Bill Miller, CEO and President of the American Gaming Association (AGA), has called for all parts of the legal gaming industry to “work together” in the fight against illegal and unregulated operators.
Miller’s plea comes alongside a new AGA report revealing Americans are wagering an estimated $511bn a year on illegal sportsbooks, igaming websites, and unregulated machines.
In a study titled ‘Sizing the Illegal and Unregulated Gaming Markets in the US’, 5,284 US adults were surveyed and asked about their past-year gambling behaviors with both legal and illegal operators and their observations of unregulated gaming machines.
Conducted by The Innovation Group on behalf of the AGA, the report also utilized publicly available data on the size of the legal US gaming market and certain state gaming machine markets.
From its report, the AGA declared that the illegal wagering total of $510.9bn a year results in a $13.3bn loss in tax revenue for gaming participating states and a $44.2bn loss in annual revenue for the legal gaming industry.
“Illegal and unregulated gambling is a scourge on our society, taking advantage of vulnerable consumers, skirting regulatory obligations and robbing communities of critical tax revenue for infrastructure, education, and more,” commented Miller.
“We have always known that the illegal and unregulated market is expansive, but this report illuminates just how pervasive it is.”
Per vertical, the legal igaming industry is being affected the most by illegal operators in terms of handle, followed by unregulated machines, and sports betting. States, however, are losing out the most in taxes from unregulated machines, followed by igaming, and sports wagering.
For igaming, the AGA study estimates that illegal websites are taking $337.9bn in bets, resulting in a revenue loss of $13.5bn for legal operators, and a $3.9bn loss for states in taxes. The illegal igaming market is three times the size of the legal US igaming market, which is estimated to be $5bn in 2022.
The report also states that 48% of Americans have played slots or table games with an illegal online casino in the past year.
For unregulated gaming machines, the AGA study estimates that 580,651 unregulated machines are present in the US, making up 40% of all gaming machines when added to the 870,000 regulated machines in casinos and slot routes.
The association adds that, based on state regulatory data for similar machines, the operator win percentage on unregulated gambling machines is “significantly higher” than on legal casino slot machines. Nevada’s slot machines have had a 7.16% win rate in the past year compared to a 25% estimated win rate on unregulated machines.
For sports betting, the AGA study estimates that $63.8bn is wagered a year with illegal and offshore sportsbooks, resulting in a loss of $3.8bn in gaming revenue for legal operators, and $700m in taxes for states.
Taking into account the $100bn in legal sports bets projected for this year, illegal sportsbooks are covering nearly 40% of the US sports betting market. The report revealed that 49% of sports bettors have placed a wager with an illegal operator over the past year.
The AGA CEO has called on all parts of the legal gaming industry to come together to help stomp out the illegal and unregulated gambling market.
Miller added: “All stakeholders—policymakers, law enforcement, regulators, legal businesses—must work together to root out the illegal and unregulated gambling market.
“This is a fight we’re in for the long haul to protect consumers, support communities, and defend the law-abiding members of our industry.”
