AGA report: Illegal gambling surpasses $670 billion, accounts for nearly one-third of total market

Americans are spending an estimated $673.6 billion each year on illegal and unregulated gambling, according to a new report from the American Gaming Association (AGA).

Representing nearly a third (31.9%) of the total U.S. market, illegal gambling diverts money from licensed operators and deprives communities of funding for infrastructure, education, and public safety, the coalition warns.

The black market has grown 22% since 2022, fueled by illegal iGaming, unregulated skill machines, and offshore sports betting. The unregulated gambling industry generates an estimated $53.9 billion annually for illegal operators, causing $15.3 billion in lost state taxes.

"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," said AGA President and CEO Bill Miller. "It's time for a national crackdown on the pervasive illegal market that is draining state coffers and putting people at risk."

Unregulated skill machines are one of the fastest-growing threats to the legal gaming market, says the association, with over 625,000 machines operating in bars, restaurants, and convenience stores—a 7.7% increase since 2022. These machines generated $30.3 billion in revenue, costing states $9.5 billion in lost taxes.

Illegal online slots and table games reached $18.6 billion, up nearly 38% since 2022, with the share of iGamers playing only on legal sites falling from 52% to 24% and those using both legal and illegal sites rising to 49%.

Americans also wagered an estimated $84 billion with illegal bookies and offshore sportsbooks in the past year, generating $5 billion in revenue and costing states $1 billion in taxes. The share of sports bettors using only illegal sites fell by a third compared to 2022, and illegal sportsbooks’ overall market share dropped from 36% to 24%. Still, one in ten sports bettors wager exclusively through illegal sources.

"These bad actors operate in the shadows with zero consumer protections, no responsible gaming obligations, and no economic return to the communities they exploit," added Miller. "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."

The study was conducted by The Innovation Group on behalf of AGA and is based largely on a survey of 2,454 U.S adults, examining their past-year gambling behaviors with both legal and illegal operators as well as their observations of unregulated gaming machines. It also incorporates publicly available data on the size of the legal U.S. gaming market and certain state gaming machine markets..

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