Illegal operators capture a third of all gambling revenue, according to study
By Kate Northrop
According to a report published by the American Gaming Association (AGA), Americans gamble an estimated $511 billion every year through unregulated sportsbooks and websites.
Last week, AGA released a report on money spent in the unregulated sports betting and gaming market, which found that Americans spend more than half a trillion dollars on illegal gambling each year.
The findings are based on a report conducted by The Innovation Group on behalf of AGA, which surveyed 5,284 U.S. adults about their gambling behaviors with both legal and illegal operators in the past year. The questionnaire also examined their interactions with unregulated gaming machines, and the study included publicly available information on the legal U.S. gaming market.
The types of illegal gambling investigated in the study were mainly sports betting (including Bookies and Offshore), online slots and table games, and unregulated "skill based" machines in bars, taverns, and other establishments.
Unregulated gambling is scrutinized for a few reasons, one being that some establishments do not adhere to laws, industry standards, and safeguards in place to protect consumers against fraud and unfair advantages that might be, unbeknownst to the player, working against them.
The other big reason for so many laws and regulations in place against illegal gambling is that state governments lose out on tax dollars collected on winnings and revenue from game sales.
In 2021, regulated gaming brought in $92 billion in combined commercial and tribal revenue. With Americans spending over $511 billion each year with illegal operators, the legal gaming industry is losing $44.2 billion in gaming revenue, one third of all gaming revenue generated in a year, as well as $13.3 billion in tax revenue.
"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," AGA President and CEO Bill Miller said. "We have always known that the illegal and unregulated market is expansive, but this report illuminates just how pervasive it is."
According to the report, there are roughly 870,000 regulated machines in casinos and slot routes but over 580,000 unregulated machines across the country. Americans bet more than $109 billion on illegal machines every year, with players often losing money on unregulated machines at three times the rate they would with regulated machines in Nevada, AGA says.
It will perhaps be the most interesting to see how consumers will interact with iGaming as states begin adapting to a digital age, seeing as how only six states currently offer it legally. Therefore, it may not come as a surprise that the study found that nearly half (48%) of Americans that have played online slots or table games in the past year have played through illegal online casinos.
The context behind the figures for sports betting may come off as a bit more concerning for players who believe that they are participating through a licensed operator. The report found that 49% of past-year sports bettors have placed a bet with an illegal operator, but a prior AGA study showed that over half of Americans that gamble through sports betting believe they are wagering legally, AGA said.
One more danger of illegal gambling practices, AGA argues, is that there is an increased risk of additional criminal activity being tied to these establishments, such as money laundering, drug trafficking and violent crime.
"All stakeholders — policymakers, law enforcement, regulators, legal businesses — must work together to root out the illegal and unregulated gambling market," Miller concluded. "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."
Call me what you want but I say GOOD.
The casinos are trying to get the IRS to raise the taxable limit from $1200 to $5K on slot winnings. Yet the debacle continues with lottery winnings taxed @ anything over $600. Makes a lot of sense doesn't it?
The US Government should abolish the 1962 law forbidding sports betting/lottery sales across state lines. IGT did win their case for sports betting though. Boat loads of cash for the US Treasury because folks are going to gamble be it legally or illegally and taxes lost.
Here we still have grey illegal slot machines and a big sticker on them says something to effect of 'Benefits the KY FOP. So the police are turning a blind eye to these and yes played them once myself.
What with Bidenflation the limit should be raised! Pretty soon that $500 will only get you a can of pop.
If they let me mail order tickets across state lines I would buy Massachusetts scratchers because they have the overall best instants while I would also get some from other states too.
I might also play online jackpot games from other states too.
I played illegal slots here once over 30 years ago. It was a 1910 fruit gum company 10 cent slot and it was in a government facility with the proceeds going to a government function. That was the only time I did it and I lost 70 or 80 cents.
As with you, the police were aware the machine was there and didn't bust it.
What the AGA president does not understand is that there are millions of gamblers across the country who couldn't care less about the rules, license or regulations. Their only concern is "does this website or machine payoff if I win?"
If the US would bring back the ball machine to all states, then people would believe in it being fair. The Lottery is rigged and isn't random. The US should go up on the winnings to 900 to 1. Then maybe people wouldn't gamble off shore.
As for lotteries do players want 500 to 1 for winning from a lottery or 600 to 1 from a bookie? Maybe if states raised payouts to 600 to 1 there would be less illegal activity. Considering inflation, the two dollar minimum price point for a lot of these jackpot games has got to go. Maybe a minimum one dollar price point for jackpot games and better odds would attract more players.
