This month’s Super Bowl, in the neon glare of the Las Vegas Strip, capped online betting’s extraordinary rise from pariah to the luxury box of top-flight sports. Tens of millions of Americans had money riding on the Kansas City Chiefs’ clash with the San Francisco 49ers.
In its fight to overturn a federal ban on sports betting, legalization’s supporters argued it would “critically weaken” illegal gambling platforms across the United States. And yet almost two in three wagers placed on Super Bowl LVIII were illegal, according to one estimate shared with the Guardian.
Research by the gambling analysis firm Yield Sec found Americans bet $5.37bn on this year’s championship game, of which just $1.4bn was bet legally. It estimates that 350.5m bets were placed by Americans on this year’s Super Bowl, of which 228.2m were on illegal platforms.
Under this analysis, the black market lost no ground between the Super Bowls of 2023 and 2024.
Legal platforms dispute these findings. The American Gaming Association, or AGA, which represents the legal industry, points to its own research, which found last year that 77% of online sports bets were legal.
But academics are skeptical. While measuring illegal gambling is incredibly difficult, it irrefutably dominated online sports betting before the supreme court ushered in the legal market in 2018.
If regulated platforms have taken a third of that same market in just six years, as Yield Sec’s modeling indicates, “that would be wonderful,” John Holden, an associate professor at Oklahoma State University, who studies sports betting’s legalization. But it would still suggest the illegal market accounts for the other two-thirds.
Whatever its size, legal operators are clear on the black market’s dangers: this is a market that “preys on Americans, undermines problem gambling efforts, and steals tax dollars from states and local governments”, the AGA said.
Unregulated operators offer bets on Little League baseball games, noted Holden, and extend $100,000 lines of credit to people who do not make that much in a year. “It’s much easier for people who are underage to gamble on offshore sites,” said Lia Nower, director of the Center for Gambling Studies at Rutgers University.
Legal operators face “a lot of requirements”, from anti-money-laundering regulations to the policing of underage gambling, added Nower. Offshore operators “don’t have to adhere to any of these things, because they’re not legal to begin with”.
The offshore market remains “robust”, the AGA acknowledged in a statement. But “the growth of legal sports betting over the last five years has been driven by the migration of millions of American adults into the protections of the legal, regulated marketplace.”
Stopping the illegal market “isn’t going to happen overnight”, the lobby group said. “Our industry [is] in this fight for the long haul and leaving no stone unturned when it comes to combatting [the] illegal market.”
Some question whether the black market will be stopped at all. Legal operators “take the position that legalizing online gambling significantly decreases the use of offshore sites”, said Nower. “I’m not sure I buy that.”
Derek Webb, founder of the pro-reform Campaign for Fairer Gambling, which commissioned the Yield Sec analysis, pointed to the legalization of cannabis. More than a decade after the first states legalized recreational marijuana, the illegal market is still flourishing. “There was never any evidence” that legalizing sports betting would have different consequences, according to Webb.
While industry insiders draw a clear distinction between legal and illegal gambling, those using the platforms can struggle to tell the difference. Unregulated sites and apps “look as good, if not better, than the FanDuels and DraftKings of this world”, suggested Holden. They are modern, sophisticated – and omnipresent. On social media, Webb argued, “it’s easier for me to get steered towards the illegals.”
“Many of the kids we talk to don’t distinguish between the legal and the illegal market. They don’t even know,” said Keith Whyte, executive director of the National Council on Problem Gambling, or NCPG. “It’s absolutely crazy to expect any consumer, much less a young consumer, to figure out these incredibly fine distinctions.”
Taking on the illegal market requires action from all stakeholders, the AGA said: government agencies should confront “bad actors”, tech and media companies should boot them from their platforms, and payment firms should block their transactions.
But legal gambling firms can themselves take action to weaken the black market, according to Holden – by building platforms so good, with odds priced so competitively, that bettors do not consider illegal alternatives. “If they don’t,” he said, “there is the risk that bettors are being trained to bet in the regulated market, and then will turn to unregulated.”
While lobbyists for regulated operators claim the legal market consistently offers greater protections for bettors than its illegal shadow, “that’s actually not our experience,” said Whyte, of the NCPG. “Some states and some companies provide better responsible gambling protections than the illegal market. But other states and other companies don’t.”
