IAGA SUMMIT FOCUS: GREY/ILLEGAL MARKET OVERVIEW
Since the end of the federal ban on sports betting in 2018, the expansion of legal gaming in the U.S. has been nothing short of prolific. Not only is sports betting now legal in 37 states and Washington, D.C., but iGaming is live in seven states and casino gaming has expanded to new markets in Nebraska and Virginia.
In turn, consumers have benefited from safer, regulated gaming options, states have gained important tax revenue—to the tune of $13.5 billion in 2022—and the legal industry has thrived with two consecutive years of record revenue.
Nevertheless, illegal gambling operators continue to be pervasive across the country. Not only does this threaten the legal industry, but it also endangers consumers and costs states billions of dollars in taxes.
While the legal industry is invested in combatting the illegal market, it will take the combined power of all stakeholders—from policymakers and media to regulators and law enforcement—to effectively combat these bad actors.
Last year, the American Gaming Association (AGA) launched a renewed effort to stamp out illegal gambling by demonstrating the scope of the problem, communicating the dangers of illegal gambling, and convening stakeholders around policy and enforcement solutions.
Sizing the Problem
According to AGA estimates, illegal gambling is a $511 billion market in the U.S. today, including offshore websites, bookies and unregulated gambling machines found in convenience stores, bars and illegal slot parlors across the country. Tis economic activity siphons more than $44 billion in business from legal operators annually and robs states of more than $13 billion in taxes each year.
To put these figures in perspective: l
At $13.5 billion in annual revenue, online casino gaming with offshore websites makes up the largest share of the illegal market and is nearly three times the size of the $5 billion legal iGaming market.
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With an estimated 580,651 unregulated machines across the country, 40 percent of all gaming machines in the U.S. are unlicensed.
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Promisingly, the expansion of legal sports betting in the past five year has cut into the illegal sports betting market by 60 percent, which was estimated at $150 billion pre-2018. A good start, yet still not enough.
Why it Matters
Beyond the economic implications for states and the legal gaming industry, illegal gambling most of all harms consumers and communities.
P54 WIRE / PULSE / INSIGHT / REPORTS
Whether playing with an offshore site or with unregulated machines, illegal gambling operators provide consumers with no responsible gaming tools or consumer protections like guaranteed payouts. Tis is in stark contrast to the legal U.S. industry, which invests hundreds of millions of dollars each year in limit setting and self-exclusion tools, consumer education, responsible gaming research, and problem gambling resource funding.
What’s worse is that many consumers are unaware they are being taken advantage of by these illegal operators. Unregulated gaming machines are designed to look and feel like legal slot machines, yet boast a win rate significantly higher than regulated machines. And when it comes to illegal sports betting sites, recent AGA research shows that 70 percent bettors who placed most of their bets with illegal operators believed they were betting either exclusively with legal sportsbooks or splitting their bets evenly between legal and illegal operators.
Moreover, all forms of illegal gambling operations are frequently tied to additional organized crime, including drugs, weapons, money laundering and even human trafficking— putting communities at risk.
What We Can Do
Making significant progress against illegal operators will take a concerted effort from all stakeholders, and the AGA is working to make eliminating illegal gambling a priority at the state and national level. And we’re making progress.
Recently, Kentucky legislators successfully banned unregulated “skill” machines across the state. Local law enforcement is increasingly raiding illegal gambling sites across the country, and the spread of illegal gambling machines is gaining increased media attention in national and local outlets.
In March, state regulators in Nevada, New Jersey, Colorado, Michigan, Illinois, Louisiana and Mississippi sent a letter to the U.S. Department of Justice (DoJ) urging action against offshore gambling sites. And last year, 28 U.S. House lawmakers, led by Congressional Gaming Caucus Co-Chairs Rep. Guy Reschenthaler (PA-14) and Rep. Dina Titus (NV-01), called for similar action from the DoJ. Media outlets are beginning to pay increased attention to the problem as well.
As the legal gaming industry, we must all continue to educate policymakers, regulators, law enforcement, media and consumers both about the harms of these bad actors and how we can stop them. Together, this is a fight we can win.
Tis June, I look forward to speaking at the International Association of Gaming Advisors (IAGA) Annual Summit to further discuss how we can maintain this momentum against illegal gambling. I hope to see many of you there.
Bill Miller President and CEO American Gaming Association
Bill Miller is the President and CEO of the American Gaming Association (AGA), which represents the $261 billion U.S. casino industry. Since joining the AGA in 2019, Miller has elevated the association’s influence in Washington, advanced key industry priorities, and deepened member engagement.
Most notably, under Miller’s leadership, the AGA has navigated the gaming industry through the COVID-19 pandemic. He led the advocacy effort that united AGA members and the broader gaming industry, secured unprecedented federal relief and created a favorable policy landscape for gaming’s remarkable recovery.
He has advanced efforts to strengthen the gaming industry’s commitment to responsibility, build a sustainable legal sports betting market, accelerate casino payments modernization, diminish the illegal gambling market, and initiate industry-wide efforts on diversity and ESG issues. Miller has also reinvigorated the Global Gaming Expo, the gaming industry’s premier tradeshow.
Miller has more than three decades of experience on Capitol Hill and representing business interests in Washington, D.C. Prior to joining the AGA, Miller served as the top lobbyist at Business Roundtable, the association of chief executive officers of America’s leading companies. During his tenure, he led consequential lobbying efforts to pass the landmark 2017 tax reform legislation and usher in the United States- Mexico-Canada Agreement.
Miller also spent time as a partner at international corporate communications firm Brunswick, providing strategic counsel to several U.S. and international corporations. At the U.S. Chamber of Commerce, Miller served as senior vice president and national political director. Miller drove the Chamber’s political affairs and federal lobbying efforts for more than a decade, where he created a favorable policy environment for the U.S. business community to thrive. Early in his career, Miller served as chief of staff and campaign manager for Representative Constance A. Morella (MD-8), overseeing the Congresswoman’s legislative and political agenda.
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