Illegal Gambling Remains Strong, AGA Report Reveals

Overview of Illegal Gambling Trends in the US
The American Gaming Association (AGA) has recently published findings based on new research about gambling behaviors in the United States. Their report indicates that nearly one-third of all gambling bets are made through illegal channels. Despite the expansion of the regulated gaming industry, a significant number of players continue to engage with unlicensed operators for various reasons.
Growth of the Illegal Gambling Market
The AGA, citing information from The Innovation Group, reveals that Americans wager approximately $673.6 billion annually on illegal gambling platforms. This surge in illegal activity is driven by increased illegal online gaming, the spread of grey market skill-based machines, and the enduring appeal of unlawful sports betting. The AGA stresses the negative impact of this trend, noting that it diverts revenue from licensed businesses and deprives local communities of essential funding for infrastructure, education, and public safety.
Since the last report in 2022, the illegal gambling sector has grown by 22%. However, because the legal gambling market has grown in parallel, the proportion of the total market occupied by illegal operations remains steady at just under one-third, or 31.9%.
The association further estimates that illegal gambling generates around $53.9 billion annually in revenue. If these funds were placed through legal channels, they could contribute approximately $15.3 billion in tax income.
Forms and Impact of Illegal Gambling
The report highlights multiple facets of illegal gambling posing risks to the legal industry. One rapidly expanding concern is unregulated skill-based gaming machines, with over 625,000 of these devices operating in various venues such as bars, restaurants, and retail outlets across several states. These machines generate roughly $30.3 billion a year but result in a tax loss of about $9.5 billion, while also exposing gamblers to potential harms due to lack of regulation.
Illegal internet gaming, which accounted for $18.6 billion in revenue, has jumped by 38% since 2022. The AGA warns that fewer online gamblers are now using legal platforms—dropping from 52% in 2022 to 24% currently. Nevertheless, the share of illegal operators in the overall online gaming market has decreased compared to three years ago.
Unlicensed sportsbooks and offshore bookmakers contribute an estimated $5 billion yearly in revenues, causing approximately $1 billion in lost tax revenue. The percentage of bettors who exclusively use offshore sites has declined by one-third, with only about 10% of players exclusively placing bets on illegal sportsbooks now.
Call for Legislative Action
Bill Miller, president and CEO of the AGA, has called on legislators to take stronger measures against illegal gambling. Miller emphasized that unlicensed operators avoid consumer protections, responsible gaming regulations, and fail to give back economically to the communities they exploit.
He said, “These operators operate behind the scenes with no consumer protections, no responsibilities for safe gaming, and they generate no financial benefits for the communities they take from. Tackling this issue demands stronger enforcement within the United States as well as cooperation with international partners to shut down offshore sites and hold those operators accountable.”
Related Observations on Sweepstakes Gambling
The AGA report also touches upon the sweepstakes sector, which, despite its attempts to distance itself from traditional gambling, is still perceived as gambling by 90% of American players. This ongoing controversy adds another layer to the challenges faced by regulators and the legal gaming industry.