For example, many US companies are increasingly relying on digital to diversify their portfolios by entering regulated online markets. Casinos and gaming companies have traditionally been land-based. They’ve begun to invest in licensed online iGaming businesses.
The U.S.-based online gambling sector is expected to reach approximately $28.69 billion by 2024 and $52.60 billion by 2033, so it's not surprising that many businesses are making a big splash in this emerging digital space.
Nevertheless, diversifying these channels poses challenges. Hence, companies must work with all 50 states to establish compliant gaming operations.
As well, developing comprehensive compliance and operational strategies will require significant financial resources (capital), as will be the case in all industries expanding services through innovative channels.
The Appeal of Regulated Digital Verticals
What makes licensed online products so attractive for diversification? For starters, they’re often shielded by robust regulatory frameworks that weed out fly-by-night operators and build consumer trust.
In the United States, sectors such as iGaming and online sports betting are regulated by State Government Agencies such as state gaming commissions and their responsibility is to maintain a fair and safe playing environment for customers while promoting responsible gambling practices.
As a result of this type of regulation there are substantial barriers to entry for new entrants, resulting in established players having advantages, while at the same time generating significant tax revenues in billions of dollars that all states utilize to fund public services.
Companies diversifying are chasing trends and investing in sustainable growth. For instance, legacy firms in hospitality or entertainment are leveraging their brand power to launch digital arms, cross-selling to existing customers, and attracting new ones through apps and websites.
The result?
A hybrid model where physical locations complement online experiences, boosting overall resilience.
With more states legalizing these products, the market expands. The projections show that the broader gambling sector will hit $209.23 billion in revenue for 2025 alone. It’s a far cry from the Wild West days of unregulated online ventures, and it explains why public companies are all in.
A Prime Example of Regulated Digital Expansion
Online casinos stand out as a textbook case of a regulated digital vertical that’s helping companies diversify effectively. These platforms offer everything from virtual slots to live dealer blackjack. They require licenses in each operating state, meaning operators must adhere to
● rigorous standards for security,
● fairness, and
● problem gambling prevention.
This setup protects players and stabilizes revenue for companies, as seen in the explosive growth of iGaming subdivisions.
The public companies (like Caesars Entertainment and MGM Resorts) that own casinos mainly operate as brick-and-mortar establishments. They have developed digital divisions that have become equally profitable as the physical operations. On the other hand, companies (like DraftKings) that operate exclusively online built their entire companies around licensed online products originally developed for fantasy sports—creating huge ecosystems of billions in sports betting.
One of the most important factors here is the scalability of both digital platforms, which can allow millions of dollars to be generated without having to invest in new construction (which require a significant amount of financial resources).
Most users are accessing online platforms using mobile devices (estimated to be at least 70%), so growth appears to be virtually infinite. However, what will allow online gambling to become profitable is through licensing, which greatly reduces risk associated with potential revenue generated through sports wagering from online sources.
Online casinos remain one of the clearest examples of a fast-growing regulated digital vertical in the U.S., with Michigan standing out as one of the most active markets for new online casinos. Since launching regulated iGaming in 2021, the state—often referred to as the Great Lakes State—has built a mature ecosystem under the oversight of the Michigan Gaming Control Board. In 2025, Michigan’s online gambling market reached a record $3.8 billion in total revenue, a 30% year-over-year increase, with iGaming alone generating $3.09 billion and contributing nearly $625 million in taxes.
The momentum has also fueled the arrival of the latest platforms, including Fanatics Casino in May, FireKeepers Casino Hotel’s revamped online offering in October, and Hard Rock Bet’s full rollout in December, reinforcing Michigan’s position as a hub for regulated digital expansion.
How Top Companies Are Diversifying?
Michigan’s proactive regulation is fueling innovation. It’s allowed operators to expand while maintaining high standards—it’s a model that’s driving consistent growth across the board.
Of DraftKings
Let’s zoom in on some heavy hitters to see diversification in action. DraftKings Inc. (NASDAQ: DKNG) is a standout, evolving from a daily fantasy sports outfit into a diversified digital powerhouse. With licenses obtained from numerous states, draft kings now have a full iGaming division plus a sports betting operation as well.
