Illegal Operators Dominate US Online Gambling as Consumer Losses Surge

It comes as no surprise that online casino gaming and sports betting are seeing phenomenal growth in the US. The surprising part is who's taking the biggest slice. 

According to a report released in August 2026 from GCI, an estimated $97 billion in GGR is generated by unregulated operators. Let’s take a closer look at what the report revealed.

Illegal Gambling Is Growing Fast, But So Is Legal Gambling

A new report from Gaming Compliance International (GCI), commissioned by the Campaign for Fairer Gambling (CFG), estimates that unregulated operators generated $97.4 billion in gross gaming revenue (GGR) during 2025. 

That represented 77.5% of the total US online gambling market. By comparison, the regulated sector was worth $28.3 billion.

Another number makes the picture harder to ignore. Total online gambling losses rose from $90.1 billion in 2024 to $125.6 billion in 2025, a 39.4% increase.

The report covers online sports betting, real money casino, online poker, crypto gambling, and lottery activity. It does not include sweepstakes, social casinos, or daily fantasy sports. GCI also stresses that its figures cover online gambling only, not retail or land-based play.

When looking at a side-by-side comparison of the 2024 vs 2025 growth in the US online gambling sector, the numbers speak volumes:

While the illegal sector grew almost twice as quickly as its regulated counterpart, the unregulated sector also grew strongly. That matters because one of the arguments for expanding legal online gambling has been that regulation can pull customers away from offshore and unlicensed operators.

GCI's findings suggest that has not happened at the scale some might have expected. Instead, both sides of the market grew, with unregulated gambling remaining by far the larger part.

The report's methodology counts operators that actively target US consumers, process payments for them and lack the relevant state licence as unregulated. Simply having an accessible website does not automatically put an operator into that category.

The Cost Varies Dramatically by State

Perhaps the most interesting part of the report is its state-by-state comparison. GCI uses a measure called the Loss Ratio. It compares online GGR with state income per capita, showing the scale of gambling revenue against each state's economic size.

It’s important not to read the figure as saying that every resident lost that percentage of their income. It’s a comparison between gambling losses and income levels, rather than a measure of individual household spending.

Even so, the differences are striking when comparing losses side by side across the 10 highest states year-over-year:

With a 1.77% total Loss Ratio, Louisiana is the highest in the country, while its 1.33% unregulated figure is also among the highest. Ohio, notably, comes in close at second-highest, with a total ratio of 1.49%, but 1.33% comes from unregulated gambling. 

Both these states show that an overwhelming share of their online market sits outside the regulated sector.

Regulation Doesn't Automatically Mean Less Gambling

The report groups states according to what they have legalised. States with no regulated online sports betting or casino recorded an average Loss Ratio of 0.44% in 2025. That rose to 0.99% in states with regulated online sports betting only. In states where both online sports betting and online casinos are legal, the average climbed to 1.38%.

In other words, the total online gambling market is considerably larger relative to income in states with more legalised products. The unregulated side remains substantial in every group.

GCI puts the average unregulated Loss Ratio at 0.67% in states with both legal sports betting and casino games, compared with 0.80% where sports betting alone is regulated and 0.44% where neither product is regulated.

That creates an important question for regulators and lawmakers: if legalisation is meant to replace illegal gambling, why is the unregulated market still so large?

California Stands in Stark Contrast

California offers a useful contrast, which shows the other side. The state has not legalised online gambling products covered by the report. Its overall online Loss Ratio was 0.43%, and because there is no regulated online market, the report attributes that entire figure to unregulated activity.

That does not mean California has a smaller gambling market in absolute terms than every state with legal betting. The Loss Ratio is designed to account for differences in population and income, making it a relative measure.

It does, however, show that banning or not legalising a product does not make online gambling disappear. Consumers can still find unregulated options.

What This Means for Players

For players, the report's biggest takeaway may be less about the size of the market and more about where the money is going. Unregulated sites operate outside state licensing systems. That can mean fewer protections and less regulatory oversight compared with licensed alternatives.

The GCI report argues that tackling those operators needs to happen alongside any discussion about expanding legal gambling at trusted online casinos. Its figures certainly make that debate more complicated.

Legal online gambling grew by 23% in 2025, but unregulated gambling grew by 45.2%. The result was a much bigger US online gambling market overall, rather than a straightforward shift from illegal to regulated play.

For consumers, checking whether an operator is licensed in their state remains an important first step. Regulation cannot eliminate gambling losses, but it does establish a framework around the companies accepting those bets and deposits.

According to the latest GCI figures, that distinction matters in a market where $97.4 billion of online gambling revenue was still flowing through unregulated operators in 2025.