Report Claims Illegal Online Gambling Growing Nearly Twice as Fast as Regulated Market

Illegal online gambling operators are leaving the regulated industry in the dust, a new report suggests.

Gambling Compliance International evaluated consumer losses in the U.S. across legal online betting platforms and compared those numbers with estimated losses on illegal online gambling websites and apps. The study, commissioned by The Campaign for Fairer Gambling, found that the illegal market is greatly outpacing the regulated industry.

Gross gaming revenue (GGR), or player losses, generated online rose almost 40% to $125.6 billion in 2025. The black market accounted for $97.4 billion, or 77%, the study concluded.

Unregulated online gambling grew revenue by 45% year-over-year from $67.1 billion in 2024. Regulated online gambling increased GGR considerably less at 23%, from $23 billion in 2024 to $28.3 billion in 2025.

The unregulated growth rate was almost two times that of the regulated platforms, highlighting the fact that offshore casino websites and apps remain attractive to millions of U.S. consumers.

The legal revenue data includes online sports betting, iGaming, sports prediction markets, and online lottery. It excludes fantasy sports, sweepstakes casinos, social gaming, and land-based/retail gambling.

Campaign Asks Where Is Law Enforcement?

The Campaign for Fairer Gambling is an initiative from Derek Webb, the inventor of Three Card Poker, to reform gambling to better limit gambling harms. While proponents of legalizing new forms of gambling often argue that a regulated market hurts bad actors, Webb says it typically only exposes consumers to more gambling.

“Proponents of expansion claim it is a means to mitigate illicit sector expansion. In fact, in the absence of monitoring, policing, and enforcement against the illicit sector, all expansion achieves is to help the total addressable marketplace for all forms of online gambling grow,” Webb said.

Webb opines that if lawmakers truly want to protect consumers from predatory, illegal gambling networks, they must use their law enforcement resources to impede such operators.

“Taking action against bad actors in the illicit sector is the solution and must be the priority for all stakeholders,” Webb said.

Less Gambling Equates Less Spend

The Campaign for Fairer Gambling study found that states that don’t regulate iGaming and sports betting have lower rates of gambling spend per capita. While a person in Michigan, which regulates online casinos and sports gambling, spends 1.72% of their income on online betting, a person in Texas gambles away just 0.56% of their earnings.

Other iGaming and mobile sports betting states with high per capita spends include West Virginia (1.57%), New Jersey (1.56%), and Pennsylvania (1.34%). The lowest online gaming spend per capita states don’t have iGaming or online sports betting. They include Washington (0.26%), South Carolina (0.32%), and Minnesota (0.32%).