Report: Illegal Gaming Market Triple the Size of Legal Market

The American Gaming Association and its president, Bill Miller (l.), are shining a spotlight on illegal gambling, thanks to a recent report that details just how pervasive it has become in the U.S.

The U.S. is rife with illegal gambling, both outside our shores and under the radar at taverns and clubs all over the country. The head of the American Gaming Association (AGA), Bill Miller, wants to do something about that.

The AGA commissioned the Innovation Group to prepare a report on the impact of illegal, offshore gaming operations on the legal market and on state tax revenues.

They surveyed more than 5,000 Americans and their gaming habits. The report looked at existing data on gaming participation rates “and the known size of the legal market.”

It found, “Americans bet more than $510 billion a year with illegal and unregulated operators. This costs the legal industry $44.2 billion in gaming revenue and state governments $13.3 billion in lost tax revenue.”

The 17-page report noted that with regards to unregulated offerings, U.S. residents primarily bet with illegal or unregulated bookies, iGaming websites and “skill games.” Additionally, it asserted that the amounts spent by Americans on illegal sportsbooks and offshore sportsbooks is the equivalent of almost 40 percent of the regulated U.S. sportsbook market.

With $13.5 billion in estimated revenue (it’s hard to get accurate figures), the illegal iGaming market is nearly three times the size of the legal U.S. iGaming market, estimated to be $5 billion in 2022.

The report also noted that there are an estimated 580,561 unregulated gambling machines in taverns, convenience stores and unlicensed gambling halls across the country.

“Wherever they are found, illegal and unregulated operators prey on vulnerable consumers, offer no commitment to responsible gaming, give no recourse to bettors if something goes wrong, encourage money laundering and generate no economic benefit to states or tribal nations,” the report said.

The authors further asserted that the legal gaming industry is “among the most highly regulated industries in America. Whether it is financial solvency and other licensing requirements, know your customer or anti-money laundering regulations, legal gaming operators and suppliers comply with thousands of laws and regulations designed to ensure consumer protections and confidence in the gaming market.”

In response to the recent findings, Miller said that he wants indictments filed by federal law enforcements against operators of illegal casinos and sportsbooks. His comments came during a speech to the National Council of Legislators of Gaming States in Las Vegas in early December.

Noting that a common tactic among illegal operators is to become so annoying that lawmakers will change the laws to make them legal, he declared, “I think that’s dead wrong,” adding, “And an indictment will make it very difficult for someone who lives in that gray market to ever get licensed.” He concluded, “So we’re going to continue to work on it. It is not a fight that’s going to be overnight.”

Recently, Miller sent a letter to Attorney General Merrick Garland that prompted the FBI to hold conversations with him about his criticism of “pervasive illegal gambling.” He urged the Justice Department to target the largest offshore operators that violate state and federal laws.

He wrote, “This action would provide much-needed clarity that these websites are criminal enterprises, which can help to deter the American public from visiting these sites and prompt businesses to take appropriate action to ensure they are not supporting them.”