Depending on whose methodology you trust, the US black market for gambling generates somewhere between $53.9 billion and $97.4 billion a year in revenue — a gap of more than $40 billion between the industry’s own trade group and an outside research firm.
The American Gaming Association’s own research finds that Americans wager a total $673.6 billion annually with illegal and unregulated gambling operators.
That handle figure, and the revenue estimates built on top of it, is the most-cited data point in the debate, but it is not the only one, and the two main camps disagree about both the size of the problem and the direction it is moving.
Key takeaways
- The AGA’s 2025 study puts illegal and unregulated US gambling handle at $673.6 billion, generating an estimated $53.9 billion in revenue and $15.3 billion in lost state tax revenue.
- Illegal iGaming is the fastest-growing segment the AGA tracks, up roughly 38% since 2022, while unregulated “skill” machines now number more than 625,000 nationwide.
- A competing estimate from Gaming Compliance International puts unlicensed online gambling revenue alone at $97.4 billion for 2025 — nearly four times the AGA’s comparable figure — underscoring how unsettled the measurement science still is.
- Both the legal and illegal markets are growing simultaneously: US commercial gaming revenue hit a record $71.9 billion in 2024, even as offshore operators expanded alongside it.
- State attorneys general and the Department of Justice have escalated enforcement since mid-2025, but offshore operators’ reliance on crypto payments and non-US banking rails limits how effective takedowns can be.
Table of contents
Why the black market is a moving target
“Illegal gambling” in the US is not one market; it is at least three overlapping ones, and the boundaries keep shifting. Offshore sportsbooks and casino sites operate from jurisdictions like Costa Rica, Panama, and Curaçao, openly accepting US customers despite having no state license. Unregulated “skill” machines sit in bars, convenience stores, and gas stations in a legal gray zone that varies by state and is frequently litigated. And prediction markets such as Kalshi and Polymarket occupy a newer, contested category: federally regulated derivatives platforms that functionally let users bet on sports outcomes in states where traditional sports betting is restricted or unavailable.
That last category matters for sizing the market because it blurs the line between “illegal” and merely “unregulated by state gaming law.”
The AGA argues that prediction markets are effectively creating a national sports-betting market in jurisdictions where traditional sports betting remains illegal or tightly regulated, though it is careful to note that this does not mean prediction markets caused the broader illegal market’s growth.
Any estimate of the black market’s size has to make judgment calls about which of these categories to include, which is one reason the headline numbers vary so much between research houses.
The AGA’s headline numbers
The AGA’s most recent analysis, published in August 2025, finds that Americans wager a total $673.6 billion annually with illegal and unregulated gambling operators, diverting activity away from licensed operators and denying communities critical resources that fund infrastructure, education, and public safety.
The report finds that the unregulated sector now generates $53.9 billion in revenue annually, costing states an estimated $15.3 billion in lost tax revenue.
As the AGA put it in its own report, “nearly one-third of all gaming revenue each year is captured by operators explicitly breaking the law or exploiting regulatory gaps.”
That $673.6 billion handle figure represents growth of 22% since the AGA’s last comparable report in 2022.
For context on how fast the number has moved, the AGA’s 2023 report (covering 2022 activity) put total illegal wagering at a lower baseline:
Americans gambled an estimated $511 billion each year with illegal and unregulated sportsbooks, iGaming websites and so-called “skill games,” according to that earlier report.
The jump between the two surveys is one of the clearest signals in the data, even allowing for methodology changes between reports.
The three segments driving the estimate
The AGA’s model breaks the market into three categories, each with a distinct growth story.
| Segment | Annual handle/scale | Estimated revenue | Lost state tax revenue |
|---|---|---|---|
| Illegal sports betting (offshore books, bookies) | $84 billion wagered | $5 billion | $1 billion |
| Illegal iGaming (offshore online slots/table games) | Not separately disclosed | $18.6 billion, up nearly 38% since 2022 | Included in totals |
| Unregulated “skill” machines | More than 625,000 machines, a 7.7% increase since 2022 | $30.3 billion | $9.5 billion |
Two trends stand out. First, illegal sports betting’s share of the overall sports betting market has shrunk even as the state-by-state legalization wave advances:
while legal sports betting has cut the black market’s share from 36% to 24%, illicit operators remain active.
That is a genuine win for channelization. Second, the categories without that competitive pressure — iGaming and skill machines — are growing faster, because fewer states have legalized online casino games, leaving a bigger gap for unlicensed operators to fill. For comparison, our analysis of North America’s projected 11.5% CAGR shows the legal market expanding quickly too — the two trends are not mutually exclusive.
The measurement dispute: AGA vs. independent estimates
The AGA is not an independent regulator; it is the trade association for licensed US casino and sportsbook operators, which gives it an obvious interest in making the illegal market look large and urgent. Its figures are nonetheless the most frequently cited in the industry, and they are not the only ones in circulation. A rival estimate from Gaming Compliance International (GCI), commissioned for the Campaign for Fairer Gambling using traffic-modeling firm Yield Sec’s data, arrives at a radically different number for the online-only portion of the market.
A GCI report puts US unlicensed online gambling revenue at $97.4 billion for 2025 — four times the licensed industry’s own estimate.
GCI’s framing has regulated online gambling growing 23%, from $23 billion to $28.3 billion, leaving unlicensed sites with 77% of a $125.6 billion total online market.
That is a dramatically different picture from the AGA’s, which has illegal and unregulated activity (across all verticals, including land-based skill machines) at roughly 32% of the total gaming market rather than 77% of the online segment alone.
The year-over-year trend from GCI is also striking.