Some people prefer the convenience of being able to gamble without leaving the house. Gas is too expensive to run out just for a ticket. California needs to step up their game or more people will be playing online.
As legal gambling started spreading across the country, via tiverboat casinos at fitst, a lot of the opposition came from churches. Some churches were basing their stance on "money won ganbling is ill gotten gains" (Gomer Pyle), but the stiffest resistance came from Catholic churches, not based on moral turpitude but becuase they saw it as a threat to their bingo operations, especially churches in lesser populated places (where a lor of boats were) because they knew they were no longer going to be 'the only game in town.
The Kentucky pick 3 does pay $600 for $1, but players can't play on credit like they can with a bookie.
The AGA represents the legal gaming industry and is making an educated guess on the total amount of money wagered on all forms of illegal gambling. The pick 3 and/or policy game wagering is only a tiny part. Doubt your neighborhood bookie will book PB and MM wagers. In Nevada players can legally wager millions on just about every sporting event and over 20 other states allow online sports wagering. The restrictions are not "one size fits all" so they vary from state to state.
"over 580,000 unregulated machines across the country"
And while it's obvious those gambling machines take money from the lottery profits, even if lotteries offered regulated machines as competition, their machines would have much smaller payoffs and players would go back to unregulated machines.
"If the US would bring back the ball machine to all states"
PB and MM both have live ball drawings as do several other states lotteries. And because each state decides its lottery's rules and regulations, the US government can't "bring them back". How much of the estimated $511 trillion illegal gambling revenues effect states with RNG lottery drawings?
Mind you, this was 20+ years ago. I worked for an OTB. We checked with lawyers and Federal people, and placing a bet outside the US was very legit. We couldn't take any bets inside the United States. I feel they are lying because they don't get tax revenue from this. Unless laws have changed, which I doubt, betting off US soil is not illegal. Just because of the I.R.S. not getting their taxes does not make it illegal.
Funny you mentioned Riverboat gambling. In nearby Indiana they used to charge patrons $5 to go on the boat as we called them. Then casinos paid the state versus patrons eventually. The reason for Riverboats was to appease the anti-gambling folks in Indiana.
Finally Indiana voted that stupid law out and allowed casinos to move inland, though not all have made this costly move. Most of us miss 'the boat' @ Caesars S. Indiana!
The only reason its an issue is because the Govt. is missing out on their extortion dollars. "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," AGA President and CEO Bill Miller said. Cities are ran like a business. Create your own revenue and stop trying to rob the citizens.
The reason the states went to riverboars was that at the time they thought any outside of Nevada casinos 9with some exceptions, such as places that already had gambling, (such as poker rooms in Montana ) they had to be on the water. In Vegas we heard a lot about casinos in Sault St Marie, MI pre-riverboats but who knows?)
In Illinois at first the 'entrance fee' was $5 or $10 on weekedays and $15 on weekends. To those of us who went to the boats from Las Vegas , Reno, and other NV casinos nothing seemed more ridiclous than for players to have to stand in line and wait to go on a cruise and have to pay a fee ro enter a casino and bet (think abot it).
At the boat in Massac County, IL (Metropolis) the casino was shating the entrance fees with the state of Illinois and the town of Metropolis. The Massac County said "What about us?"
Those in the know said way back when that it was all a ploy for thr boats ro become land based casinos.
As a side note, those who operate illegal game kinow rhar gmablers will alway find the action. A former FBI agent wrote a book about a guy he had arrested and they were both in the car and the arrested person told the agent, "see those two raindtops? You pick the one that you think will hit the bottom of the window first and we'll bet on it."
The FBI agent mentioned that they guys was a reallly nice guy (urnd out they got the wrong guy)and when he asked him why he would suggest such a bet the guy said, "I'm a gambler, agent, that's what I do."
"The casinos are trying to get the IRS to raise the taxable limit from $1200 to $5K on slot winnings. "
They're trying to change how often they have to report winnings to the IRS. All gambling winnings are taxable income. A higher reporting limit means there's no paper trail for the IRS to pursue you for tax evasion, but the casinos are only trying to reduce their paperwork.
"betting off US soil is not illegal. "
Betting from US soil (or water) is illegal. As long as you leave the US you can do pretty much anything ad the US has no say, but a phone or internet connection to a foreign country doesn't mean you've left the US.