Estimating the Scope of Illicit and Unregulated Gambling Markets, AGA Report

Driven by a sharp rise in illegal iGaming, expanding use of unregulated skill machines, and persistent illegal sports betting, the illegal market has grown 22% since the AGA’s last report in 2022. Growth in the legal market in recent years has kept the illegal market’s share of total U.S. gaming revenue largely steady — with illegal operators capturing smaller shares of sports betting and iGaming revenue — but illegal operators still account for nearly one-third (31.9%) of the total U.S. gaming market.

Unregulated “Skill” Machines

Unregulated machines continue to be one of the fastest-growing threats to legal gaming:

• Estimated Machines in Operation: 625,316
  (up 7.7% since 2022)
• Annual Revenue: $30.3 billion
• Tax Revenue Lost: $9.5 billion

Found in bars, restaurants, and convenience stores across the country, these machines operate without regulatory oversight—posing serious risks to consumers and diverting billions from public programs.

Illegal Sports Betting

Americans continue to wager heavily with illegal bookies and offshore sportsbooks:

• Annual Handle: $84 billion
• Revenue: $5 billion
• Tax Revenue Lost: $1 billion

Since 2022, the share of sports bettors exclusively using illegal sources has fallen by one-third, and illegal sportsbooks’ market share has dropped from 35% to 24%. Still, one in ten sports bettors wagers only through illegal channels.

Illegal iGaming

Illegal online slots and table games have surged:

• Annual Revenue: $18.6 Billion
  (up nearly 38% since 2022)
• Player Behavior Shifts: 
  • Share of players playing only on legal sites has dropped from 52% (2022) to just 24% today.
  • Share playing on both legal and illegal sites has nearly tripled to 49%.

Why It Matters

Illegal operators exploit communities without contributing to them—providing no consumer protections, no responsible gaming programs, and no economic return to the states where they operate. 

Methodology

The study was conducted by The Innovation Group on behalf of the American Gaming Association and is based largely on a survey of 5,284 U.S adults, examining their past-year gambling behaviors with both legal and illegal operators as well as their observations of unregulated gaming machines. It also incorporates publicly available data on the size of the legal U.S. gaming market and certain state gaming machine markets.