Yield Sec says 74% of US gambling goes to illegal operators

A market growing in the wrong direction

As more states approve online betting, legal casinos continue to expand across the country. Yet the study suggests the illegal market is expanding faster — and with fewer limits. Yield Sec estimates that 74% of online gambling revenue in the United States went to unlicensed casinos.

The research covers the first six months of 2025. During that period, total online gambling gross revenue reached about $52 billion. Roughly $38.7 billion of that amount, according to the data, ended up with offshore and unauthorized casinos.

That gap matters. States lose tax income, and players face higher risks. Nevertheless, legalization alone does not appear to be slowing illegal growth.

Legal growth brings unintended results

The study argues that legal betting may increase overall gambling activity. More options lead to more spending — but not always inside regulated borders. States offering several legal products often report higher gambling spend per person.

However, illegal casinos still take the largest share. They benefit from fewer rules and lower costs. This creates an uneven contest — one that legal casinos struggle to win.

Yield Sec noted that legalization was meant to weaken offshore operators. Instead, illegal brands appear to grow alongside legal ones. Hence, the market expands, but control remains limited.

Why illegal casinos keep winning

The report outlines several reasons why unlicensed casinos remain dominant:

• They link sports betting and casino games under one account

• They offer higher payouts by avoiding taxes and license fees

• They exploit differences between state gambling rules

These advantages help illegal casinos attract and keep users. Over time, their reach grows stronger — while enforcement stays slow.

Warnings from industry leaders

Derek Webb, founder of the Campaign for Fairer Gambling, criticized long-standing claims about legalization. He said promises that legal casinos would shrink the illegal sector appear unproven. According to Webb, enforcement at state and federal levels remains limited.

Ismail Vali, president of Gaming Compliance International, shared similar concerns. He argued that legalization alone cannot fix the problem. Control requires constant monitoring, firm policing, and real penalties — not just new laws.

A tougher path ahead

The study paints a sobering picture of the US gambling market. Growth continues, but oversight lags behind. Without stronger action, illegal casinos may keep capturing most revenue.

For lawmakers, the message is clear. Regulation must go beyond approval. It must include enforcement — or the black market will keep winning.