U.S. gaming hits record $19B, illegal market persists
The U.S. commercial gaming industry posted record results in the second quarter of 2025, extending a run of sustained growth even as regulators confront the persistent challenge of illegal operators capturing nearly a third of the market.
The American Gaming Association (AGA) reported that total commercial revenue reached $19.44 billion in Q2, up 9.8% year-on-year. It marked the sector’s eighteenth consecutive quarter of growth and its highest-grossing Q2 on record.
Strong growth across betting and iGaming
The gains were broad-based. Traditional casino gaming (slot machines, table games, and retail sports betting) brought in $12.82 billion, a modest 2.8% increase.
Online segments were far more dynamic, with iGaming revenue surging 32.2% to $2.60 billion and sports betting revenue jumping 20.6% to $3.92 billion, both setting new second-quarter records.
June was particularly strong, with monthly revenue climbing 12.8% over the prior year to $6.40 billion. Sports betting alone expanded by nearly 40% compared to June 2024, helped by favourable sporting calendars and wider adoption of online platforms.
At the state level, 37 out of 38 commercial gaming jurisdictions reported year-on-year revenue growth. North Carolina was the only outlier, slipping 18.5% due to a weaker April performance against an unusually strong prior year when local universities boosted March Madness betting.
States also benefited from tax inflows. Commercial operators paid an estimated $4.59 billion in direct gaming taxes during the quarter, up 18.8% from 2024. The figures exclude federal sports betting excise taxes and broader corporate levies, meaning the industry’s overall fiscal contribution was considerably larger.
Online wagering continues to reshape the market
According to the AGA, online gaming made up 33.2% of all commercial revenue in Q2, reflecting the steady rise of internet-based betting alongside brick-and-mortar casinos.
iGaming remains concentrated in just seven states, but all posted year-on-year increases, led by Rhode Island, where revenue more than doubled. Notably, New Jersey’s online gaming revenue surpassed that of its casinos, and in Pennsylvania, the two segments are now nearly equal.
Meanwhile, Americans wagered $36.05 billion on sports in the quarter, with operators holding 10.87% of that handle, up from 10.07% a year ago, according to the AGA.
Illegal gambling siphons off nearly a third of the market
Despite the growing legal market, new AGA analysis highlights the stubborn influence of illegal operators. According to the association, Americans wager $673.6 billion each year with unlicensed or offshore entities, amounting to 31.9% of the total U.S. gaming market.
These operations generate an estimated $53.9 billion in revenue and deprive state governments of $15.3 billion in annual tax revenue. “Illegal gambling operators are thriving at the expense of American consumers, siphoning billions in tax revenue from state governments, and undercutting the efforts of the legal market,” said AGA President and CEO Bill Miller. “It’s time for a national crackdown on the pervasive illegal market that is draining state coffers and putting people at risk”.
Unregulated “skill” machines are a major driver of this shadow economy. More than 625,000 such devices now operate in bars, restaurants, and convenience stores, a 7.7% rise since 2022. These machines generated $30.3 billion in revenue, costing states $9.5 billion in lost taxes.
Illegal online slots and table games also surged, hitting $18.6 billion in revenue, up nearly 38% in just three years.
Sports betting has seen some progress against illegal competition: the share of bettors using exclusively unlicensed operators has fallen by a third since 2022. Still, around one in ten bettors continues to place wagers exclusively with illegal bookies or offshore sites. “These bad actors operate in the shadows with zero consumer protections, no responsible gaming obligations, and no economic return to the communities they exploit,” Miller warned. “Combating them requires not only stronger U.S. enforcement, but also continuing to work closely with our international partners to shut down offshore operators and hold them accountable”.
