Illegal Gambling US Market Hits $53.9 Billion, AGA Demands Crackdown

⏱ 3 min read

The illegal and unregulated US gambling market generated $53.9 billion in annual revenue while handling $673.6 billion in total wagers — equal to nearly one-third of the entire US gaming market — according to new analysis published by the American Gaming Association (AGA) this week. The illegal market has grown 22% since 2022, driven by surging illegal iGaming, an explosion in unregulated skill machines, and persistent offshore sports betting.

A separate report by Gaming Compliance International (GCI), covered by Forbes on August 10, 2026, put the US illegal online gambling figure alone at $97.4 billion in 2025 — up 45.2% year-on-year and larger than the entire legal US commercial gaming industry combined. Together, the two reports deliver the starkest picture yet of how severely illegal operators are eroding the legal market that states, operators, and bettors have spent two decades building.

---

The Numbers Behind the Illegal Market

The AGA's analysis, drawn from its State of the States 2026 research, frames the illegal market's scale in terms that should alarm both regulators and licensed operators. $15.3 billion in annual tax revenue is being denied to state governments — money that would fund infrastructure, education, problem-gambling programmes, and public safety. Illegal operators pay none of these costs while competing directly for the same players.

The GCI figure compounds the picture. Ismail Vali, GCI president, told Forbes that US illegal online gambling grew from $67.1 billion in 2024 to $97.4 billion in 2025 — a 45.2% surge in a single year. That figure, covering only online channels, already exceeds the AGA's own record for the entire legal commercial gaming industry ($78.62 billion in 2025).

---

Three Threats Driving Illegal Market Growth

The AGA's breakdown identifies three distinct and growing segments of the illegal market:

• Unregulated skill machines: More than 625,000 devices operating in bars, restaurants, and convenience stores across the US — a 7.7% increase since 2022. These machines generated $30.3 billion in revenue and cost states $9.5 billion in lost tax receipts. They are the single largest component of the illegal market.
• Illegal iGaming: The fastest-growing segment. Revenue reached $18.6 billion, a 38% increase since 2022, on a handle of $466.2 billion. Offshore platforms — accessible to players in all 50 states — account for the bulk of this activity.
• Illegal sports betting: Despite the post-Murphy v. NCAA expansion of legal sports betting to 38 states, illegal books still handled $84 billion in wagers and generated $5 billion in revenue — costing states $1 billion in lost taxes annually.

The AGA also found that only 24% of US bettors used exclusively legal platforms in 2025, down sharply from 52% in 2022. Legal expansion has not translated into a commensurate shift in player behaviour — a finding that undermines the core policy premise of post-PASPA legalization.

---

Legal vs. Illegal: A Market Comparison

Segment	Annual Revenue	Annual Handle	Lost State Tax	Growth Since 2022
Unregulated Skill Machines	$30.3B	N/A	$9.5B	+7.7%
Illegal iGaming	$18.6B	$466.2B	$4.8B est.	+38%
Illegal Sports Betting	$5.0B	$84.0B	$1.0B	N/A
Total Illegal Market	$53.9B	$673.6B	$15.3B	+22%
Legal US Commercial Gaming (AGA)	$78.6B	N/A	Fully taxed	Record high

---

What Comes Next: Enforcement and Policy

The AGA is pushing for a coordinated federal and state response. AGA President and CEO Bill Miller called for a "national crackdown", stating that illegal operators are "thriving at the expense of American consumers, siphoning billions in tax revenue from state governments." The AGA has confirmed that 50 state attorneys general have collectively urged the Department of Justice to target offshore operators.

At the state level, enforcement is already escalating — but unevenly. Florida, Michigan, Mississippi, and Tennessee have ramped up action against unregulated machines in 2026. Louisiana this month made sweepstakes casino operation a felony racketeering offence. But without federal coordination, each state act merely displaces activity rather than eliminating it.

• For licensed operators: the data provides ammunition for lobbying against the regulatory burden gap — they carry tax, compliance, and responsible-gambling costs that illegal competitors avoid entirely
• For bettors: the 76% who used some illegal platform in 2025 do so largely without the consumer protections, dispute resolution, or responsible-gambling tools that regulated sites must provide
• For states: the $15.3 billion tax gap is a policy failure that grows with each year iGaming expansion stalls — New York's refusal to legalise online casinos, for instance, directly fuels offshore migration

---

Sources

Primary sources consulted for this article, in order of authority.

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.

— Bill Miller, President & CEO, American Gaming Association · AGA Illegal Gaming Analysis, August 2026