American Gaming Association Reports On Illegal US Gambling

Written By Katarina Vojvodic on November 30, 2022
Illegal US online gambling presents big issue according to AGA

According to American Gaming Association’s new report, US gambling with illegal and unregulated sportsbooks amounts to an estimated $511 billion annually.

AGA’s findings also imply that illegal sportsbook operators, online casino websites and so-called “skill games” are capturing nearly 40% of the US gambling market.

AGA says illegal gambling “robs state governments” of $13.3 billion in tax revenue annually. That amount is nearly $2.5 billion more than US legal casino and sportsbook operators generated in 2021 ($11.7 billion).

Illegal betting also costs the legal gaming industry $44.2 billion in annual revenue. Or nearly half of the $92 billion combined commercial and tribal revenue in 2021.

The Innovation Group conducted the study “Sizing the Illegal and Unregulated Gaming Markets in the US” on behalf of the American Gaming Association. The analysis is mainly based on a survey of 5,284 American adults. And, it focuses on examining their past-year gambling activities with both legal and illegal operators.

AGA President and CEO Bill Miller shared via the company’s press release:

“Illegal and unregulated gambling is a scourge on our society, taking advantage of vulnerable consumers, skirting regulatory obligations and robbing communities of critical tax revenue for infrastructure, education and more.

We have always known that the illegal and unregulated market is expansive, but this report illuminates just how pervasive it is.”

Illegal sportsbooks take almost 40% of US sports betting market

The report estimates that American players gamble $63.8 billion through illegal offshore sites. All that unlawful wagering comes at the cost of $3.8 billion in gaming revenue and $700 million in state taxes.

Americans are estimated to bet $100 billion in 2022 legally. That implies that illegal sportsbook operators are taking about 40% of the US sports betting market.

Although that amount is substantial, the findings also show that Americans are progressing. Players are moving to the regulated sports betting market.

The regulated US sports betting market exists in 36 states and Washington DC. It is now more extensive than the unregulated US sports betting market.

AGA’s analysis also shows that 49% of players placed a bet with an illegal operator last year. According to AGA’s previous research, more than half of Americans that use illegal sportsbooks believe they are wagering legally.

Illegal online casino market in US is bigger than legal market

Although three major online casino markets – Michigan, New Jersey, and Pennsylvania – broke October revenue records, US stakeholders still have a reason to worry.

According to AGA’s estimation, Americans wager $337.9 billion yearly on unregulated online casinos. That amounts to damage of $3.9 billion in state tax revenue.

With $13.5 billion in projected revenue, the illegal online casino market in the US is almost three times bigger than the legal US online market ($5 billion estimation in 2022).

However, that number shouldn’t come as a surprise as online casinos are only legal in six states. Nearly half of Americans (48%) who played online slots or table games last year used illegal online casinos.

Those figures may change sometime in the future as New York Democratic Senator Joe Addabbo recently said he would want to discuss the legalization of online casinos in the state.

A recent study from Spectrum Gaming Group indicated that bringing online casinos to Indiana likely won’t cut into land-based casino revenue in the state. Now Indiana casino operators can feel more relieved.

And this study may serve as a good example to other US jurisdictions looking to legalize online casinos soon.

More than 580,000 illegal US gambling machines nationwide

With approximately 580,651 illegal gaming machines in the US, unregulated gaming machines continue to thrive.

There are 870,000 regulated machines in casinos and other gaming venues. It means 40% of all gaming machines in the US work without a valid license.

AGA reports, based on state regulatory data for similar machines, the operator win percentage on unregulated gambling machines is much higher than on legal casino slot machines.

During the past year, slot machines in Nevada had a 7.16% win rate. Compared to an almost 25% projected win rate for unregulated machines.

Miller went on to add:

“All stakeholders—policymakers, law enforcement, regulators, legal businesses—must work together to root out the illegal and unregulated gambling market. This is a fight we’re in for the long haul to protect consumers, support communities and defend the law-abiding members of our industry.”

Photo by Playin USA
Katarina Vojvodic Avatar
Written by

Katarina Vojvodic

Katarina Vojvodic is a lead writer for Playin USA who lives in Toronto. Vojvodic provides coverage of the US gambling industry with a focus on US online casinos. Previously, she covered Ontario?s online gambling industry for Vojvodic holds a master?s degree in journalism from the University of Belgrade. Outside working hours, she can be found near the water with her husband and their two kids.

View all posts by Katarina Vojvodic