Black Market Gambling in the US Keeps Growing

The American Gaming Association (AGA) has released its latest report on the US gambling black market, revealing that Americans wager an estimated $673.6 billion annually through unregulated channels—an increase of 22% since 2022. While this overall growth underscores the persistent appeal of illegal gambling, the report notes a decline in the illegal market’s share of both iGaming and sports betting, signaling some gains for the regulated sector.

According to the report, the unregulated market now represents just over one-third (31.9%) of the total US gambling market. Illegal operators generate approximately $53.9 billion in annual revenue, resulting in a substantial loss of $15.3 billion in potential state gaming tax revenue. The figures highlight both the scale of the problem and the economic impact of illicit gambling on local and state governments.

• Scale of the Black Market: Americans wager an estimated $673.6 billion annually through illegal gambling channels, resulting in $53.9 billion in revenue and $15.3 billion in lost state gaming tax revenue.

• iGaming and Sports Betting Trends: While the overall black market has grown, illegal iGaming and sports betting market shares have declined. iGaming revenue rose 38% since 2022, and sports betting black market share dropped from 36% to 24%.

• Land-Based Gambling and Machines: Illegal land-based gaming generates $30.3 billion in revenue, with unregulated gaming machines increasing 7.7% since 2022 and causing $9.5 billion in lost tax revenue, highlighting ongoing regulatory and enforcement challenges.

iGaming: Illegal Market Dominates Online Gambling

Online gambling remains the largest segment of the US black market, with Americans estimated to wager $466.2 billion annually on online slots and table games through illegal platforms. This segment produces roughly $18.6 billion in revenue—a 38% increase from 2022—and contributes to an estimated $4.8 billion in lost tax revenue. The increase in revenue suggests that while the share of illegal players may have declined relative to legal operators, the absolute size of the black market continues to grow.

Consumer behavior has shifted noticeably over the past three years. The share of players using only legal iGaming sites dropped from 52% in 2022 to 24% in 2025. Conversely, the proportion of players accessing both legal and illegal platforms has tripled, reaching 49%. These patterns indicate a growing overlap between regulated and unregulated play, raising questions about player trust, accessibility, and the effectiveness of current regulatory frameworks in encouraging fully legal participation.

The illegal land-based gambling sector, while smaller in handle than iGaming, still accounts for a significant share of revenue. Estimated annual wagers reach $123.4 billion, generating $30.3 billion in revenue. Corresponding losses in state tax revenue are estimated at $9.5 billion, making land-based illegal gaming the costliest sector in terms of public revenue impact. A major contributor to these losses is the proliferation of unregulated gaming machines. The report identifies more than 625,000 machines now operating nationwide, a 7.7% increase since 2022. These devices alone generate $30.3 billion annually, illustrating the significant financial and regulatory challenges that illegal machines pose for state authorities and the broader gaming industry.

Sports Betting: Signs of Improvement

Sports betting shows the most positive trends among the three major gambling sectors. The report estimates that annual illegal betting handle stands at $84 billion, producing $5 billion in revenue and $1 billion in lost state tax revenue. Importantly, the black market share of sports betting has declined from 36% in 2022 to 24% in 2025, reflecting the growth of legal, regulated sportsbooks in many states.

Nevertheless, one in ten US sports bettors continues to wager exclusively through illegal operators. This indicates that while regulatory efforts and legal market expansion are effective to some degree, a substantial portion of consumers remain outside the legal framework. The findings suggest a continuing need for targeted enforcement, public education, and robust consumer protections to shift more players toward regulated channels.

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.

Industry Response and Broader Implications

AGA President and CEO Bill Miller emphasized the broader economic and social risks posed by illegal gambling. “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,” Miller said. He called for a national crackdown on the illicit sector, as well as continued international cooperation to shut down offshore operators and hold them accountable.

The AGA’s report underscores a persistent tension in the US gambling landscape. While legal markets are expanding and regulatory oversight is strengthening, the sheer size and growth of the black market highlight the challenges of enforcement and the importance of consumer awareness. In May 2025, the AGA reported total US commercial gaming revenue for FY 2024 at $72 billion, illustrating the relative scale of the legal sector but also the ongoing gap between regulated revenue and the much larger illicit market.

Overall, the report suggests that while progress is being made in curbing illegal iGaming and sports betting, the broader black market remains robust, with substantial economic and regulatory implications. Addressing these challenges will require a combination of enforcement, legislation, and public engagement to shift consumers toward legal and safer gambling options.