Illegal Gambling Dominates in New York, New Jersey, and Minnesota

The Campaign for Fairer gaming (CFG) and Yield Sec (YS) recently released a research that uncovered an astounding $9.5 billion in illicit gaming in Minnesota, New Jersey, and New York. This amount is about 25% of the $40.92 billion in illicit gross gaming revenue (GGR) in the US.

The selection was made based on three factors: New Jersey’s long experience in iGaming, New York’s position as the biggest sports betting market, and Minnesota’s absence of legal iGaming. YS was hired by the CFG, an independent gambling reform organization with knowledge of the business and lobbying strategies of the industry in the US and the UK, to track and evaluate the proportion of online gaming that is operated by legal and illicit companies.

In their initial report, YS data highlighted the significant presence of illegal operators in the American online gambling scene. This report follows USA Report One, which examined the overall U.S. marketplace and conducted a special analysis of online gambling during Super Bowl LVIII.

Insights from Industry Experts

“The dominance of illegal online gambling operators remains unchallenged despite the expansion of legal gambling,” said Derek Webb, founder of CFG. “Sector-friendly legislation, regulation, and tax rates have not made much of a dent. Despite wildly different legal regimes, these three states continue to accommodate over 800 illegal operators who operate with zero regard for state law.”

Webb emphasized the need for federal oversight, stating, “We need federal involvement in the oversight of online gambling. We are eager to equip policymakers with real, reliable data so that we can have more informed, balanced debate, and ultimately smarter gambling policy.”

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Ismail Vali, founder and CEO of Yield Sec, echoed this sentiment, highlighting the financial impact: “This data and analysis expose a stark reality: illegal gambling operators are brazenly stealing money from state and federal coffers, and legitimate American industry. It’s time for the federal government to end this theft in broad daylight.”

Key Findings of the Report

  • New York (online sports betting only): Illegal online casino gaming captures 49% ($3.4 billion) of the total online marketplace GGR, with illegal online sports betting taking another 27% ($1.9 billion).
  • New Jersey (legal for online sports betting and online casino): Illegal online sports betting accounts for 22% ($996 million) of the total GGR, while illegal online casino gaming takes 16% ($719 million).
  • Minnesota (not legal for online sports betting or online casino): Illegal online sports betting usurps 38% ($929 million) of the total GGR, and illegal online casino gaming captures 62% ($1.5 billion).

These findings underscore the pervasive issue of illegal gambling, which continues to siphon billions from both state and federal revenues and legitimate businesses. The call for federal oversight aims to address and mitigate this significant challenge.

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