to players. The burden of taxation is no longer just a business issue—it is shaping the betting experience itself.
Illinois is a prime example. Starting July 1, 2025, a new state tax will require operators to pay $0.25 per bet on the first 20 million wagers each year, with the rate doubling to $0.50 per bet beyond that threshold. Operators such as FanDuel and DraftKings have already introduced added charges for players to offset the cost. This direct pass-through has sparked debates over fairness, particularly when combined with rising operator fees in other states. New Jersey, for instance, passed a new iGaming tax rate in June 2025, signaling that governments across the country see betting as an untapped source of revenue.
The long-term effect of these taxes could be reduced competitiveness in the market. Smaller operators may struggle to keep pace with larger companies that can absorb the costs more easily. Consumers may also feel the impact through higher betting fees, less generous promotions, or fewer betting options. These developments are happening at the same time as federal lawmakers discuss reforms like the SAFE Bet Act, which raises questions about affordability and fairness in the industry. If both higher taxes and stronger federal oversight arrive together, sportsbooks could face one of the most difficult operating environments since legalization began. For bettors, that may mean adjusting to a more expensive and tightly regulated landscape in 2025 and beyond.
Responsible Play and Fair Game Concerns
As sports betting continues to expand across the United States, the conversation around responsible gambling is becoming louder. Both state governments and federal lawmakers are focusing on consumer protection, with the proposed SAFE Bet Act serving as the most prominent example of a national approach. If enacted, this legislation would create uniform standards for mobile sports gambling across all states. Its provisions include establishing a national self-exclusion list, placing stricter limits on marketing tactics, and restricting prop bets on college sports to protect student-athletes.
Supporters of the SAFE Bet Act argue that federal involvement is overdue. They believe a national framework would help prevent predatory practices and ensure that responsible gambling tools are consistently available no matter where a person bets. Critics, however, worry that the law could overreach, undermining states’ rights to regulate gambling within their borders. This tension between state-level autonomy and federal oversight mirrors the broader debates playing out across the industry, from taxation to prediction markets.
What is clear is that consumer protection will remain central to how sports betting evolves. Whether through the SAFE Bet Act or through similar measures at the state level, operators will be expected to demonstrate that they are prioritizing fairness, transparency, and responsible play. At the same time, states will continue to push for tax revenue, and consumers will demand affordable access to betting markets. The SAFE Bet Act represents just one piece of this puzzle, but it underscores how the industry is at a pivotal crossroads in 2025.
