Americans spend an estimated $511 billion a year on illegal and unregulated sports betting, iGaming sites and so-called “gaming of skill”, according to a new report from the American Gaming Association (AGA).
Illegal betting ‘stole’ $13.3 billion in tax revenue from state governments in 2022, nearly $2.5 billion more than legal operators in 2021 ($11.7 billion). It also cost the legal gaming industry $44.2 billion in annual revenue, or nearly half of the $92 billion in combined commercial and tribal revenue in 2021.
“Illegal and unregulated gambling is a scourge on our society, taking advantage of vulnerable consumers, circumventing regulatory obligations and robbing communities of critical tax revenue for infrastructure, education and more,” said President and CEO of AG, Bill Miller. “We’ve always known that the illegal and unregulated market is huge, but this report proves how big it really is.”
Illegal sports betting
The AGA report estimates that Americans gamble $63.8 billion on illegal gambling and offshore sites at a cost of $3.8 billion in gaming revenue and $700 million in state taxes. With Americans projected to place $100 billion into legal sports betting this year, these findings imply that illegal sports betting operators are capturing nearly 40% of the US sports betting market.
While the numbers are significant, they also demonstrate the movement of Americans into the regulated market with the expansion of legal sports betting to 36 states and the District of Columbia.
The report also found that 49% of sports bettors last year placed a bet with an illegal operator. Past AGA surveys show that more than half of Americans who bet on sports with illegal operators believe they are betting legally.
Legal iGaming vs Illegal iGaming
Americans gamble an estimated $337.9 billion with illegal iGaming sites, with a loss of $3.9 billion in state tax revenue. With $13.5 billion in estimated revenue, the illegal iGaming market in the US is nearly three times the size of the legal iGaming market, estimated to be worth $5 billion by 2022.
With iGaming only legal in six states, nearly half of Americans (48%) who played online slots or table games last year played at illegal online casinos.
The slot machines
Unregulated gaming machines also continue to spread, with an estimated 580,651 unregulated machines in the United States. With 870,000 regulated machines on casinos and slots routes, that means 40% of all slot machines in the United States are unlicensed.
Based on state regulatory data for similar machines, the percentage of operator winnings on unregulated gaming machines is significantly higher than on legal casino slot machines. During the last 12 months, slots in Nevada have had a win rate of 7.16%, compared to an estimated win rate of nearly 25% for unregulated machines – demonstrating how unregulated machines take advantage of customers. .
“All stakeholders – legislators, law enforcement, regulators, legal companies – must work together to eradicate the illegal and unregulated gambling market. This is a fight we are committed to for the long term to protect consumers, support communities and defend the law-abiding members of our industry.”
The study was conducted by The Innovation Group on behalf of the American Gaming Association and is based largely on a survey of 5,284 American adults, examining their past year gaming behaviors with legal and illegal operators, as well as their observations of gaming machines. unregulated gambling. It also incorporates publicly available data on the size of the US legal gaming market and certain state gaming machine markets.