A new report from the American Gaming Association (AGA) revealed Americans are wagering nearly $700 billion annually with illegal and unregulated operators, denying communities critical funds for infrastructure and more.
Key Takeaways
- The illegal U.S. gambling market has grown 22% since 2022, comprising 31.9% of total gaming revenue.
- Offshore operators have also cost states an estimated $15.3 billion in lost tax revenue.
- Offshore iGaming is of particular concern, with more players using only illegal channels (27%) than legal ones (24%).
"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,” AGA president and CEO Bill Miller said in the release. “These bad actors operate in the shadows with zero consumer protections, no responsible gaming obligations, and no economic return to the communities they exploit.”
The illegal market has grown 22% since the AGA’s last report in 2022. Thanks to major growth in the legal market in recent years, however, the illegal market has largely retained a steady share of total gaming revenue, with illegal operators ultimately accounting for 31.9% of the total U.S. gaming market.
“Combating (illegal operators) requires not only stronger U.S. enforcement, but also continuing to work closely with our international partners to shut down offshore operators and hold them accountable," Miller added.
Alarming Numbers
An estimated $53.9 billion of illegal and unregulated revenue was reported by the AGA, resulting in approximately $15.3 billion in lost state tax revenue.
That growth came in part from unregulated “skill” machines, with an estimated 7.7% increase. These machines are the fastest-growing threat to legal gaming, according to the Aug. 13 report.
That doesn’t mean all offshore and illegal gambling operations have seen their revenues increase over the last three years. Illegal sports betting, while still a major factor resulting in roughly $1 billion in lost tax revenue, saw its market share drop from 35% to 24%.
The AGA report also noted that 1 in 10 sports bettors still exclusively used illegal channels. That contrasts starkly with illegal iGaming, which has most dramatically seen major gains in revenue and market share.
Annual revenue for the offshore iGaming industry is reportedly up to just shy of $19 billion, an alarming 38% increase since 2022. Additionally, more online casino players reported using illegal channels only (27%) than using exclusively legal avenues (24%).
Legal markets also growing
While the illegal market appears to be growing, legal sports betting, in particular, has dramatically outpaced the offshore market.
An AGA report from earlier this year on 2024 figures found that Americans wagered roughly $150 billion with legal sportsbooks in 2024, a handle nearly twice as large as illegal channels. That represented a 23% increase year-over-year, a similar figure to that which the illegal channels had experienced in triple the time.
The combined revenue of legal sports betting, iGaming, and brick-and-mortar casinos also generated $77 billion in revenue in 2024, including a fourth-quarter haul of $18.6 billion, a single-quarter record. That figure also contrasted favorably with illegal operations, a roughly 43% difference in revenue.
