2026 outlook: ten predictions shaping the future of regulated online gaming 

The regulated online gaming and wagering ecosystem is expanding far beyond traditional sports betting and iGaming. Newly scaled categories like prediction markets (Kalshi, Polymarket), event-contract platforms, skill-adjacent fantasy formats, and crypto-enabled prediction protocols are compelling regulators at state, federal, and international levels to confront entirely new product types and risk models. 

At the same time, advances in AI-driven compliance, granular geolocation, and multi-vendor orchestration are reshaping how operators build and manage regulated platforms. For operators navigating this complex landscape, geolocation compliance has become more critical than ever. 

Below are ten predictions for 2026, including emerging trends and upcoming transformations that we believe will define the future of regulated online gaming. 

1. Sweepstakes & Social Casino Crackdowns Accelerate 

The Prediction: States will either ban the dual-currency sweepstakes model outright or reclassify it as gambling, requiring full licensing, taxation, know-your-customer (KYC) and anti-money laundering (AML) protocols, and geolocation controls. 

Why It’s Happening: The enforcement surge we’ve already seen in California, Montana, New Jersey, New York, and West Virginia is just the beginning. Regulators increasingly view sweepstakes operations as unlicensed online casinos that circumvent established gambling frameworks. More importantly, states want to reclaim tax revenue that’s migrating to unregulated sweeps, social casinos, and adjacent wagering-like models. 

In 2025, we witnessed Montana becoming the first state to officially ban sweepstakes casinos with Senate Bill 555, effective October 1, 2025. New Jersey’s sweepstakes casino ban (A5447) took effect in August 2025. New York took a dual approach: Attorney General Letitia James issued cease-and-desist orders against major sweepstakes operators in June 2025, followed by the state legislature passing Senate Bill S5935A, which prohibits online sweepstakes games using dual-currency systems. California completed the trend with Governor Newsom’s signing of AB-831 in October 2025, making it the largest state to ban dual-currency sweepstakes casinos. This trend will only intensify in 2026. 

The Implications: Surviving platforms will need to shift toward licensed, taxable models, while traditional operators fill the gap with compliant alternatives. State-level geofencing and tax-reporting will become universal requirements. For operators in this space, having flexible geolocation solutions that can respond to regulatory changes within hours, not days or weeks, will be essential for survival. 

For detailed guidance on staying compliant, download our Sweepstakes Geolocation Compliance Checklist. 

2. Skill vs. Chance Definitions Move Toward a National Standard 

The Prediction: A national legal or regulatory body will propose a standardized framework distinguishing skill-based, chance, and hybrid game formats across all states. 

Why It’s Happening: The DFS pick’em and fantasy hybrid litigation has exposed glaring inconsistencies across state lines. Prediction and event-contract platforms argue they offer “information advantage” rather than gambling, but states and even local jurisdictions may interpret this differently depending on their respective standards. Meanwhile, regulators are increasingly frustrated by the lack of consistent classification for emerging formats that don’t fit neatly into traditional categories. 

The Implications: We’ll see the development of a shared rubric for fantasy, skill, social, sweepstakes, and event-contract mechanics. This will lead to more predictable product approvals and fewer costly legal disputes. Operators designing hybrid or probability-driven games will finally have greater clarity on which features trigger gambling classification and which don’t. 

3. Prediction Markets Face Expanding State-Level Restrictions 

The Prediction: Federally permitted platforms like Kalshi and globally accessible crypto-based platforms like Polymarket will encounter growing state-level pushback, especially regarding sports, political, financial, and token-settled event contracts. 

Why It’s Happening: Even with federal approval from the CFTC, states are asserting gambling jurisdiction over activities they view as wagering. Sports event contracts, political markets, crypto-settled outcomes, and equity/financial event futures are attracting heightened scrutiny from state attorneys general and gambling regulators. The fundamental problem is that no unified federal standard defines where “information markets” end and wagering begins. 

The Implications: Platforms will need to adopt contract-type-specific geofencing—allowing certain contract types in some states while blocking them in others. Prediction markets will begin to resemble sportsbooks in their compliance architecture, requiring sophisticated rule management that can differentiate between contract categories. National uniformity remains unlikely through 2026, making dynamic geolocation compliance infrastructure absolutely critical. 

