Americans spend $500bn on illegal gambling annually

Long overdue, the American Gaming Association has issued a new report on the state of the illegal gambling industry in the United States at a time when more than 31 states and the District of Columbia have legalized their betting activities, and at least five states in the country are pending launches, along with six or so states that presently allow online casino gambling.

However, Americans may be gambling an estimated $511bn with illegal bookmakers, online casinos, and other unregulated operations such as skill machines according to the association’s latest report that investigates the issue in some detail. A quick crunching of the numbers shows that US state governments may be on the hook for $13.3bn in lost tax revenue annually due to the proliferation of illegal gambling operators.

Of course, the American Gaming Association has also reported some successes over the past months. A growing number of consumers are particularly concerned with placing their wagers through an authorized and regulated gambling site, which means the future is shifting towards the regulated market.

Even then, the illegal gambling operators are still sapping the industry from achieving its full potential. For example, legal gambling operators in 2021 paid only $11.7bn in state taxes, the report argues. The American Gaming Association also claims that illegal operations cost it $44.2 billion in annual revenue. AGA CEO and President Bill Miller has spared no criticism of what he has long called "a scourge" in American society, referring to the unregulated and illegal gambling sector.

Miller has insisted over the years that because of those operators, the US economy is deprived of valuable tax dollars that could otherwise go to help fund infrastructure, pensions, education, and more. Not least, illegal operators are often predatory in nature, and they have no concern for consumer well-being. He added:

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

The American Gaming Association proceeded to offer a detailed breakdown of each segment and the impact illegal gambling had on it. Americans wagered $63.8bn on illegal bookmakers, the report said, which is still not too bad, but it still accounts for 40% of the total sports betting market, the association argues. Consumers are projected to spend $100bn on the legal betting market this year, owing to events such as the FIFA World Cup in Qatar.

However, there is a clear shift towards the regulated market as noted before in the sportsbook segment. Things do look a little different when taking into consideration the iGaming sector where Americans gamble $337.9bn on offshore and illegal gambling websites. The loss to the state is $3.9bn, argues the report. This is somewhat understandable given that the US has been slower to move with iGaming legislation than it has been with sportsbooks.

The numbers for the sector are more worrying, as 48% of all Americans who have played a slot or table gameonline have done so at an illegal gambling site. Once again, the US is beginning to gain momentum in this vertical as well. A third important vertical that AGA noted was the so-called "skill machines" which continue to spread across the United States. Skill machines usually have a much higher yield for the person operating them than licensed and regulated gaming machines.

There are some 580,651 unregulated gambling machines as opposed to 870,000 slots in licensed casinos, which means that 40% of all gambling machines in the country are not currently licensed. AGA urges law enforcement, regulators, legal businesses, and lawmakers to come together and address the issue.

"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," the Association noted.

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