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Americans spending more than $500bn a year on illegal gambling

According to new claims by the American Gaming Association (AGA), US citizens spend no less than half a trillion dollars on illegal gambling each year.

The preeminent lobbying arm released a new report dubbed ‘Sizing the Illegal and Unregulated Gaming Markets in the United States’, where it revealed that US residents spend an estimated $511 billion annually on unregulated gambling. The activity was mostly done using illegal sportsbooks, in-person “skill games” and offshore online casinos.

The AGA claimed that such behaviour negatively affected the licensed industry in addition to the several programs it supported via gaming taxes. The President and CEO of the association, Bill Miller, called illegal gambling a “scourge” on society and accused it of dodging regulatory obligations and manipulating vulnerable gamblers.

“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,” Miller said.

“We have always known that the illegal and unregulated market is expansive, but this report illuminates just how pervasive it is.”

The association further said that state governments were losing approximately $13.3 billion in associated tax revenue every year as a result of the money lost to illegal betting. The unregulated operations reportedly cut into legal gaming revenue by around $44.2 billion — almost half of the $92 billion recorded in combined gross gaming revenue by the commercial and tribal gaming industries last year.

Regulated online casino gaming is available in only six states in the US, while 30 states offer legally regulated sports betting. The iGaming states are Pennsylvania, Delaware, Michigan, New Jersey, Connecticut, and West Virginia.

US gamblers that want to place bets from their homes usually utilize offshore casino sites in the online gambling meccas of Gibraltar, the Philippines, and Malta. Although these platforms are illegal, US law enforcement seldom issues penalties on punters that play on illegal websites.

According to the AGA’s report, each year offshore casino websites rack up around $337.9 billion from bets places, producing a net revenue of approximately $13.5 billion. The association revealed that if that amount were wagered on legal iGaming platforms in the country, the state tax income would amount to $3.9 billion.

The AGA reported that in the case of illicit sports betting, underground bookies and offshore sportsbooks that take in-person bets generate approximately $63.8 billion yearly for an estimated revenue of $3.8 billion. This equates to a projected state tax loss of around $700 million.

The APA also revealed that skill gaming machines which can be found in several states, like Virginia and Pennsylvania, receive an estimated $109.2 billion via coin wagers yearly. The terminals are found in bars, restaurants, gas stations, and grocery stores and are not observed by an independent gaming regulator for fair play.

According to the association, in 2021, skill gaming host venues, route distributors, and the terminals’ manufacturers shared almost $27 billion in profits. Per the AGA’s estimate, more than 580,650 unregulated skill gaming machines were operating across the US.

The lobbying arm requested the aid of state and federal lawmakers to partner with the legal gaming industry to uphold gambling laws so as to keep unregulated gaming in check and protect the exploited customers.

Miller said: “All stakeholders — policymakers, law enforcement, regulators, legal businesses — must work together to root out the illegal and unregulated gambling market. This is a fight we’re in for the long haul to protect consumers, support communities, and defend the law-abiding members of our industry.”

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