CFG-Commissioned Study Reveals $9.5 Billion Wagered Illegally in NY, NJ and MN

The Campaign for Fairer Gambling (CFG) published a new study of the US iGaming marketplace, revealing that $9.5 billion is wagered through unlicensed gambling operators in just three states, New York, New Jersey, and Minnesota. The study, conducted by Yield Sec (YS), confirmed that this represents nearly one-fourth of the total illegal gross gaming revenue (GGR) in the US.

Driven by the necessity to produce state-specific information, CFG and YS selected the above jurisdictions that manifest “state variations relating to the online betting and gambling marketplace in the USA.” As the report pointed out, while New Jersey has legalized online sports betting and casinos, New York is legal for online sportsbooks only, and Minnesota is illegal for both.

Derek Webb, founder of the CFG, commented on the study’s findings, highlighting that illegal operators still dominate the industry despite the expansion of the legal iGaming sector in recent years. Factors such as regulation, tax rates, and legislation have not made much of an impact, with nearly 800 illegal operators in each of those three states “with zero regard for state law.”

Ismail Vali, founder and CEO of YS, also commented on the analysis, pointing to the “stark reality” of the US iGaming marketplace. He did not hesitate to prompt legislators to act upon the situation: “It’s time for the federal government to end this theft in broad daylight.”

Key Findings of the CFG Study

The CFG study reached several key findings for each of the three states and compared some important indicators.

Yield Sec’s factsheet for the New Jersey Online Gambling Marketplace for 2023 reveals there are 43 legal sports betting and casino operators, 119 affiliates that actively promote their business, and a GGR of $2,856 million for 2023. This data stands in stark contrast to the share of the illegal market, with 860 illegal operators, 638 affiliates, and a GGR of $1,715 million.

The situation in New York in terms of the legal GGR share is even worse, with a mere 24%, or $1,690 million. The illegal GGR for 2023 in the Empire State stands at $5,351 million.

In Minnesota, where only tribal land-based casinos are authorized, the illegal GGR for 2023 stands at $2,444 million, with a 38% share for illegal sports betting operators, and a 62% share for illegal casino operators.

The study compared the tax rates of New Jersey (NJ) and New York (NY), which are 14.25% and 51%, respectively. It also looked at the shares of illegal online marketplaces in these states, which are 51% and 53%, respectively. As the report’s conclusion stated, there was “no evidence of a correlation between lower taxes and less illegality or lower taxes and higher paybacks.”

Last but not least, the CFG study uncovered the average percentage of an adult’s annual income that goes to online gambling (both legal and illegal): 1.0% for New Jersey, 0.4% for New York, and 1.5% for Minnesota.