American Gaming Association Values Illegal U.S. Gambling Market At $511bn Annually

December 1, 2022
Even with commercial and tribal gaming legal in 42 U.S. states, Americans still spend an estimated $511bn annually gambling via unregulated sportsbooks, offshore websites and so-called skill-based gaming devices, according to a new report by the American Gaming Association.


Even with commercial and tribal gaming legal in 42 U.S. states, Americans still spend an estimated $511bn annually gambling via unregulated sportsbooks, offshore websites and so-called skill-based gaming devices, according to a new report by the American Gaming Association (AGA).

The 19-page report released on Wednesday (November 30) was the first to measure the scale of the entire illegal gambling market in the United States, encompassing illegal bookmakers and offshore sports-betting sites, illegal online gambling sites, and unregulated gaming machines.

Chris Cylke, senior vice president of government relations for the AGA, said there have been previous estimates of the illegal market, especially the $150bn illegal sports-betting market estimate released prior to the Professional and Amateur Sports Protection Act (PASPA) being overturned in May 2018.

The report was based on a survey of 5,284 U.S. adults conducted by the Innovation Group on behalf of the AGA, examining their past-year gambling behaviors with both legal and illegal operators.

In addition to Americans gambling more than half a trillion dollars illegally each year, the report found illegal and unregulated gambling cost state governments $13.3bn in annual tax revenue, compared with legal operators who contributed $11.7bn to state coffers in 2021.

It also cost the legal gaming industry $44.2bn in annual revenue or almost half of the $92bn in combined commercial and tribal casino revenue in 2021.

Broken down by types of illegal gaming, the report estimated that illegal wagering on sports generated $3.8bn in revenue, $13.5bn came from illegal online gambling, and $26.9bn from unregulated gaming machines.

Bill Miller, president and CEO of the AGA, described illegal gambling as a “scourge on our society” that takes advantage of vulnerable consumers and costs state and local governments crucial tax revenues.

“We have always known that the illegal and unregulated market is expansive, but this report illustrates just how pervasive it is,” he said in a press release Wednesday.

Miller is expected to address the issue of illegal and unregulated gambling during a keynote speech on December 9 at the National Council of Legislators from Gaming States (NCLGS) winter meeting in Las Vegas.

Combating illegal gaming has been a strategic priority for the AGA, with Miller focusing on the topic during recent speeches at gaming industry conventions in Atlantic City and Las Vegas.

He also submitted a letter in April to Attorney General Merrick Garland asking the U.S. Department of Justice (DOJ) to crack down on illegal sportsbooks, online casinos and unregulated gaming machines.

Miller urged the Justice Department to crack down on illegal operators and enforce federal regulations to protect consumers, singling out Bovada, BetOnline and MyBookie as companies that “openly violate federal and state laws.”

Cylke said the DOJ did acknowledge receiving the letter, and that the AGA is having ongoing discussions with the FBI.

“This [report] will only add to the conversations we’ve been having with law enforcement, Congress and state gaming regulators,” Cylke said.

The AGA’s latest report titled “Sizing the Illegal and Unregulated Gaming Market in the U.S.” estimated that Americans wager $63.8bn with illegal bookmakers and offshore sites annually.

The report also estimated that Americans are projected to place $100bn in legal wagers in 2022 in the 36 states and the District of Columbia that offer legal retail and mobile wagering.

“While offshore sites have succeeded in muddying the waters in internet search results, the law is clear: it is a crime to participate in the business of illegal gambling,” according to the report.

There are a variety of federal statutes that make it illegal to operate or participate in financial transactions related to an unlicensed sportsbook in the United States, including the Wire Act, the Illegal Gambling Business Act, the Travel Act and the Unlawful Internet Gambling Enforcement Act.

Beyond federal statutes aimed specifically at gambling, the report noted there are a variety of broader criminal laws targeting organized crime that have also been the basis for the prosecution of offshore gambling rings.

Americans also spend nearly $338bn each year with online casinos. Internet gaming is legal in six states, with $5bn expected to be generated in regulated revenue in 2022.

Along with illegal bookmakers and online gaming sites, unregulated gaming machines continue to proliferate. The AGA’s report estimates that there are more than 580,000 unregulated gaming machines nationwide and that consumers spend more than $109bn on these games annually.

With 870,000 regulated machines in casinos and slot routes, that means 40 percent of all gaming machines in the U.S. are unlicensed.

“To make things worse, players are often losing money on these machines at three times the rate they would with regulated machines in Nevada,” the report found.

Additionally, the lack of regulatory controls increases the risks the machines may be tied to criminal activity including money laundering, drug trafficking and violent crime, the report said.

Legal gaming machine manufacturers are subject to federal laws, including the Johnson Act, which make it unlawful to trade in unregulated gaming devices, operate a gambling business outside the bounds of state law, or transfer wagering paraphernalia through interstate channels if not permitted by state law.

“Unregulated machines clearly meet the definition of gambling devices,” the report said.

The AGA once again urged state lawmakers and regulators to take action to strengthen and enforce laws protecting consumers from these machines that often lure players in under the guise of being “games of skill.”

In an email to AGA members, Miller acknowledged that this “is not a fight we will win overnight.”

“Illegal gambling is arguably the greatest threat to our industry,” Miller wrote. “The unfortunate reality is about a third of the U.S. gaming market is being captured by illegal or unregulated gambling.”

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