Illegal Gambling Remains Strong, AGA Report Reveals

The American Gaming Association (AGA) has analyzed new data about Americans’ gambling habits, revealing that approximately a third of all bets are placed with illegal operators. Despite the rapid growth of the legal gaming industry, some players continue to play with unregulated companies for a variety of reasons.

The Illegal Market Has Grown Although Its Share Remains the Same

According to the AGA’s latest analysis, based on data from The Innovation Group, Americans place a total of $673.6 billion in bets on illegal platforms every year. The association attributed this high number to a spike in illegal iGaming, the proliferation of grey market skill machines and the continued popularity of illegal sports betting. The AGA regretted the fact, saying that this diverts activity away from licensed operators and “denying communities critical resources that fund infrastructure, education, and public safety.”

The AGA estimated that the illegal market has experienced growth of 22% since its most recent report in 2022. It added that the parallel growth of the legal alternative has kept the black market’s share roughly the same at one-third (31.9%) of the total US gaming market.

 The AGA added that the illegal gambling market is generating approximately $53.9 billion in annual revenue. The association estimated that if this money were spent on legal bets, it would have generated $15.3 billion in taxes.

Illegal Gambling Is Available in Multiple Forms

Further findings suggest that unregulated machines are a fast-growing threat to legal gambling. The AGA suggested that over 625,000 such machines now operate across bars, restaurants and stores in multiple states. These machines generate an annual revenue of approximately $30.3 billion, costing states $9.5 billion in lost tax revenue. At the same time, their unregulated nature exposes players to harm.

Illegal iGaming, on the other hand, reaches $18.6 billion in revenue, marking a staggering 38% increase since 2022. The AGA noted that, concerningly, the share of online gamblers who play on legal sites has decreased from 52% in 2022 to 24% today. The silver lining, however, is that illegal operators hold a smaller share of the total US iGaming market than they did three years ago.

Last but not least, unlicensed bookmakers and offshore sportsbooks are estimated to generate $5 billion in annual revenue, causing approximately $1 billion in tax losses. The AGA noted that the share of bettors using exclusively offshore websites has declined by a third and now only one in ten bettors would wager on illegal platforms exclusively.

AGA Urges Lawmakers to Act

Bill Miller, AGA’s president and chief executive, urged lawmakers to crack down on the black market, which has presented continuous challenges to operators in the US.

These bad actors operate in the shadows with zero consumer protections, no responsible gaming obligations, and no economic return to the communities they exploit. Combating them 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.

Bill Miller, president & CEO, AGA

This analysis follows another report, which examined the controversial sweepstakes sector. Despite trying to differentiate themselves from the gambling industry, sweepstakes are still seen as gambling by 90% of US players, the AGA pointed out.