• A controversial new report from threat-intelligence firm Yield Sec claims the US illegal online gambling market generated $67.1 billion in 2024, dwarfing the legal sector.
• The research, sponsored by The Campaign for Fairer Gambling, argues that cryptocurrency is the primary enabler of this “shadow empire,” allowing offshore operators to bypass regulations.
• The report’s methodology, which uses behavioural analysis to infer spending, is under scrutiny, with other analysts estimating the global crypto gambling market to be far smaller.
• The findings highlight the significant competitive disadvantage faced by licensed US operators, who struggle for profitability while competing against untaxed, unregulated offshore sites.
• The report concludes that America’s state-by-state regulatory approach has failed to curb the black market and calls for better enforcement of existing laws.

A new and highly contentious report is challenging the established understanding of the US online gambling market, claiming that the illegal sector is not just a nuisance but a dominant “shadow empire.” Research conducted by the anti-crime platform Yield Sec estimates that of a total $90.1 billion US online gambling market in 2024, a staggering $67.1 billion-or 74%-was channelled through illegal operators.

The report, which was sponsored by the industry watchdog group The Campaign for Fairer Gambling, argues that conventional market analysis, which sizes the global online gambling market at around $90 billion, is fundamentally flawed as it only measures the visible, regulated industry. According to Yield Sec’s founder, Ismail Vali, this sanitised view ignores the reality that in most jurisdictions, illegal gambling still commands the majority of the market.

The Role of Cryptocurrency and Regulatory Failure

The report identifies cryptocurrency as the key technological enabler for this vast illegal market. Its cross-border fluidity and pseudonymity provide a perfect vehicle for operators to conduct regulatory arbitrage, moving funds beyond the reach of national authorities.

This allows a thriving ecosystem of offshore operators to exploit the gaps in America’s patchwork, state-by-state legalisation. The report notes that in states with no legal online gambling, such as California and Texas, the market is 100% illegal, with estimated values of $5.5 billion and $4.5 billion respectively. However, even in regulated states like New York, Yield Sec claims that illegal operators capture 72% of the $7.4 billion market by offering products like online casino, which are not yet legal.

A Contentious Methodology

The report’s explosive figures are derived from a proprietary methodology that Yield Sec claims was adapted from counter-terrorism technology. Rather than relying on operator disclosures or blockchain data, the system analyses user behaviour across multiple platforms to calculate a “value per visit” and infer spending.

However, these figures have been met with significant skepticism. Competitor analytics firm Tanzanite, for example, has published its own analysis suggesting the global crypto gambling market is worth only $10-11 billion-a fraction of Yield Sec’s $81.4 billion global estimate. Tanzanite relies more heavily on blockchain analysis and self-reported figures from major operators.

Vali has countered this by arguing that criminal enterprises do not accurately report their revenues, but the vast discrepancy between the estimates raises serious questions about the methodologies being used.

The Competitive Disadvantage for Licensed Operators

Regardless of the precise figures, the report highlights the impossible position faced by licensed, regulated operators in the US. Companies like Flutter (FanDuel) and DraftKings spend billions on licensing, taxation, compliance, and responsible gambling measures. Yet, they are forced to compete with a legion of offshore operators, like crypto giant Stake.com, who face none of these costs.

The report underscores a stunning statistic: in seven years of operation, the legal US online gaming industry has collectively produced only one profitable quarter. This, the report argues, is a direct consequence of a flawed regulatory approach that has allowed a massive, untaxed black market to flourish, making it incredibly difficult for legitimate businesses to achieve sustainable profitability. The report concludes that the solution is not more regulation, but a dramatic increase in the enforcement of existing laws against these illegal operators.