In a recent survey conducted by the American Gaming Association, $511 billion is wagered illegally in the US annually, with the vast majority of this taking place at the clever hands of illegal and unregulated sportsbooks and iGaming websites. This issue has cost the legal gaming sector $44.2 billion in annual revenue, nearly half of the total revenue earned from sports betting in 2021. According to the survey, an estimated $13.3 billion in potential state tax revenue is lost annually from the illegal gambling operations.
“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. “We have always known that the illegal and unregulated market is expansive, but this report illuminates just how pervasive it is.”
Statistics of Illegal Gambling
The survey, carried out by The Innovation Group, was based on 5,284 US adults. The Innovation Group is a research and advisory firm aiding tourism, gaming, entertainment, and hospitality firms with investment consultation.
According to the survey, the majority (nearly two-thirds) of illegal gambling came from unregulated online casino websites that offer slots and/or table games. Although just six states have legalized online casinos, these illegal online casinos are available across all state lines.
The AGA stated that the unregulated gaming machine market is also rapidly growing. There are a total of 870,00 regulated machines in casinos in the US. The AGA estimates there to be 580,651 unregulated machines. Additionally, these illegal machines have a 25% win rate which is considerably higher than the win rate for the state of Nevada, for example, which is around 7.16%.
Sports betting is now legal in 36 states and the District of Columbia. While the figures may be alarming, the AGA says it represents a movement towards more regulated markets, and with time, the hope is that local state governments will implement better ways to crack down on illegal gambling operations.
The report also showed that Americans bet $63.8 billion on illegal bookies and offshore sports betting sites which costs $3.8 billion in gaming revenue and $700 million in state taxes. The legal market for sportsbooks was estimated to be $100 billion this year, which draws us to conclude that illegal sportsbooks are consuming 40% of the total market.
A Threat to the Industry
In May 2018, the US supreme court gave the right to individual states to legalize, regulate and tax the sports betting market. Since then, over 30 states have legalized sports betting. Still, many states are left with no legal betting options. Inevitably this encourages the growth of the illegal market since many people do not have an outlet legally available to them.
“All stakeholders — policymakers, law enforcement, regulators, legal businesses — must work together to root out the illegal and unregulated gambling market,” Miller said. “This is the fight we’re in for the long haul to protect consumers, support communities, and defend the law-abiding members of our industry.”
If and when sports betting and gambling become legal and available to everyone in the US, perhaps we will see a significant decrease in the illegal and unregulated gambling market.
At the Global Gaming Expo in Las Vegas, AGA President and CEO Bill Miller stated that he believes illegal gambling to be the top threat to the industry.
“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.”
Mac Daniel is a Michigan native and freelance writer for PlayOnlineCasino and PlayOnlineSportsBetting. He has experience writing about a wide variety of topics, including healthcare, tourism, non-profit organizations, and most recently casino and sportsbetting news. To check out more of his work, visit: playonlinemichigan.com