Skip to main content

New Report Reveals $9.5B in Illegal Gambling Revenue in New York, New Jersey, Minnesota

C Jackson Cowart

Last Updated: June 3, 2024 7:08 PM EDT • 2 min 29 sec read.

Since the U.S. Supreme Court overturned the federal ban on sports betting in 2018, the best sports betting sites have raked in billions of dollars over the last six years. Those operators "have not made much of a dent" in the black market, according to a recent report.

The Campaign for Fairer Gambling (CFG), a gambling reform group, recently commissioned Yield Sec, an online marketplace intelligence platform, to investigate the overall share of gambling revenue for the best sportsbooks in the legal market compared to illegal betting operators.

The first report, released in March, concluded that 860 illegal operators still accounted for $40.92 billion in gross gaming revenue in 2023.

The second report, released Thursday, revealed that $9.5 billion - nearly a quarter of that total figure - is being siphoned from the best sports betting apps in just three states: New York, New Jersey, and Minnesota.

"This data and analysis exposes a stark reality: illegal gambling operators are brazenly stealing money from state and federal coffers, and legitimate American industry," said Ismail Vali, Yield Sec's founder and CEO. "It's time for the federal government to end this theft in broad daylight."

$9.5 billion lost to black market in NY, NJ, MN

The report focused on three of the biggest markets in America, all chosen for their varying approach to legalized sports betting and iGaming.

The most shocking numbers came from the Empire State, where New York sports betting is legal, but real money online casinos are not. A whopping $3.4 billion in online casino gaming revenue—accounting for 49% of the total gross gaming revenue across the online marketplace—went to illegal operators, while $1.9 billion (27%) of sports betting revenue was lost to the black market.

It was a similar story for New Jersey sports betting, which features legal wagering on sports and iGaming. Even with an open and widely regulated marketplace, illegal betting operators accounted for $996 million (22%) in sports betting revenue and $719 million (16%) in online casino revenue.

Despite a recent push for legalization, Minnesota sports betting and iGaming remain illegal in 2024, offering little alternative for the 5.7 million residents who might look to gamble in the state. Accoringly, illegal operators pocketed $929 million - 38% of the total online marketplace - in sports betting and $1.5 billion (62%) on online casino gaming.

"Sector-friendly legislation, regulation, and tax rates have not made much of a dent," said Derek Webb, the founder of CFG. "Despite wildly different legal regimes, these three states continue to accommodate over 800 illegal operators who operate with zero regard for state law."

No solution in sight for black market

While the presence of illegal gambling operators is clearly bad for state and federal governments, who are losing billions in tax revenue to the unregulated market, it's also a troubling sign for consumers.

Unlike legal sports betting operators, which are bound by consumer protections to prevent fraud and other anti-competitive behavior, illegal sportsbooks are free to operate in a strictly profit-based manner. That leaves them little incentive to offer customer support or even to fairly pay out customers in the case of a dispute.

Legal sportsbooks also regularly offer some of the best sportsbook promos in the industry, and while there's always fine print involved, these bonus offers are also regulated by state and local governments. The same can't be said for black market operators, who often offer attractive promotions to deceive customers.

The widespread legalization of sports betting and iGaming hasn't been enough to deter bad actors in the industry, which remains insufficiently regulated given the billions of dollars flowing through the marketplace.

"This is one reason why we need federal involvement in the oversight of online gambling," Webb said. "We are eager to equip policymakers with real, reliable data, so that we can have more informed, balanced debate, and ultimately smarter gambling policy."

For a comprehensive breakdown of the legal betting market, here's a list of the legal sports betting states and the current status of legislation for the dozen states yet to legalize gambling.

Written By:
C Jackson Cowart
C Jackson Cowart is a publishing editor and lead writer for Sportsbook Review. An award-winning writer, reporter, and editor with a decade of sports media experience, "C-Jax" has worked with ESPN, Forbes, theScore, and various daily newspapers before joining the Sportsbook Review team. He's a proud graduate of the University of North Carolina, where he served as a beat writer for the Tar Heels' championship run through the NCAA men's basketball tournament in 2017. Jackson has spent the last five years covering sports betting as a predictive analyst, features writer, and industry reporter. Since joining the team in 2023, he's played a key role in Sportsbook Review's coverage of the Super Bowl, March Madness, and NBA playoffs while serving as the lead writer for the growing WNBA and NASCAR betting scenes. Though he's cashed some big bets over the years -- including Lamar Jackson to win MVP (twice) -- he's still haunted by enough second-place bet slips to wallpaper his home office. While Jackson is a committed "process over results" bettor with a keen eye for advanced stats and subtle bias in futures markets, he also embraces sports betting as a vehicle for entertainment and personal investment. He's written about everything from hot dogs to groundhogs and still hasn't forgiven his "inside source" for a sabotaged bet on the Gatorade color in Super Bowl LV.