According to the American Gaming Association’s latest report, an estimated $511 billion is the annual turnover of illegal and unregulated gambling in America. These illegal sportsbooks, iGaming websites, and unregulated casinos deprive state governments of $13.3 billion in tax revenue each year.
Illegal revenue estimates:
This presumed tax revenue is around $2.5 billion more than the state revenue generated by legal operators in 2021 (being $11.7 billion). Further, the illegal competition costs the legal gaming industry $44.2 billion in annual revenue to represent almost half of the $92 billion industry’s revenue in 2021.
“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,” said AGA President and CEO Bill Miller. “We have always known that the illegal and unregulated market is expansive, but this report illuminates just how pervasive it is.”
AGA report features:
The AGA report is extensively based on a survey of 5,284 U.S. adult citizens whose past-year gambling behaviors with both legal and illegal operators were examined, as well as their observations of unregulated gaming machines, and publicly available data of the legal U.S. gaming market.
The report acknowledged that commercial or tribal casino gaming is legal in 42 states, while iGaming is legal in six states, and sports betting is legal in 36 states and Washington, D.C. It also provides the breakdown of the costs of the illegal revenue for each wagering category.
Illegal sports betting:
AGA’s report estimates that illegal sportsbooks and sites take around $3.8 billion away from the gaming revenue and $700 million in state taxes. The report uses projected betting behaviors, the above figures, and these findings to point to the conclusion that illegal sports betting operators are taking around 40 percent of the U.S. sports betting market value, with 49 percent of past-year sports bets placed with illegal operators. Though, legal sports betting has already expanded to 36 states.
Illegal iGaming:
Illegal iGaming websites collected wagers estimated at $337.9 billion with illegal iGaming websites. It is a $3.9 billion loss in state tax revenue. The illegal market’s estimated revenue is $13.5 billion, which is almost three times higher in comparison with the 2022 legal market revenue estimated at $5 billion. As iGaming is legal only in six states, almost half of American users played online slots or table games with illegal online casinos.
Unregulated casinos:
AGA reports that there are an estimated 580,651 unregulated ”skill machines” in the U.S. against 870,000 regulated slot machines in casinos. This comparison shows that 40% of all gaming machines in the U.S. are not licensed. These machines mostly have a higher win rate than the legal casino slot machines thus taking advantage of customers that are often not aware of the operators’ legal status.
AGA President calls for action: “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.”
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