4. Sub-Jurisdictional Geofencing Becomes Mandatory 

The Prediction: Operators across all categories—sportsbooks, fantasy operators, iGaming platforms, prediction markets, and event-contract exchanges—will be required to enforce geo-rules below the state level, covering tribal lands, municipalities, campuses, and market-type prohibitions. 

Why It’s Happening: Tribal compacts already require precise boundary enforcement to respect sovereignty agreements. College-sports restrictions and local-market prohibitions are becoming more granular. Event-contract legality varies not just by state, but by contract category within states. The one-size-fits-all approach of simple state-level geofencing is no longer sufficient for the complexity of modern online gaming compliance. 

The Implications: Geolocation technology will evolve from simple state polygons to multi-layer regulatory mapping. Vendors with high-precision polygon capabilities, advanced spoof-detection, and the ability to manage complex exclusion zones will gain significant strategic advantage. Dynamic, product-specific availability maps will become standard across platforms. 

This is where Locance’s approach becomes particularly valuable. Our platform manages rule sets on behalf of customers, allowing us to quickly add zones, remove zones, or create exclusion areas as needed—all without requiring code changes on the operator’s end. When a new restriction is implemented, exclusion zones can be established swiftly, and when jurisdictions open up, areas can be made available rapidly. 

5. Traditional Operators Expand Into DFS, Prediction, Skill, Event Contracts & Regulated Sweeps 

The Prediction: Over half of all major regulated operators (sportsbook, social, or casino) will launch, announce or acquire offerings in fantasy/pick’em, predictive contests, event-contract markets, skill gaming, or compliant sweepstakes categories. 

Why It’s Happening: Recent deals like Allwyn’s acquisition of PrizePicks and Boyd Gaming’s investment in Resorts Digital signal a clear trend. Operators are seeking diversified engagement opportunities beyond traditional odds markets. The disruption happening in sweeps and pick’em categories is creating attractive acquisition opportunities for established operators with existing compliance infrastructure. 

The Implications: We’ll witness the blending of fantasy, prediction, and iGaming ecosystems into integrated platforms. New cross-vertical acquisition funnels will emerge, allowing operators to convert users between product types. Hybrid products will gain regulatory legitimacy through licensed ownership, potentially creating a path forward for formats that currently exist in gray areas. 

6. More Countries Establish National Frameworks for iGaming & Event-Contract Markets 

The Prediction: A new wave of national regulation will spread across Latin America, the Persian Gulf region, Southeast Asia, and Africa, covering not only sports betting and iGaming but also lotteries, prediction markets, event-contract platforms, and crypto-settled wagering. 

Why It’s Happening: Brazil’s regulated market and the UAE’s emerging framework are setting regional precedents that neighboring countries are watching closely. Crypto-native markets are accelerating regulatory urgency as governments recognize they can’t ignore these platforms. Moreover, governments are seeking both tax revenue and transparent oversight of activities they previously couldn’t monitor effectively. 

The Implications: Event-contract legality will become a global policy topic, not just a U.S. phenomenon. Operators will need to deploy localized KYC, AML, and geolocation rules for political, financial, weather, and sports contracts across multiple international jurisdictions. Supplier demand for compliance technology will grow dramatically across emerging high-growth regions. 

For operators expanding internationally, having geolocation partners who understand the unique regulatory requirements of each market becomes essential. Locance’s platform is designed to handle complex, multi-jurisdictional compliance scenarios with the flexibility to adapt quickly to new regulatory frameworks. 

7. AI Becomes a Regulatory Expectation Across Compliance Functions 

The Prediction: AI will transition from optional enhancement to mandatory infrastructure. Regulators will expect AI-driven solutions for identity verification, AML, fraud detection, responsible gaming, and geolocation anomaly detection. 

Why It’s Happening: AI demonstrably outperforms manual and legacy systems in detecting spoofing, collusion, and behavioral risk patterns. Crypto-based and event-contract platforms require more sophisticated monitoring than traditional gambling formats. Forward-thinking regulators are beginning to emphasize compliance effectiveness and traceability over purely formalistic checkbox compliance. 

The Implications: AI governance, explainability, and audit logs will become standard components of licensing reviews. Operators will run multi-model compliance stacks for resilience, using different AI approaches for different risk vectors. Vendors specializing in AI-native risk assessment and location intelligence will gain substantial market share over those relying on legacy rule-based systems. 

