Illegal Gambling Still Accounts for Nearly a Third of U.S. Gaming Market
A new analysis by the American Gaming Association (AGA) shows that illegal and unregulated gambling continues to represent almost one-third of the U.S. gaming market, costing states over $15 billion annually in lost tax revenue. The report points to rising illegal iGaming, unregulated skill machines, and persistent illicit sports betting as key drivers of the problem.
Scale of the Illegal Market
According to the AGA, Americans wager an estimated $673.6 billion each year with illegal and unregulated operators. This activity generated $53.9 billion in revenue for offshore and unlicensed providers, depriving state governments of $15.3 billion in taxes. While growth in legal gaming has prevented illegal operators from significantly increasing their overall market share, they still account for 31.9% of total U.S. gaming revenue.
The number of unregulated skill machines has reached over 625,000 across U.S. bars, restaurants, and convenience stores – a 7.7% increase since 2022. These machines generated $30.3 billion in revenue, with tax losses amounting to $9.5 billion. Without regulatory oversight, they present risks to both consumers and communities, according to the AGA.
Illegal iGaming Trends
The report highlights that illegal online slots and table games produced $18.6 billion in revenue, nearly 38% higher than in 2022. The share of players using only legal sites dropped from 52% in 2022 to 24% in 2025, while those engaging with both legal and illegal platforms surged to 49%.
Americans placed approximately $84 billion in bets with illegal bookmakers and offshore sportsbooks over the past year. This generated $5 billion in revenue for illicit operators and cost states $1 billion in lost taxes. Despite this, the share of bettors exclusively using illegal sites fell by a third compared to 2022, and the illegal share of the sports betting market dropped from 36% to 24%.
Call for Stronger Enforcement
AGA President and CEO Bill Miller stated:
“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.”
He also stressed the need for stronger U.S. enforcement and closer cooperation with international partners to combat offshore operators.
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