Study: iGaming Legislation Is Insufficient to Keep Unlicensed Operators Out

Gaming consultancy Yield Sec has compiled a new report on online gambling in the USA. Among other things, the study suggested that most of the gambling is being done with unlicensed operators and that the legal market is insufficient to stop unlicensed gaming from taking place.

The Study Highlighted the Prevalence of Unlicensed Gaming

The new study was commissioned by The Campaign for Fairer Gambling, which sought to compare the legal and illegal iGaming markets in the US. Yield Sec’s study uncovered some disconcerting findings, highlighting that the unlicensed online gambling sector remains strong. However, the silver lining was that licensed gaming was also on the rise.

According to Yield Sec, the legal online gambling market’s revenue increased 36% thanks to the launch of online gambling in Rhode Island. However, since most US markets do not yet permit online casinos, most of the iGaming continues to be done online.

Yield Sec estimated that a staggering 74% of all money spent on online gambling went to unlicensed companies. The firm put the total money US players spent on iGaming at $90.1 billion, which would mean that some $67 billion was lost to illegal operators.

Yield Sec further suggested that approximately ninety percent of US consumers have been exposed to illegal gambling content via the media they engage with.

To make matters worse, even in states that offer legal online gambling, unlicensed platforms remain very popular.

The Illegal Market Is Very Competitive

Experts understand that the illegal market’s appeal can be attributed to its tempting promotions. Since unlicensed companies do not pay taxes and licensing fees, they can instead channel much more money toward making their offer more attractive.

On top of that, such companies do not offer necessary customer protections, limits and checks. Some players actively seek out such companies because they do not wish their playtime to be restricted, even if the safer gaming tools are in place for a reason.

The worst part, however, is that unlicensed operators do not have guarantees that winning bets will be paid out.

Regulation Is Insufficient to Keep Unlicensed Operators Out

The Campaign for Fairer Gambling, as its name suggests, seeks to ensure a healthy gaming ecosystem. To that end, the campaign champions the protection of online borders and seeks to defend the economy and minimize gambling-related harm.

After examining the report, The Campaign for Fairer Gambling urged for gambling reforms to protect the legal gaming ecosystem. Derek Webb, the campaign’s lead, said that anyone who believes that the existence of legal gaming by itself is sufficient to prevent illegal gambling should be ashamed.

For the purposes of its report, Yield Sec also considers controversial and gray market operators as unlicensed operators. This also includes controversial prediction market platforms, such as Kalshi, which are de facto operating under the jurisdiction of the CFTC.