NY, NJ, MN Lose $9.5bn to a Flourishing Illegal Online Gambling Market

Despite robust regulations, illegal gambling remains a challenge across the United States. Although close to four dozen states offer legal betting, there are plenty of black market and unlicensed operators that continue to lure bettors and even online gamblers with promotions, odds and lucrative bonuses.

A newly released report highlighted the gravity of the situation, revealing that the illegal online gambling market benefits from nearly $10 billion from only three US states, namely New York, New Jersey and Minnesota. The Campaign for Fairer Gambling (CFG), an independent gambling reform group, uncovered details Thursday regarding a report.

The group commissioned the online marketplace intelligence platform, Yield Sec (YS), to compile the new report. Through analysis and monitoring, the company was able to estimate the market share of the illegal online gambling sector.

In its report, YS confirmed that illegal gambling operators benefit from an estimated $9.5 billion from New York, New Jersey and Minnesota alone. The figure represents approximately a quarter of the total illegal gross gaming revenue (GGR) which is estimated at a staggering $40.92 billion for the whole country.

Billions Flow to Unlicensed iGaming and Betting Operators

Notably, YS confirmed that it probed New York considering that the state offers only online sports betting. An estimated 49% or $3.4 billion in the share of iGaming belongs to the black market in the Empire State. Another $1.9 billion or 27% of the online betting market activities also go through illegal operators, per the new report.

The results for New Jersey, where iGaming and online betting is permitted, are just as concerning, considering that the share of illegal iGaming operators is estimated at 22% of the GGR or $996 million. On the other hand, $719 million or 16% of the online sports betting activities in the state are conducted through the black market.

Minnesota currently doesn’t offer online gambling activities or online sports betting. Yet, some $929 million is spent via the black market on sports wagers. The share of the illegal online gambling market in Minnesota is 62%, representing $1.5 billion.

Action from the Federal Government Is Needed

Ismail Vali, Yield Sec’s CEO, revealed that the newly released report proves that unlicensed, black market operators are “brazenly stealing money from state and federal coffers, and legitimate American industry.” He encouraged the federal government to take action and put an end to “this theft in broad daylight.”

“The dominance of illegal online gambling operators remains unchallenged despite the expansion of legal gambling.“

Derek Webb, founder of CFG

Derek Webb, CFG’s founder, added that although legal betting and iGaming is expanding across the country, the black market continues to thrive. He said that robust regulations were not able to prevent consumers from using illegal providers.

What’s more concerning is that among the three aforementioned states, there are 800 unlicensed gambling operators that continue to operate without any hassle, warned Webb.

Similarly to Vali, he encouraged the government to take action against the flourishing illegal gambling industry.