Illegal US Online Gambling Revenue Hits $97.4bn, Outpacing Legal Market

A report commissioned by the Campaign for Fairer Gambling estimates that unlicensed online gambling operators generated $97.4 billion in US revenue in 2025, growing at nearly twice the pace of the regulated sector and raising pointed questions about whether legalisation is containing or expanding overall market harm.

• Gaming Compliance International estimates illegal US online gambling revenue reached $97.4 billion in 2025, a 45.2% rise year-on-year, against 23% growth for the regulated market, which reached $28.3 billion
• Unlicensed sites and apps accounted for 77% of total US online gambling GGR in 2025, up from 74% the prior year, according to the report
• Combined regulated and unregulated online gambling losses rose 39.4% to $125.6 billion in 2025, from $90.1 billion in 2024
• States with both legal online sports betting and casino gaming recorded the highest loss ratios relative to income, suggesting legalisation has expanded the overall market rather than displacing illegal activity
• The findings follow the American Gaming Association's own data showing record US commercial gaming revenue of $78.7 billion in 2025, creating a contested picture of a market growing strongly on both its licensed and unlicensed sides

A Commissioned Report Sets a $97.4 Billion Figure at the Centre of the US Legalisation Debate

Illegal online gambling revenue in the United States reached $97.4 billion in 2025, according to a report by Gaming Compliance International (GCI) commissioned by the Campaign for Fairer Gambling (CFG). The figure represents a 45.2% increase on the prior year and dwarfs the $28.3 billion generated by the regulated online market, which itself grew by 23% over the same period, according to the same report. GCI estimates that unlicensed sites and apps accounted for 77% of total US online gambling gross gaming revenue in 2025, up from 74% in 2024.

Combined player losses across both regulated and unregulated markets rose from $90.1 billion in 2024 to $125.6 billion in 2025, a 39.4% increase. The report's central argument is that the expansion of legal online sports betting and casino gaming has not suppressed illegal activity; instead, it contends, legalisation has grown the overall market while unlicensed operators have continued to capture the larger share of that growth.

Derek Webb, the financier who funds the CFG, argued in the report that the legal industry's standard case for legalisation rests on a self-serving logic. "The legal sector uses the presence of the illicit sector to demand legalisation, then asks for low tax and regulation to compete against the illicit sector," Webb said, according to the report. He argued that direct action against illegal operators, rather than further expansion of licensing, should be the priority for policymakers and industry stakeholders.

The GCI report compared state markets using a loss ratio, defined as online gambling GGR per capita expressed as a proportion of income per capita. States with both regulated online sports betting and casino gaming recorded an average ratio of 1.38% in 2025, compared with 0.99% in states with sports betting only and 0.44% in states where neither product is regulated. The finding is significant because it suggests that fuller legalisation is associated with higher total gambling intensity, not lower, though the report does not isolate the causal mechanism.

Individual state data sharpens the picture. Louisiana, which has both products regulated, recorded the highest loss ratio and also the highest unregulated proportion, with most of that unregulated activity attributed to illegal operators. West Virginia, also a dual-product market, posted a total loss ratio of 1.57%, of which 0.87 percentage points were attributed to unregulated activity. California, where neither online sports betting nor online casino gaming is legal, recorded a 0.43% loss ratio, entirely from unregulated activity. That comparison is frequently cited in the ongoing California tribal ballot campaign as evidence both for and against further legalisation.

The report's commissioning body, the Campaign for Fairer Gambling, has a stated position that the current trajectory of US online gambling expansion is harmful. That context is relevant to how the findings should be read: GCI's methodology and the CFG's advocacy mandate are distinct from the independent research and regulatory data that frame other market estimates. The report does not appear to have been peer-reviewed or published in a regulatory filing, and no financial value or audit trail for the underlying data is disclosed in the publicly available summary.

For comparison, the American Gaming Association reported that US commercial gaming hit a record $78.7 billion in 2025, with iGaming surging 27.6% and tax revenue climbing 15.1%. The AGA figure covers only the licensed, regulated sector and is drawn from state regulator filings. The two datasets are not directly comparable, but placed side by side they underscore the contested nature of US market sizing.

The 77% Unlicensed Share, If Accurate, Demolishes the Channelisation Argument

The most consequential single figure in the GCI report is the claim that unlicensed operators hold 77% of total US online gambling GGR. If that estimate is even approximately correct, the channelisation thesis that underpins most US legalisation arguments, that a well-regulated licensed market draws players away from the black market, is not working at scale. The pattern described in the report, in which both the licensed and unlicensed markets grow simultaneously, with unlicensed growing faster, is consistent with a demand-expansion dynamic rather than a substitution dynamic. That distinction matters enormously for state legislators debating whether to add online casino to an existing sports-betting regime, and for operators making the case that their expansion serves a public-interest function. The counter-argument is that the US legalisation wave is still young: channelisation effects documented in more mature European markets, such as the Netherlands or France, took years to materialise after initial licensing. But that argument requires regulators to tolerate a prolonged period in which illegal operators continue to dominate.

The State-Level Loss Ratio Data Creates a Policy Dilemma

The loss-ratio comparison across state types is the part of the report most likely to influence legislative debate. If states with full legalisation record loss ratios more than three times higher than states with neither product regulated, legalisation advocates cannot straightforwardly claim that bringing gambling online reduces per-capita harm. The Louisiana and West Virginia data are particularly pointed: both are dual-product states with substantial unregulated activity, suggesting that legalisation alone has not crowded out illegal operators in those markets. The obvious policy response is that enforcement against illegal sites must accompany, or precede, any further licensing expansion. That is Webb's own conclusion, and it is shared by some within the licensed industry, though enforcement-first arguments have historically struggled to produce sustained results against offshore operators whose infrastructure sits beyond the reach of US courts.

Methodological Credibility Will Determine Whether This Report Changes Anything

The GCI report will be cited frequently in the months ahead, particularly in states where online casino legislation is under consideration and in federal-level conversations about prediction-market oversight and gambling more broadly. Its influence will depend almost entirely on whether its methodology withstands independent scrutiny. Estimating illegal gambling revenue is genuinely difficult: by definition, unlicensed operators do not file returns, and estimates rely on modelling assumptions that can move the output figure substantially. The report was commissioned by an advocacy body with a clear position, which does not make it wrong, but does mean that regulators and legislators with no stake in the outcome will apply their own filters before acting on it. The $97.4 billion headline will likely set the terms of debate; the detail beneath it will determine whether that debate produces policy or merely argument. A comparable exercise, the 2024 report that put the illegal US market at $67 billion, attracted significant criticism over its methodology and commissioning context. The GCI figure is nearly 50% higher than that earlier estimate, which itself warrants explanation.