Illegal gambling in US surges to $9.5bn in three states

The Campaign For Fairer Gambling and Yield Sec are finally trying to put their thumb on understanding the size of the illegal gambling market in the United States a bit better, tapping into vast data sets from 2023.

Although the American Gaming Association has already confirmed that the size of the offshore gambling market remains substantial, but has been diminishing at a good clip, and some regulators, including Michigan Gaming Control Board, now have offshore gambling sites in their visors, the black market remains an issue and a challenge to regulated gambling companies who are facing tax hikes and restrictions.

Illegal gambling operators need not worry about tax

Think of the 51% sports betting tax in New York and the newly proposed and most likely-to-be-enforced 40% on tax betting in Illinois, to speak nothing of the 51% slot tax on slots in Pennsylvania. The black market seldom has to worry about such matters operating from tax havens.

The CFG and YS have pinpointed the exact value of the black market at $9.5bn in only three states surveyed, throughout 2023 to name:

• New York
• Minnesota
• New Jersey

This sum is a quarter of the $40.92bn of illegal gross gaming revenue across the online gambling market in the United States, according to the CFG and YS. The report, USA Report Two, also further breaks down how much of the total gross gaming revenue goes into illegal operators:

• New York - $3.4bn goes to illegal online casino gaming, $1.9bn goes to illegal online sports betting
• New Jersey - $996m goes to illegal online sports betting, $719m goes to illegal online casino gaming
• Minnesota - $929m goes to illegal online sports betting, $1.5bn goes to illegal online casino gambling

The two companies are monitoring the split between legal and illegal operators on a state basis, with their latest efforts focusing exclusively on three states to help highlight the issue and what needs to be done to address it, in a bid to help galvanize action.

800 illegal operators dominate US gambling

CFG Founder Derek Webb is confident, however, that there is more work to be done to address the problem. Webb is less optimistic than AGA’s CEO, Bill Miller, and argues that the dominance of illegal online gambling operators is in fact unchecked.

"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 said, talking about some of the challenges the sector presently faces.

There is a way forward, however, for the industry to come together and fight back.

One of the things that can be done immediately is for lawmakers to make use of the data that CFG and YS have put together to help inform decisions on regulation and how to actually tackle the outstanding matter with illegal gambling in the country, at a time when regulated operators are launching in droves, but still remain on the back foot in certain areas because of unfair competition.

YS CEO and Founder Ismail Vali was similarly determined to leverage data and analysis to expose what he has described as a "stark reality" wherein the offshore gambling market remains empowered beyond what is considered reasonable.

Vali did not hesitate to call out illegal gambling operators as "thieves" who "brazenly steal money from state and federal coffers."

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