Yield Sec, a consultancy firm based in Denver, published a study showing that unregulated online gambling accounts for 74% of the gambling industry in the US.
In total, US gamblers lost $91 billion in 2024. Of this, $67 billion was in unregulated markets. The study included sweepstakes casinos and prediction markets as illegal gambling.
These markets have become increasingly widespread and can operate in a legal gray area in all states.
The report read, “For Americans, illegal gambling brands have become the homes of choice and convenience, and existed far in advance of legal online betting and gaming options.”
High growth in online gambling
The report showed there was high growth both in legal online gaming and unregulated markets. In 2023, the industry generated $57.8 billion in revenue. The increase to $90.1 billion is up 56%.
Rhode Island became the latest state to legalize iGaming last year. This contributed to 36% in growth of regulated online gambling.
However, unregulated markets grew at a much larger rate of 64%. Even in states with legal online gambling, Yield Sec showed that unlicensed operators were thriving.
For example, in Ohio, unregulated sportsbooks generated $1.5 billion in revenue. This was more than the legal sports betting sector at just under $900 million.
The authors put this down to unregulated online sportsbooks offering better odds and promotions to attract players. Ohio was one of the states to issue prediction market operators, Kalshi, Crypto.com, and Robinhood, cease-and-desist letters last week.
Legalization expands the total market
Rather than legalization driving out illegal operators, the report said the opposite is true. They cited New Jersey figures as proof that legal online gambling dramatically increases the market.
“The New Jersey revenue per capita of $654 is several times greater than the California revenue per capita of $141, dramatically confirming the reality that legalization expands the total market. New Jersey illegal casino at $169 exceeds California illegal sports and casino combined.”
Generally, however, legal sectors generate more money than illegal sectors. For example, in New Jersey $2 billion was generated by legal online casinos compared to $1.5 billion by uncliensed casinos.
A call for action
The report concluded by urging regulators to step up efforts to tackle illegal online gambling.
“State legalization without a gameplan to counter the illegals has been an unmitigated disaster. The Commodity Futures Trading Commission (CFTC) plans holding a roundtable on the subject of sports prediction markets. The CFTC must support federal action against illegal prediction markets and against illegal internet gambling.”
A Nevada judge ruled in favor of Kalshi this week, but the CFTC roundtable will take place on April 30th.
Explore more articles like this
Subscribe to the Markets Outlook newsletter
Get critical insights to spot investment opportunities, mitigate risks, and refine your trading strategies. Delivered every Monday
Cointelegraph is a free to read website, by purchasing a product through affiliate links in our content, we may earn a commission at no extra cost for our readers. Which will allow us to finance our operations and continue with our research work for our readers. We ensure all recommendations go through in-depth editorial checks to maintain accuracy and quality. You can learn more about this on Content Guidelines and How We Rate pages.
