$5.9T Gambling Underground Is Reshaping Online Betting

Key Points

• Prediction market sites like Polymarket and Kalshi proved to be one of the fastest-growing areas within the global ecosystem of unregulated gambling, contributing 8.7 per cent of revenues from offshore sportsbooks while comprising just 0.2 per cent of revenues in legal U.S. sports betting.
• According to Gaming Compliance International, unlicensed online gambling hit the value of $5.9 trillion in wagers in 2025, with the illegal gambling industry commanding 78 per cent of global gross gaming revenues through sports betting, crypto casino gambling, poker, lotteries, and unidentified gambling-like services.
• The regulators have found themselves under growing pressure as illegal streaming networks, crypto casinos, and prediction markets converge within one online universe that is continuously circumventing the gambling laws of individual states, advertising limitations, and regulatory regimes.

Online betting started as one market. Now the industry has shifted into something far larger. Prediction markets, crypto casinos, and illegal streaming systems continue blending into one digital ecosystem worth $5.9 trillion. Regulators continue falling behind, and consumers often cannot recognise where gambling finishes and financial speculation starts anymore.

$5.9T Underground Gambling Market Is Reshaping Betting

A new worldwide analysis estimates that unregulated online gambling processed $5.9 trillion in wagers during 2025. The figure now stands larger than the GDP of every country except the United States and China. Even then, the number itself still fails to explain the disruption now spreading across the gambling sector.

Offshore sports betting websites are no longer the sole problem for authorities and operators. The line between entertainment, investment, and gambling blurs as prediction games, cryptocurrency casinos, and financial derivatives games grow. As those sectors overlap, regulators struggle to determine where one area stops and another begins. Consumers also fail to recognise many differences between them.

Gambling Regulation No Longer Matches Digital Markets

For years, regulators viewed online gambling as a two-sided structure. Licensed operators operated on one side. Offshore illegal operators stayed on the opposite side. That model no longer reflects how digital gambling now behaves. Gaming Compliance International divides today’s market into three divisions, regulated, unregulated, and unacknowledged. The third section includes some of the fastest-growing online products, including prediction markets, social casinos, sweepstakes systems, skins trading, TikTok contests, and finance-style speculative gaming products.

That distinction carries more importance because many of those platforms reproduce gambling behaviour without always falling under gambling regulation. “In a world where you can bet on anything, consumers are increasingly betting on everything,” GCI President Ismail Vali said. “This is the gamification of everything.”

The statement spread across the gaming and fintech sectors because it reflected what current figures began showing. Prediction markets no longer sit as niche products connected only to elections or sports props. They now form part of the broader betting economy. Inside the United States, companies such as Polymarket and Kalshi operate under Commodity Futures Trading Commission oversight, which classifies event contracts as financial derivatives instead of gambling products. Outside the US, though, similar platforms often operate through offshore betting ecosystems.

That legal divide created room for another market segment to expand rapidly.

Prediction Markets Quietly Turned into A Larger Betting Force

At first view, prediction markets still appear small beside global sportsbooks and casinos. The deeper numbers tell another story. GCI estimates that prediction-style products now account for 8.7 per cent of unregulated online sportsbook revenue worldwide. Inside the United States, meanwhile, they represent only 0.2 per cent of legal sports-betting profitability. That gap reflects another behavioural change forming across digital wagering. Consumers continue gravitating toward platforms combining speculation, entertainment, finance, and real-world events inside one experience.

Momentum accelerated further after prediction markets received institutional validation. Following a reported $2 billion acquisition involving Intercontinental Exchange and Polymarket, institutional valuations for prediction-market businesses reportedly reached around $9 billion. At the same time, GCI estimated almost $3.1 billion in prediction-market trading volume surrounding this year’s Super Bowl and related events.

Vali explained how those platforms evolved through time: “Predictor platforms metastasised and morphed from fintech apps in the 2010s. They were just looking at things like Bitcoin and stock price movements. They then went into, when they started becoming audience-generated content, why don’t we just bet on anything? Why don’t we let the audience decide what they want to bet on?”

That transition changed the regulatory debate completely. The question no longer focuses on whether prediction markets resemble gambling. Regulators now confront whether financial regulation alone can control products designed around gambling psychology.

$5.9 Trillion Shows the Scale of The Underground Economy

The headline figure itself now forces regulators, investors, and operators to reconsider the scale of online gambling. According to GCI, global unregulated online gambling reached $5.9 trillion in total wagering value during 2025. The figure stood at $5.7 trillion in 2024 and $5.1 trillion in 2023. The market now spans offshore sportsbooks, online casinos, poker, crypto gambling platforms, lotteries, and emerging prediction-market products.

