Two Billion Reasons Why Minnesota Should Legalize Online Gaming

A new report estimates Minnesotans gambled $2.44 billion through offshore, unregulated websites in 2023.

And because sports betting and online casinos remain illegal in Minnesota, the state saw none of it.

The report, which looked at New York and New Jersey along with Minnesota, found that the three states combined to miss out on tax revenue from nearly $10 billion illegally gambled last year.

Minnesotans gambled $1.5 billion at online casinos in 2023

Minnesota online casinos and Minnesota sports betting continue to be illegal and unregulated. Efforts to legalize online sportsbooks fell short in 2024, but there’s optimism that lawmakers can get it done next year.

Campaign for Fairer Gambling (CFG) compiled the information in the report with Yield Sec (YS) and its online marketplace analytics platform.

According to their findings, illegal sports betting was nearly a $1 billion industry in Minnesota in 2023 ($929 million), and illegal online casinos generated another $1.5 billion.

The report studied three states, each with different online gambling laws.

Minnesota: online casinos and sports betting are illegal

New York: online casinos are illegal; online sports betting is legal

New Jersey: online casinos and sports betting are legal

Minnesota

Total GGR: $2.44 billion

Illegal online casinos: $1.52 billion

Illegal sports betting: $929 million

New Jersey

Total GGR: $4.57 billion

Legal casinos: $1.9 billion

Legal sports betting: $961 million

Illegal online casinos: $719 million

Illegal sports betting: $996 million

New York

Total GGR: $7.04 billion

Legal sports betting: $1.69 billion

Illegal online casinos: $3.45 billion

Illegal sports betting: $1.91 billion

Report shows that illegal online casinos are flourishing

The findings from the report suggest that legalizing online gambling can entice a lot of bettors who previously placed wagers through illegal, offshore sources.

With legal online casinos and sportsbooks, New Jersey had the lowest percentage of illegal GGR of the three states in the report. Minnesota, which has not legalized either of them, had the highest.

Combined, the three states missed out on more than $9.5 billion in revenue in 2023.

The report also shows that states must do more to stop gambling through illegal operators. Despite sports betting being legal in well over half the US, the black market continues to thrive. This can be seen in New Jersey, which has offered online sports betting since 2018.

As to illegal online casinos, the report shows that they are incredibly popular with gamblers. Only seven states have legalized iGaming.

CFG and YS founders say a federal response is badly needed

CFG and YS conducted the report to highlight underground gambling’s impact in the US. Three states alone accounted for nearly $10 billion in online gambling revenue that could have stayed within their respective states.

There’s no doubt that tax money from that amount would have gone to several beneficial programs and services.

The report also found that 860 illegal sports betting and casino operators and 638 affiliates actively promoted illegal gambling sites in the three states.

CFG founder Derek Webb said a federal response is needed to combat illegal gambling activity.

“Sector-friendly legislation, regulation, and tax rates have not made much of a dent. Despite wildly different legal regimes, these three states continue to accommodate over 800 illegal operators who operate with zero regard for state law.

“This is one reason why we need federal involvement in the oversight of online gambling. We are eager to equip policymakers with real, reliable data so that we can have more informed, balanced debate, and ultimately smarter gambling policy.”

Ismail Vali, founder and CEO of YS, went even further.

“This data and analysis expose a stark reality: illegal gambling operators are brazenly stealing money from state and federal coffers and legitimate American industry. It’s time for the federal government to end this theft in broad daylight.”

Minnesota misses out on millions annually

Unfortunately, hopes for legal Minnesota sports betting in 2024 ended on May 20 when the state legislative session adjourned. The issue had support in the state House and Senate, but time ran out on the session before either could conduct a vote.

The recent report only confirms Minnesota’s need to legalize sports betting. It is nearly a $1 billion industry, which means the state is missing out on millions, even if the black market keeps half.

Imagine legal Minnesota sportsbooks reporting $500 million in annual GGR. If the state taxed sports betting operators at 20%, that would mean $100 million more in tax revenue each year.