Illegal gambling revenue is U.S. is $511 billion per year: American Gaming Association study

November 30, 2022 10:33 AM
Photo: Shutterstock
  • Rege Behe, CDC Gaming Reports
November 30, 2022 10:33 AM

Despite commercial and tribal gaming being legal in 36 states, many American still gamble with illegal or unregulated sportsbooks and bookies.

According to a new report issued Wednesday by the American Gaming Association, illegal gambling is estimated to be $511 billion per year, taking $13.3 billion in tax revenue from state coffers and $44.2 billion in revenue from legal operators.

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

The study was conducted by The Innovation Group for the AGA and is based on a survey of 5,284 U.S adults about past-year gambling behaviors with both legal and illegal operators. It also uses publicly available data on the size of the legal U.S. gaming market and certain state gaming machine markets.

Sports betting is especially fertile for illegal gambling. The report indicates American bettors annually wager $63.8 billion with illegal bookies and offshore sites, costing operators $3.8 billion in revenue and states $700 million in taxes. This year Americans are projected to place $100 billion in legal sports bets. The study indicates that illegal sportsbook gambling accounts for nearly 40% of the U.S. sports betting market.

Also, 49% of sports bettors placed bets with illegal operators during the last year. Previous research by the AGA showed more than half of Americans wagering with illegal operators believe they are legally betting.

The report says that igaming accounts for an estimated $337.9 billion wagered through illegal websites, costing states $3.9 billion in tax revenue. With $13.5 billion in estimated revenue, the illegal igaming market is estimated to bring in revenue of $13.5 billion – nearly three times the estimated legal U.S. igaming market of $5 billion.

Nearly half of Americans, according to the study, have played online slots or table games in the past year with illegal online casinos.

The study also finds that there are 580,651 unregulated skill machines in the U.S., which has 870,000 regulated machines in casinos and slot routes. That means 40% of all gaming machines in the U.S. are unlicensed.

“All stakeholders—policymakers, law enforcement, regulators, legal businesses—must work together to root out the illegal and unregulated gambling market,” Miller said. “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.”

Rege Behe is lead contributor to CDC Gaming Reports. He can be reached at rbehe@cdcgaming.com. Please follow @RegeBehe_exPTR on Twitter.