Illegal and Unregulated Gaming in the US Hits $673.6 Billion

The American Gaming Association (AGA) has found that US consumers wager approximately $673.6 billion annually on illegal and unregulated gambling. The wagering is conducted through unlicensed iGaming sites, offshore sportsbooks, and unauthorized skill-based gaming machines. This shadow market now represents nearly one-third (i.e., 31.9%) of total US gaming revenue and costs state governments an estimated $15.3 billion in lost taxes.

“Illegal gambling operators are thriving at the expense of American consumers, siphoning billions in tax revenue from state governments, and undercutting the efforts of the legal market,” shared AGA President and CEO Bill Miller. Miller believes that now is the time for a national crackdown on the pervasive illegal market that is draining state coffers and putting people at risk.

Illegal and Unregulated Gaming Stats in the US

The report has shown that when it comes to skill-based gaming machines, there are now 625,000+ unregulated gaming machines in places like bars and convenience stores. This amounts to a 7.7% increase since 2022. These illicit machines generate $30.3 billion in revenue, while costing states approximately $9.5 billion in lost tax income.

As per the report, illegal iGaming revenue has surged to $18.6 billion, amounting to an increase of nearly 38% since 2022. Fewer players now stick exclusively to legal options, just 24% do, down from 52%, while 49% now split their gaming preference between legal and illegal platforms.

Lastly, illegal sports betting continues to grow, with nearly $84 billion wagered through unauthorized books and offshore outlets, producing $5 billion in revenue and depriving states of $1 billion in tax revenue. The share of bettors using only illegal platforms has fallen from 36% to 24%. But, 10% of bettors still wager only with unregulated platforms.

This underground market directly competes with legal gaming and thus, is an issue for both the regulated industry and public interests. For instance, US states drain billions each year. This loss includes funds that would otherwise help with infrastructure, public safety, and community services. Other side effects relate to players playing on uncontrollable sites and experiencing such proven risks as lack of control, no guarantees of fairness, age verification or financial recovery. 

Also, illegal operators impinge upon legitimate business, making it difficult for the legal gaming sector to remain both reputable and sustainable.

“These bad actors operate in the shadows with zero consumer protections, no responsible gaming obligations, and no economic return to the communities they exploit,” added Miller.  Miller added that combating them requires not only stronger US enforcement, but also continuing to work closely with the international partners to shut down offshore operators and hold them accountable.

To check the rise in illegal gaming, the AGA has proposed a detailed approach that includes:

Enhanced Enforcement:
Strengthen coordination among state, federal, and international authorities to identify and dismantle illegal gambling operations.

Regulatory Refinement:
Clarify definitions and regulations around skill-based machines and online betting to close ambiguity and improve control.

Public Education Campaigns:
Raise awareness about the dangers of unregulated gaming and promote licensed, transparent alternatives.

The report has revealed the scale and urgency of America’s gambling problem. An estimated $673.6 billion is traded away from regulated sources that damages both tax revenue and consumer rights. Negative consequences extend far beyond the unlicensed venues themselves to where they also reflect the entirety of our national level trust in legal betting. In light of this,  the need for stronger action has become very important.

The issue is not unique to the US, other countries have also taken bold steps to crack down on illegal gambling. For example, the Philippines recently issued a ban that prohibits all Department of the Interior and Local Government (DILG) personnel and local officials from accessing or participating in any form of online gambling, citing the impact on public service credibility.

Also Read: Chile and India Make Strides in Online Gambling Regulation