U.S. States Miss Out On $15.3B Annually from Illegal Gambling

Illegal gambling is costing U.S. states billions every year, according to a new report from the American Gaming Association (AGA). The study estimates that prohibited gambling generates $53.9 billion in annual revenue for illegal operators and drains $15.3 billion from state tax coffers.

Good to know

• Illegal iGaming, unregulated skill machines, and offshore sportsbooks are fueling a 22% jump in illegal gambling since 2022.
• Nearly one-third of the U.S. gaming market—31.9%—is still controlled by illegal operators.
• Over 625,000 unregulated machines operate nationwide, up 7.7% in two years.

The AGA’s research shows that illegal sports betting alone, including offshore sites and bookies, handles $84 billion annually. This translates to $5 billion in revenue for unlicensed operators and $1 billion in lost tax revenue. Illegal online slots and table games account for $466.2 billion in yearly handle, producing $18.6 billion in revenue for the black market.

Bill Miller, AGA President and CEO, said:

“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. It’s time for a national crackdown on the pervasive illegal market that is draining state coffers and putting people at risk.”

Unregulated gaming machines—often found in bars and taverns—pose another major challenge. These devices take in $123.4 billion annually and generate $30.3 billion in illegal revenue, costing states $9.5 billion in lost taxes.

The study also revealed troubling trends in player behavior. Only 24% of iGaming customers are using legal sites, down from 52% in 2022. Meanwhile, the share of players using both legal and illegal platforms rose to 49%. However, there are signs of progress in sports betting: the percentage of bettors exclusively using illegal services dropped by roughly one-third, and illegal sportsbooks’ share of the U.S. market fell from 36% to 24%.

“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.”

The report is based on a survey of 2,454 U.S. adults, combined with data on unregulated machines and player behavior. The AGA says the findings show the urgency of coordinated enforcement to protect consumers and ensure revenue flows back into American communities.

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