In the 3rd quarter of 2025, Draftkings encountered some difficult conditions as they posted $1.144 billion worth of revenue up 4% versus last year - primarily due to poor performance from sports events; however, in Q2 of 2025, they did post significant revenue gains with $1.513 billion in sales or 37% growth versus the prior year.
While DraftKings lowered its 2025 full-year outlook to $5.9 - 6.1 billion, they are experiencing continued success in their iGaming segment as the average monthly unique payer's revenue grew 3% ($106) in Q3 compared to same period last year.
They lowered their full-year outlook to $5.9-6.1 billion, yet iGaming growth remained a bright spot, with average revenue per monthly unique payer rising 3% to $106 in Q3. This diversification has helped them weather losses, such as the over $300 million in Q3 from betting results, by leaning on casino games for steadier income.
Of Flutter Entertainment PLC
The parent of FanDuel, Flutter Entertainment PLC (NYSE: FLUT) has a global perspective as it diversifies across the U.S. with its U.S. business benefiting from the success of FanDuel’s sports betting and iGaming operations. In Q3 2025, Flutter is experiencing overall revenue growth of 21% and strong performance in iGaming.
For 2025, Flutter expects total group revenue to be $16.69 billion. FanDuel is expected to account for between $7.40 and $7.90 billion of this total, up from $5.798 billion in 2024.
Adjusted EBITDA targets sat at $2.915 billion, buoyed by iGaming’s 10% organic revenue rise. Their strategy? Using international expertise for data analytics and risk management, while launching innovations like FanDuel Predict to tap non-betting states.
Of MGM Resorts International
MGM Resorts International (NYSE: MGM), through its BetMGM joint venture with Entain, showcases how a hospitality giant diversifies digitally. BetMGM raised its 2025 revenue guidance to at least $2.75 billion after a 23% Q3 net revenue jump, with online sports betting up 36% to $202 million. MGM’s overall Q3 consolidated revenues grew 2%, but digital ops are targeting $500 million EBITDA beyond 2025. Cross-promotions with Vegas resorts enhance loyalty, proving hybrid diversification works.
Of Caesars Entertainment Inc.
Caesars Entertainment Inc. (NASDAQ: CZR) mirrors this, with its digital segment posting $311 million in Q3 2025 revenue, contributing to flat overall revenues of $2.869 billion.
But Q2 showed stronger growth, with digital up 24% to $343 million.
Their Caesars Rewards program bridges physical and online, driving engagement despite a $82 million Q2 net loss. Analysts see digital potentially exceeding $1.3 billion in 2025.
Of Penn Entertainment Inc. (NASDAQ: PENN)
Penn Entertainment Inc. faced a rocky 2025, terminating its ESPN Bet partnership in Q3 amid underwhelming results—Q3 revenues reflected the shift, with customer-friendly outcomes impacting margins.
Pivoting back to theScore Bet, they’re refocusing on regional strengths, but stock dipped 11.7% post-announcement. It’s a reminder that diversification can stumble if partnerships falter.
Financial Impacts and Growth Trajectories
Financially, these moves are paying off. The US online gambling market alone is eyed for $22.19 billion by 2030, with a 9.8% CAGR. iGaming subdivisions often boast higher margins—BetMGM’s sometimes 8 points above sports betting—thanks to lower acquisition costs and repeat play.
For DraftKings, iGaming helped offset sportsbook volatility, while Flutter’s US EBITDA jumped 54% in Q2.
States collected $15.91 billion in gaming taxes in 2025, underscoring the economic boost. Growth rates hover in the double digits, with North America’s online gambling market at 9.45% CAGR.
Challenges Ahead and the Road Forward
Diversification isn’t all wins—high taxes (like New York’s 51% on betting), rising compliance costs, and problem gambling scrutiny pose risks. Penn’s ESPN fallout highlights partnership pitfalls, and market saturation could squeeze smaller players.
The future is bright with augmented reality (AR) technology emerging as a massive revenue generator for the entertainment industry, with projections of at least $54.8 billion by year end 2029.
All of California and Texas are currently considering the possibility of legalizing augmented reality as a new form of entertainment. The amount of additional revenue generated if they do would be in the billions also. The lesson is simple for companies; if you can be creative and innovative in your business model using digital commerce with AR and execute properly, your business can change dramatically over time and those that evolve will prosper.
