Illegal iGaming Is a $67 Billion a Year Problem in the US

The Campaign for Fairer Gambling is out with a new study that suggests that nearly three-quarters of all iGambling in the US happens on grey or black market gambling sites, amounting to around $67 billion a year. Even more shocking, they estimate growth in illegal gambling rose at about twice the rate of legal gaming in 2024. 

They estimate the total addressable market in the US at somewhere near $90 billion, up 56% from last year. However, according to their research, illegal gambling has grown by about 64%, while the legal side of the equation only grew by 36%.

The Campaign for Fairer Gambling is in itself quite a story. Founded by Derek Webb, the UK poker player who invented the games three-card poker and the 21+3 side bet, and made a fortune not just selling Three Card Poker to Shuffle master, now Light and Wonder, but an even bigger fortune in subsequent lawsuits defending his patents. 

In the past decade, he has become one of the biggest donors to the Labour Party in Great Britain, but he and his Campaign for Fairer Gambling are probably best known across the pond for their successful campaign against the 100 Pounds a spin Fixed Odds Betting Terminal, or Fruit Machines, a bit more colloquially. 

He has drawn recent attention in England with his support of foundations attempting to raise taxes on gambling operators, restrict gambling advertising across the UK, and generally tighten the reins on the iGaming sector in general. Much of this is accomplished by writing large checks and hiring very well-connected and bright people to run these charitable organizations and think tanks.

One such hire was Matt Zarb-Cousin, a spokesperson and behind-the-scenes political operative. Matt was instrumental in reducing the max bet on FOBT to 2 Pounds a spin and is still very much the face of the Campaign for Fairer Gambling. 

In recent years, he and Derek have taken their tighter regulation and higher tax on the online casino industry advocacy to the United States. They regularly speak and promote more federal oversight of the burgeoning legal market and eradication of the gray and black market operators, which seem to be proliferating at an alarming rate.

This latest report on the US market was put together primarily with information gathered by Yield Sec, a well-known and respected technical intelligence platform that provides stakeholders with information about various online marketplaces worldwide, including, in this case, online gambling.  

They were able to identify over 900 separate illegal operators targeting US markets. Only seven states have legalized online casinos so far, though the number of legal online sportsbooks states is in the high 30s. Still, they could only identify about 95 legal operators in the entire country currently. 

They also noted that almost 90% of those searching the web for casino sites were presented with illegal gaming marketplaces from which to choose, indicating that Google and other search engines may play an integral part in some of the rapid growth in illegal offshore gambling. 

Yield Sec data seems to indicate that even in the largest legal iGaming states of New Jersey, Pennsylvania, and Michigan, only about half of all wagers take place on licensed and regulated online casinos and sportsbooks. They argue that until the states, or more likely the Federal government, are given the tools to go after these illegal operators, search engines, and advertising companies that promote “illegal” products, those numbers are unlikely to change or perhaps get even worse. 

The numbers in this report aren’t just eye-opening; they are outright alarming. If nearly 75% of all online gambling and sports wagering is on unregulated sites, costing this country more than $60 billion in revenue and tens of billions in taxes, that would seem to indicate that the current regulatory framework isn’t just flawed but failing. 

Black market overseas casinos remain the default choice for online iGaming for the vast majority of Americans. Without a broad framework of more legal options for US gamblers as well as a national response that includes stricter enforcement, tighter oversight of search engine results, and perhaps even a federal framework for online gambling, this shadow market will only continue to grow. Now is the time to act.