A previous estimate by the same company put the illegal gambling market at $67.1 billion a year prior, meaning the GCI-estimated illegal market grew by roughly 45% year over year.
That is roughly double the AGA’s 22% growth rate for its broader basket of illegal activity over a three-year window, which illustrates just how far apart these two research traditions have drifted.
Why the estimates diverge so sharply
The gap comes down to methodology, not just intent.
The AGA’s report was conducted by The Innovation Group, surveying 2,454 US adults about their gambling habits and observations of unregulated machines, supplemented with publicly available data on the legal gaming market.
That is a self-reported survey approach, which tends to undercount activity respondents are reluctant to admit to (illegal betting) or unaware of (machine operators skimming revenue). GCI’s approach is different and, by its own description, less transparent:
it is a commissioned estimate built from traffic modeling, not independently audited.
Traffic modeling can capture activity surveys miss, such as casual visits to offshore sites that never convert into a self-reported “I gambled illegally” answer, but it is also vulnerable to overcounting bounce traffic, bots, and window-shopping that never becomes a real wager.
Neither method has been validated against hard transaction data, because by definition no regulator has subpoena power over a Curaçao-licensed sportsbook’s ledgers. The honest takeaway is that the true figure is unknown and probably unknowable with precision; what both data sets agree on is direction — the illegal market is large, it is growing, and iGaming is its fastest-expanding component.
Context: the legal market is growing too
It is worth stressing that none of this is a story of the legal industry losing ground in absolute terms.
US commercial gaming revenue reached an annual record of $71.92 billion in 2024, surpassing 2023’s previous high of $66.5 billion by 7.5%, marking the industry’s fourth-straight record revenue year.
Online gaming specifically hit new highs too. Both the legal and illegal markets are expanding at the same time, drawing on a larger overall pool of American gambling demand rather than one simply cannibalizing the other. That pattern echoes what we found in our review of North America’s projected growth rate and contrasts with the more mature, consolidated picture described in our look at UK market stagnation under tighter regulation, where a longer-established licensing regime has had more time to squeeze out unlicensed supply.
The enforcement response
Pressure on offshore operators has intensified since mid-2025.
In August 2025, attorneys general from 50 US states and territories sent a joint letter to US Attorney General Pam Bondi asking the Department of Justice to shut down illegal gaming outlets, seize related assets, and block unlawful transactions.
The DOJ’s written response a month later acknowledged the scale of the problem without committing to a specific timeline:
the Department said it takes illegal offshore gaming operators and the related harm they perpetuate seriously, noting that these unlawful enterprises undermine the rule of law, threaten consumer protection, and deprive states of significant tax revenues.
Individual states have had more visible, if narrower, success acting on their own.
Massachusetts Attorney General Andrea Campbell sent cease-and-desist letters to offshore operators BetOnline.ag and SportsBetting.ag, telling the companies they needed to stop all in-state transactions.
The Michigan Gaming Control Board sent a cease-and-desist letter to Curaçao-based Duranbah Limited NV, operator of MyBookie.ag, which offers both illegal online casino and Michigan sports betting products.
Tennessee’s Sports Wagering Council has gone further still, pairing fines with forced exits:
the council fined five offshore sportsbooks $50,000 each, including BetAnySports, Bookmaker, JazzSports, BetOnline, and Everygame, demonstrating its commitment to scrutinizing these operators,
and
that action followed Tennessee forcing sweepstakes platform Legendz to shut down in April 2025, as well as offshore sportsbook Bovada in November 2024.
Federal criminal cases remain rarer but do happen.
The DOJ’s newly formed National Fraud Enforcement Division secured an early win by prosecuting a California resident who ran illegal sports betting services out of Costa Rica.
He was ordered by a federal judge to pay more than $1.3 million in restitution and a $150,000 fine, plus interest,
on top of a prison sentence. Cases like this are useful deterrents but don’t scale to an industry estimated in the tens of billions, partly because
offshore gambling sites rely more heavily on cryptocurrency processing, and an entire cottage industry of crypto gambling sites has emerged as a result, limiting the leverage US banking regulators can apply.
Frequently asked questions
Why do illegal gambling market estimates vary so much?
Different research methods capture different things. Survey-based estimates like the AGA’s rely on respondents’ self-reported behavior and tend toward conservatism, while traffic-modeling estimates like GCI’s can capture more activity but are harder to verify independently. No public agency audits offshore operators’ books, so every figure in circulation is an estimate, not a measured fact.
Is the illegal market growing because of weak enforcement?
Enforcement gaps are one factor, but regulatory gaps matter more. Illegal sports betting’s market share has fallen as more states legalize betting, while illegal iGaming and unregulated skill machines are growing fastest precisely where legal alternatives remain limited or banned outright.
Do prediction markets count as illegal gambling?
Not under current federal classification — platforms like Kalshi operate as federally regulated derivatives exchanges, not state-licensed sportsbooks. Their legal status is being actively litigated, and the AGA treats them as a related but distinct phenomenon rather than folding them into its illegal-market totals.
What risks do offshore sites carry for individual bettors?
Offshore operators are not bound by US consumer-protection rules: no mandated age verification, no responsible-gambling tools, no dispute-resolution process, and no guarantee that winnings will be paid out. Players have no regulator to appeal to if a site disappears with their balance.
How GamblScout.com tracks this topic
For regional and regulatory deep dives like this one, our algorithm cross-references figures published by government bodies, listed-company filings, and established research houses rather than relying on any single trade group’s framing, flagging where estimates diverge materially so readers can see the range rather than one cherry-picked number. For background on how we weigh operator-level signals versus macro market data, see our hub on the macro economics of iGaming and our explanation of our data-scraping methodology. This article sits within our broader regional deep dives and global split coverage.
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