Though legalized forms of gambling continue to expand across the United States, illegal gambling is still a prevalent issue.
The American Gaming Association released a report last week that stated Americans gamble nearly $511 billion each year by illegal means.
Whether through unregulated sportsbooks, iGaming websites or illegal machines, these forms of gambling are impacting governments, which are missing out on more $13 billion in tax funds.
The Michigan Gaming Control Board has put an emphasis on stopping illegal gambling in 2022. Particularly when it comes to illegal machines.
What the AGA report says about illegal gambling
In the AGA’s latest report, titled Sizing the Illegal and Unregulated Gaming Markets in the U.S., it estimates that $510.9 billion per year is wagered with illegal and unregulated operators.
The AGA estimates that is costing the legal industry across the country $44.2 billion in gaming revenue. It’s also taking away $13.3 billion in potential tax revenue.
The AGA breaks up the unregulated markets into sports betting, online slots and table games, and unregulated machines.
Below you can see how each category factors into the $510.9 billion total.
What constitutes illegal gambling?
Illegal gambling consists of wagering with sportsbooks or casinos that are not regulated by a governing body in the United States. That can include illegal bookies or offshore sites.
Unregulated machines or “skill machines” are unlicensed. The operator win percentage is often significantly higher than legal casino slot machines.
In all cases, the unregulated operators are not bound by laws of the state. They also don’t pay a dime in taxes.
It also means that consumers have no method to resolve disputes with the illegal operators and suppliers of illegal gaming machines.
MGCB focused on stopping illegal machines
In 2022, the MGCB has put an added emphasis on cracking down on illegal gambling machines.
The MGCB has identified that these illegal machines in communities make them more prone to more serious criminal activities. A fact sheet has been made available by the MGCB to help consumers better identify illegal machines.
“Illegal gambling machine operations bring unwanted crime to communities across Michigan and deprive school districts of gaming tax revenue from the state to support education,” MGCB Executive Director Henry Williams previously stated. “The MGCB works to educate citizens and businesses about illegal gambling and to support state and local officials’ efforts to remove machines used illegally.”
The AGA estimates that 580,651 unregulated machines exist in the U.S. currently. With 870,000 regulated machines in operation, the illegal machines account for 40% of all gamine machines in the country.
In the past year, the MGCB has helped local law enforcement with the seizure of more than 350 illegal machines. A total of 17 individuals have received criminal convictions based on state investigations into their use of illegal gaming machines.
“The Michigan Gaming Control Board this year has conducted a statewide public education and enforcement initiative to encourage businesses to remove unregulated machines used for illegal gaming,” said Mary Kay Bean, Communications Specialist for the MGCB. “The MGCB believes the work to eliminate the illegal use of gaming machines is an important part of our mission to ensure fair and honest gaming for Michigan citizens.”
The MGCB encourages Michigan citizens to report suspicious or illegal gambling activity. You can do so by calling its 24-hour anonymous tip line at (888) 314-2682.
Illegal gambling accounts for 40% of sports betting market
The AGA estimates that illegal sportsbook operations are making up nearly 40% of the US sports betting market right now. Current projections call for the U.S. to have $100 billion in legal sports bets in 2022.
The report also indicates that 49% of sports bettors have placed a bet with an illegal operator in the past year.
Online sports betting has become a wide-ranging legal activity in the United States. The same can’t be said for iGaming.
Only six states in the U.S. have legalized online casinos, with Michigan being one.
The AGA estimates that $337.9 billion has been wagered in the U.S. with illegal iGaming websites. That equates to roughly $13.5 billion in lost revenue. That is nearly three times the size of the legal U.S. iGaming market ($5 billion) in 2022.
The AGA also believes that 48% of Americans that have played online slots or tables games in the past year have done so illegally.
