A new analysis by the American Gaming Association (AGA) shows that illegal and unregulated gambling continues to claim a large portion of the U.S. market, with Americans betting $673.6 billion annually through unauthorized channels. This activity, which includes offshore sportsbooks, illegal iGaming, and unregulated skill machines, siphons funds from legal operators and deprives states of an estimated $15.3 billion in taxes each year.
While the legal gambling market has expanded in recent years, illegal operations still control 31.9% of the total U.S. gaming market. The report marks a 22% increase in illegal gambling since the AGA’s previous analysis in 2022.
“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.”
iGaming and Skill Machines Drive Illegal Growth
Unlicensed online casino games have seen significant growth, generating $18.6 billion in annual revenue—up nearly 38% since 2022. The number of players using only legal platforms has dropped sharply from 52% in 2022 to just 24%, while nearly half now use both legal and illegal sites.
At the same time, unregulated “skill” machines — often found in convenience stores, restaurants, and bars—have grown to over 625,000 units, a 7.7% increase since 2022. These machines produce $30.3 billion in revenue and lead to $9.5 billion in lost tax revenue. Lacking regulation, they pose serious risks to both consumers and communities.
Illegal Sports Betting Slows, But Issues Remain
Though illegal sports betting remains widespread, its market share is shrinking. Americans wagered about $84 billion illegally on sports over the past year, generating $5 billion in revenue and $1 billion in tax losses. The share of bettors exclusively using illegal sportsbooks has declined by a third since 2022, and illegal operators’ hold on the sports betting market has dropped from 36% to 24%.
Still, one in ten sports bettors continues to wager only with illegal operators.
“These bad actors operate in the shadows with zero consumer protections, no responsible gaming obligations, and no economic return to the communities they exploit,” Miller added. “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.”
Economic Toll Underscores Urgency for Action
The illegal market generates approximately $53.9 billion in annual revenue—money that fails to support public services or safe gambling practices. The AGA warns that unless enforcement strengthens, legal markets will continue to compete against entrenched illicit operators that operate without accountability.
The findings come from a study by The Innovation Group, which surveyed 2,454 U.S. adults about their gambling habits and supplemented the data with industry figures. For more details, the AGA encourages stakeholders to visit its State of Play Map, which tracks legal gaming by state.
Source:
“New AGA Analysis Reveals Illegal Gaming Remains Nearly a Third of the U.S. Market”, americangaming.org, Aug 13, 2025.
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