Casinos are prevalent across the U.S. and sports betting is legal in 39 states, Washington, D.C. and Puerto Rico. However, offshore gambling sites are still thriving.
According to a report from the American Gaming Association, Americans wager $673.6 billion annually with unregulated gambling operators.
Since the AGA’s last report in 2022, the use of unregulated online gambling sites grew 22%. This includes online casino games, the expanded use of unregulated “skill games” and sports betting sites.
The group says this diverts activity away from licensed operators. As a result, state governments miss out on funding for infrastructure, education and public safety.
“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. “It’s time for a national crackdown on the pervasive illegal market that is draining state coffers and putting people at risk.”
Inside The Numbers
The report notes that growth in the legal market in recent years has kept the illegal market’s share of total U.S. gaming revenue steady. Illegal operators continue to secure smaller shares of sports betting and online gaming revenue, but still account for almost one-third of the total U.S. gaming market.
According to the report, offshore betting platforms and unregulated operators generated $53.9 billion in annual revenue. In other words, state governments missed $15.3 billion worth of tax revenue.
Here’s a look at the AGA estimates of the unregulated market:
| Category | Estimated Handle | Estimated Revenue | Estimated State Gaming Tax Revenue Loss |
|---|---|---|---|
| Sports Betting (Including bookies and offshore) | $84 billion | $5 billion | $1 billion |
| Online Casino Games | $466.2 billion | $18.6 billion | $4.8 billion |
| Unregulated machines in bars, taverns, etc. | $123.4 billion | $30.3 billion | $9.5 billion |
| Total | $673.6 billion | $53.9 billion | $15.3 billion |
The AGA says unregulated machines remain one of the fastest-growing threats to legal gaming. There are more than 625,000 machines in bars, restaurants and convenience stores. That’s a 7.7% increase since 2022.
Illegal online casino betting surged 38% over the last three years. The number of players who play only on legal sites fell from 52% in 2022 to just 24% today. The share using both legal and illegal sites rose to 49%, nearly tripling.
Despite those numbers, illegal operators hold a smaller share of the total U.S. iGaming market than three years ago.
In the sports betting arena, the share of sports bettors using exclusively illegal sites fell by one-third since 2022. Illegal sportsbooks’ share of the total U.S. sports betting market fell from 36% to 24%. But one in 10 bettors still wager exclusively with illegal operators.
“These bad actors operate in the shadows with zero consumer protections, no responsible gaming obligations, and no economic return to the communities they exploit,” Miller said. “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.”
Photo courtesy of Shutterstock