8. Multi-Vendor Compliance Stacks Become Standard Practice 

The Prediction: A major operator—possibly including an event-contract or prediction platform—will publicly adopt a multi-vendor geolocation/KYC/AML/responsible gaming strategy or execute a high-profile vendor switch that demonstrates the industry’s shift away from single-vendor dependency. 

Why It’s Happening: State regulators are now holding service providers directly liable for noncompliance, as demonstrated by California’s AB-831 provisions. Emerging markets require specialized vendor mixes (crypto-risk assessment, device intelligence, location integrity) that no single vendor can optimally provide. Most importantly, operators cannot risk single-provider outages that could shut down operations or create compliance gaps. 

The Implications: Compliance architectures will become modular and orchestrated rather than monolithic. Failover geolocation and identity-verification systems will become industry norms, with primary and backup vendors providing redundancy. Vendor diversification will reduce systemic risk for both operators and regulators, making the entire ecosystem more resilient. 

9. Efficiency Gap Widens: Large Operators Pull Ahead 

The Prediction: Large operators and scaled prediction/event-contract platforms will expand margins through AI and vendor competition, while smaller sweeps, fantasy, prediction, and social platforms face escalating compliance costs that threaten their viability. 

Why It’s Happening: Compliance requirements increase annually, but the costs of meeting these requirements don’t scale linearly. AI and multi-vendor stacks provide significant economies of scale that disproportionately benefit large operators. Smaller operators often lack both the capital and technical maturity necessary for advanced compliance infrastructure, putting them at a severe disadvantage. 

The Implications: Subscale operators will increasingly pursue mergers and acquisitions (M&A), partnerships, or managed-service models rather than attempting to build compliance infrastructure independently. Larger operators will strengthen their competitive moat through superior compliance capabilities. The market will bifurcate into scaled platforms with sophisticated internal capabilities and compliance-dependent niche operators who must rely on external partners. 

10. M&A Surges Across Gaming, Fantasy, Prediction & Compliance Tech 

The Prediction: M&A activity will remain at near-record levels, with at least one landmark acquisition in prediction markets, event-contract platforms, AI-driven compliance technology, or fantasy/pick’em hybrids. 

Why It’s Happening: Category convergence is encouraging strategic deals as operators seek to own multiple product lines under a unified compliance infrastructure. Distressed sweeps and pick’em operators present attractive acquisition opportunities for well-capitalized buyers. Meanwhile, compliance-tech, geolocation, and crypto-risk vendors are attracting private equity and strategic acquirers who recognize these technologies as critical infrastructure. 

The Implications: We’ll see the emergence of integrated gaming ecosystems that merge sports betting, fantasy, prediction, and event markets under single corporate umbrellas. Supplier consolidation will reshape the compliance tech landscape, potentially reducing the number of viable vendors. Operators will increasingly pursue “own the stack” strategies to gain regulatory control and enable faster product expansion across categories. 

Preparing for the Future of Regulated Online Gaming 

2026 will be a defining year for regulated online gaming. Enforcement is rising, gray areas are shrinking, and new wagering-like categories are scaling faster than the regulatory frameworks designed to govern them. The operators who thrive in this environment will be those who embrace precision geolocation, AI-driven compliance, multi-vendor orchestration, and adaptable regulatory strategy. 

For operators navigating this complex landscape, having the right geolocation partner makes all the difference. Locance’s highly configurable platform is designed specifically for the evolving needs of gaming compliance, offering: 

• Rapid response timelines: Standard changes within 24-48 hours, emergency modifications within hours 

• Dynamic rule management: Quickly add zones, remove zones, or create exclusion areas without client code changes 

• Sub-jurisdictional precision: Manage tribal lands, municipalities, and contract-type-specific restrictions 

• Multi-layered compliance: Support for complex rule sets across different game types and regulatory frameworks 

The next decade of global growth in gaming, prediction, and event-driven markets will belong to operators and suppliers that prioritize precision, redundancy, regulatory alignment, and product innovation. 

Is your platform ready for the regulatory changes ahead? Contact Locance to learn how our geolocation solutions can help you stay compliant and competitive in 2026 and beyond.