American Gaming Association Uncovers Illegal Gambling Surge in U.S.

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American Gaming Association Uncovers Illegal Gambling Surge in U.S.

Originally posted on Action Network | By Dave Grendzynski | Last updated Aug 14, 2025 8:46 AM ET

Despite the growing legalization of gambling across the country, it appears many Americans still like to try their luck illegally.

The American Gaming Association’s (AGA) analysis finds illegal gambling is a massive and growing problem in the U.S., with the latest research revealing that Americans wager nearly $674 billion annually with illegal and unregulated gambling operators.

This represents nearly one-third (31.9%) of the entire U.S. gambling market, despite a parallel expansion of the legal, regulated gaming industry over the past decade.

“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 on the pervasive illegal market that is draining state coffers and putting people at risk,” said Bill Miller, AGA President and CEO.

The American Gaming Association has a strong track record of tracking trends in the gaming industry, including revenue.

What is Illegal Gambling?

This report defines the “illegal and unregulated market” as bets placed by U.S. residents with operators that do not possess a U.S. gaming license, regardless of whether these operators are authorized to conduct business outside the U.S.

This includes sports bets placed with bookies and unlicensed online operators, wagers on unlicensed online slots and table games, and bets on “skill games” in states where they are not regulated.

The estimates in this report do not cover other illegal or disputed forms of gambling, such as underground casinos or illegal dog fighting, nor do they include sweepstakes gambling sites or prediction markets.

Key Findings By The American Gaming Association

The research uncovered the wide range and impact that is being tied to illegal gambling. Here’s a breakdown:

Scope of Illegal Gambling:

Illegal and unregulated operators include offshore online casinos, unlicensed sports betting platforms, and unregulated “skill” gaming machines found in bars, restaurants, convenience stores, and other venues.
These operators avoid taxes, licensing requirements, and consumer protection regulations, putting gamblers at increased risk of fraud and abuse.

Economic Impact:

Illegal gambling generates nearly $54 billion in annual revenue for criminal enterprises.
State governments lose over $15 billion in potential tax revenue annually, funds that could be used for education, public safety, infrastructure, and responsible gambling programs.
The legal gaming industry misses out on an estimated $54 billion in annual revenue due to illegal market diversion.

Breakdown by Segment:

Source: American Gaming Association (AGA)

There are over 625,000 unregulated gaming machines in operation nationwide (roughly 40% of all U.S. gaming machines).

Risks to Consumers

Poor consumer protections: Illegal and unregulated sites offer few or no safeguards against fraud or cheating.
Increased likelihood of problem gambling: Lack of responsible gaming obligations puts vulnerable players at greater risk.
Public safety threats: Unregulated machines are attractive conduits for money laundering and other criminal activity.
Tax loss: Funds that could support schools, infrastructure, or gambling addiction prevention are diverted to criminal enterprises.

Illegal Online Casino Top List of Major Trends and Concerns

Illegal online casino (iGaming) play has surged, with revenue up nearly 38% since 2022.

The percentage of players using only legal online casino sites has plummeted from 52% in 2022 to just 24% in 2025, while those splitting play between legal and illegal platforms nearly tripled to 49%.

Source: American Gaming Association

Illegal sports betting remains significant, but its share of the total market is declining—now 24% (down from 36% in 2022) of all U.S. sports betting.

Unregulated physical “skill” machines have become one of the fastest-growing threats, taking in billions of dollars in wagers annually and often operating in plain sight

AGA Response and Policy Recommendations

In response to the findings, the AGA is calling for several changes, including:

Stronger law enforcement against illegal operators.
International cooperation to target offshore betting.
Modernization and enforcement of U.S. gambling laws.

The AGA would also like to see increased consumer education about the risks and dangers posed by illegal gambling sites.

Despite the growing legal gambling market, the AGA’s analysis highlights that illegal and unregulated gaming remains a persistent, large-scale problem. U.S. gamblers—whether knowingly or not—are fueling a vast underground economy that drains public resources and endangers consumers while benefiting criminal operators.

Play Legal Online Casino Games

You can play legal online casino games by using websites that are licensed and regulated by the gaming authority in your state or country. Start by checking the website’s homepage for licensing information, usually listed at the bottom of the page.

Many legal online casinos will also have a seal of approval from a recognized regulatory body.

To ensure you’re playing legally, you can also visit your local gaming authority’s website for a list of approved online casino operators. Always make sure the site uses secure connections and offers customer support to resolve any issues you might encounter.

You’ll also find that many legal online casinos will offer bonus codes and free spins to help new customers get started. You can also check sites like Vegas Insider for guidance on where to find the best legal casinos in the U.S.

But remember, if you do decide to try your luck, always exhibit responsible gambling habits.

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