Unregulated US online gambling market generated US$97.4 billion GGR in 2025: report

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Illegal play grows alongside legal markets

The latest estimate that unregulated online gambling generated US$97.4 billion in gross gaming revenue in the U.S. in 2025 puts a hard number on a concern that has followed the industry since sports betting began spreading across states after 2018: legalization has not automatically displaced offshore and otherwise unlicensed operators.

The report commissioned by the Campaign for Fairer Gambling said the unregulated sector accounted for 77% of U.S. online gambling revenue last year, even as regulated online revenue rose to US$28.3 billion. That combination is important. It suggests the market is not simply shifting from illegal to legal channels. Instead, demand is expanding across both, with unlicensed operators still capturing the larger share of spending outside state tax, compliance and consumer-protection systems.

That finding complicates a central argument made by many supporters of legalization. Regulated sports betting and online casino gambling have been promoted as tools to bring existing activity into the open, generate tax revenue and allow states to impose age checks, responsible gambling rules and oversight of advertising. The new figures indicate that the policy outcome is more uneven: regulated operators are growing, but the illegal market is growing faster.

State success has not closed the enforcement gap

Several regulated states have shown that online casino markets can become major revenue engines when legal frameworks, brand competition and consumer adoption align. Michigan is a leading example. The state ended 2024 with US$2.4 billion in online casino gross receipts, up 23.8% from 2023, after a record December in which online casinos generated more than US$244 million in gross receipts. The state also collected US$451.4 million in igaming taxes for the year, showing why online casino authorization remains attractive to lawmakers seeking recurring revenue.

That growth, detailed in Michigan’s record monthly igaming performance at the end of 2024, shows the upside of a mature regulated market. Operators with national brands, payment integrations and state oversight can turn online casino gambling into a significant tax base. BetMGM and FanDuel each exceeded US$60 million in monthly gross receipts in December 2024, underscoring the depth of customer demand in a state that legalized online casino gaming in 2021.

But Michigan’s success also illustrates the limit of the displacement argument. The Campaign for Fairer Gambling report identified Michigan among states with some of the highest overall loss ratios, a metric comparing online gambling revenue per capita with income per capita. In other words, legalization may produce tax revenue and supervised play, but it also expands the total gambling footprint. If illegal operators remain accessible, the regulated market can grow without meaningfully shrinking the unregulated one.

Canada offers a parallel test case

Ontario’s regulated market provides another useful comparison because it was built in part to channel gray-market activity into a supervised system. Since launching in 2022, the province has become one of North America’s most closely watched online gambling jurisdictions. Its December 2025 performance, when total non-adjusted gross gaming revenue reached CA$425.4 million, showed the scale a regulated open market can reach in less than four years.

According to Ontario’s record-breaking December revenue report, online casinos generated CA$320.5 million, or 75% of the market, while online betting accounted for CA$99.1 million. Total cash wagers hit CA$9.5 billion. The numbers point to the same structural reality visible in the U.S.: online casino revenue generally becomes the larger commercial opportunity once a market is live, because casino products generate steadier wagering volume than sports betting.

Ontario also shows how legal markets can create space for smaller and local operators if rules allow broad participation. NorthStar Gaming, for example, said total wagers on its Northstarbets.ca platform were expected to reach about CA$303 million in the fourth quarter of 2024, up 42% from a year earlier. Its revenue and gross margin also increased sharply, supported by product changes and customer-experience investments.

The company’s preliminary figures, covered in NorthStar’s fourth-quarter growth update, show why operators continue to invest aggressively in regulated online gambling despite high competition and marketing costs. When player migration is successful, regulated businesses can scale, improve margins and pursue profitability. But the Canadian experience also reinforces that legalization requires continued enforcement. A legal market can coexist with offshore sites unless regulators, payment providers and advertising channels make illegal access harder.

Marketing race raises political risk

The fight for customers does not end once a market becomes regulated. Operators often respond with heavy advertising, bonus offers, influencer campaigns and product localization. That commercial pressure can accelerate legal-market growth, but it also increases scrutiny from policymakers concerned about gambling normalization and consumer harm.

Latin America is seeing that dynamic as newly regulated or fast-developing jurisdictions attract international brands. In Peru, SkillOnNet’s PlayUzu launched a television, billboard and digital campaign designed to build name recognition in a competitive online casino market. The company emphasized transparency and no wagering requirements on bonuses, a message aimed at differentiating the brand from rivals and appealing to consumers who may be wary of hidden terms.

The campaign, described in PlayUzu’s Peru advertising rollout, is not directly tied to the U.S. illegal-market estimate. Still, it helps explain the broader policy tension. Legal operators need visibility to compete with established offshore sites and informal gambling options. Yet widespread advertising can make online gambling more prominent, drawing criticism if it appears to reach vulnerable groups or young consumers.

That is a central challenge for U.S. states considering further expansion of online casino gambling. Sports betting is already widely legal, but online casino remains limited to a small number of states. If lawmakers authorize igaming, they gain a larger taxable base and more control over consumer safeguards. They also invite an intense marketing battle that may raise public-health concerns and strengthen calls for tighter advertising, affordability checks and product restrictions.

Youth gambling concerns sharpen the stakes

The unregulated market poses a particular risk for minors because illegal operators are less likely to apply effective age verification, identity checks or responsible gambling controls. Those concerns are not limited to the U.S. In South Korea, public officials and business leaders have backed campaigns warning about illegal online gambling among young people, framing it as a social and financial harm that requires a broader response than individual discipline.

Hanwha General Insurance Chief Executive Na Chaebum recently joined a Seoul Metropolitan Police Agency campaign focused on youth gambling, after similar participation by other financial-sector leaders. The effort, covered in the campaign against youth online gambling in South Korea, reflects a growing international concern: digital gambling products can spread quickly through mobile access, social media and informal payment channels, often faster than enforcement systems can adapt.

For U.S. regulators, that risk strengthens the argument that illegal-market suppression cannot be secondary to legalization. A state-licensed operator can be audited, fined or removed from the market. An offshore operator may ignore state rules, avoid taxes and target customers through channels that are difficult to police. The result is an uneven competitive field in which licensed companies carry compliance costs while illegal competitors can offer fewer restrictions, higher incentives or access in states where online gambling remains prohibited.

Policy debate shifts from expansion to control

The Campaign for Fairer Gambling’s call to pause further expansion until illegal-operator controls improve reflects a broader shift in the debate. The question is no longer only whether online gambling should be legalized. It is whether legalization without stronger enforcement, payment blocking, advertising controls and data-driven harm prevention can achieve its stated goals.

The revenue evidence cuts both ways. Michigan and Ontario show that regulated online gambling can generate large legal markets and substantial public revenue. NorthStar’s results show that operators can grow within a supervised framework. Peru’s advertising push shows how brands compete to move consumers toward licensed platforms. South Korea’s youth-gambling campaign shows why policymakers worry about online access when illegal operators remain active.

The U.S. report brings those strands together. If unregulated revenue is nearly four times regulated revenue, states face a structural problem. Legalization can create a compliant market, but it does not by itself eliminate illegal supply or reduce total gambling exposure. The next phase of U.S. policy is likely to focus less on launch mechanics and more on market integrity: who is allowed to reach players, how illegal sites are cut off and whether growth can be balanced against the social costs of easier access.