U.S. OSB and iGaming Still in Early Growth Stages, says Goldman Sachs

Above: A view of the Goldman Sachs stall on the floor of the New York Stock Exchange. REUTERS/Brendan McDermid/File Photo.

The U.S. online sports betting (OSB) and iGaming sectors remain in the early stages of growth, according to a new report from Goldman Sachs, which sees significant upside as the markets mature, more states legalise online gaming, and promotional spending tapers off.

"Despite the strong topline momentum, both verticals are still relatively nascent,” the bank said in a note to clients dated March 17. "Only about 38% of the U.S. population currently has access to legal OSB, and iGaming remains confined to a handful of states," the authors wrote.

Total gross gaming revenue (GGR) across OSB and iGaming rose 21% year-on-year in January 2025, with iGaming growing 33%, outpacing its 2024 average of 28%. Goldman forecasts that combined GGR will expand from over $16 billion in 2023 to $40 billion by 2028.

"The U.S. consumer is still in the early innings of adoption," said Ben Andrews, lead analyst at Goldman Sachs International. "The long-term growth trajectory is underpinned by increased legalisation, stronger product offerings, and more normalised promotional intensity.”

The report identifies Flutter Entertainment, which owns FanDuel, and DraftKings as the two dominant players in the U.S. online gaming and casino landscape. Together, they account for more than 80% of OSB net gaming revenue (NGR), the report said, while holding a combined 53% share in iGaming.

Goldman sees these companies as well-positioned to capitalise on the market’s ongoing evolution. "Flutter and DraftKings continue to perform strongly, with improved monetisation, high customer satisfaction, and growing share in key states," said Andrews.

In contrast, BetMGM, a joint venture between MGM Resorts and Entain, has shown signs of recovery but still lags in customer perception and market share. "There remains a significant gap between BetMGM and the two largest operators," the report noted. "More evidence of sustainable share gains is needed to reassure investors on the turnaround."

While January marked one of the strongest GGR months on record for the OSB industry, Goldman emphasised that meaningful upside remains. "There is still a large portion of the U.S. market that has yet to come online," said Andrews. "States like Texas and California represent material optionality that is not yet priced into many valuations.”

The report also highlights improved win margins in January, driven by seasonal parlay mixes and favourable Super Bowl results. "Operator-friendly outcomes and evolving product strategies are helping to stabilise margins," Goldman wrote.

Still, the bank cautioned that the early-stage nature of the industry implies volatility, especially in customer acquisition costs, state-by-state regulatory regimes, and market share dynamics. "We believe long-term success will depend on product quality, trading capabilities, and innovation," said Andrews.