Annual growth slowed from 12 per cent during 2024 to 4 per cent during 2025, though the slowdown still failed to stop expansion. The industry added almost $235 billion in new wagering activity in one year.

Analysts also do not treat that moderation as a sign of stability. Large sporting events usually trigger another acceleration cycle, and attention already moves toward the 2026 FIFA World Cup. Expectations continue to build that the tournament may push another increase in worldwide betting activity.

Nations have begun to prepare for that eventuality. For instance, it has been reported that the Indonesian government intends to embark on an entire country-wide operation to stamp out illegal gambling and internet fraud ahead of the competition.

GCI CEO Matt Holt described the scale directly: “The scale of the unregulated online gambling sector is now undeniable. At $5.9 trillion in wagering value, this is one of the largest economic systems in the world.”

The comparison becomes stronger when viewed through a macroeconomic perspective. Only the economies of the United States and China exceed the estimated size of the unregulated gambling ecosystem. Wagering handles do not equal GDP because money moves repeatedly through gambling systems. Even so, the comparison still illustrates how large the shadow economy has become beside national economies.

Consumers No Longer Separate Licensed and Offshore Gambling Platforms

One of the report’s major findings focused less on finance and more on consumer behaviour. GCI describes the current gambling environment as the “White Noise Marketplace,” where consumers move between regulated, unregulated, and unclassified platforms as though all of them exist inside one connected network. “The audience does not distinguish between these sectors,” Vali said. “They experience one marketplace, where everything is accessible and everything competes equally.”

That behavioural movement explains why licensed operators continue losing market share despite years of legalisation campaigns. Regulated operators now represent only 22 per cent of global gross gaming revenue. Unregulated platforms control the remaining 78 per cent. That imbalance continues because offshore operators provide something many regulated markets still cannot offer: a connected ecosystem combining sports betting, casino gaming, poker, crypto wagering, and prediction products inside a single platform.

Licensed US operators still face fragmented restrictions separating sportsbooks, casinos, poker products, and other gambling segments across states. Offshore operators continue functioning without those limits.

Vali explained the disadvantage clearly: “We have seven US states today that have legal, regulated online sports betting and online casinos. There is an opportunity with that dynamic to have what you call cross-sell. It doesn’t work in America because of this patchwork quilt of legality.”

For many consumers, convenience outweighs regulatory separation. That reality continues to strengthen offshore ecosystems.

Illegal Streaming Became A Direct Funnel into Offshore Gambling

The report also explained how illegal sports streaming developed into one of the gambling industry’s strongest acquisition channels. According to GCI estimates, more than 80 per cent of illegal sports streams in the United States and the United Kingdom during 2024 and 2025 carried advertising from unregulated gambling operators. That relationship stretches beyond copyright concerns.

Vali warned: “Behind illegal streaming is malware, spyware, keystroke logging, and scams. So if you have not become a victim of crime, you will once you engage with illegal streaming. You just don’t know it yet.”

The report describes the relationship between illegal streaming and offshore gambling as part of an underground economy that intensified during the pandemic. When professional sports stopped during COVID-19, gambling operators and illegal streaming networks reportedly turned toward obscure or manufactured events to maintain engagement. Vali pointed toward examples including children’s basketball games from Ukraine and snail racing from Vietnam streamed under gambling sponsorships to generate betting traffic and volume.

What appears to many users as free sports streaming now increasingly works as an acquisition funnel feeding unregulated gambling ecosystems.

Europe And Other Regulated Markets Continue Falling Behind

The growth of illegal gambling no longer remains limited to emerging markets or lightly regulated jurisdictions. Inside the United Kingdom, recent estimates place illegal gambling activity at around £17 billion. Italy faces another challenge despite maintaining some of Europe’s strictest gambling advertising rules. Research from the Data Room Nexus Observatory estimated Italy’s illegal online gambling market reached around €20 billion every year, driven by smartphones, social media platforms, and disposable betting websites.

Across Europe, the scale grows even larger. The “EU 27 Europe: Online Gambling 2024” study conducted by Yield Sec for the European Casino Association found that unlicensed operators controlled 71 per cent of Europe’s online gambling market during 2024. Illegal operators reportedly generated €80.6 billion in gross revenue compared with €33.6 billion for licensed operators, within a total online gambling market valued at €114.3 billion.

Those figures expose a reality regulator increasingly struggling to ignore publicly. Legalisation alone does not automatically move users toward licensed platforms. Consumer behaviour follows accessibility, payment flexibility, product depth, and frictionless engagement. Offshore operators adjusted around those factors years ago.

The Industry Conflict No Longer Centres Only on Gambling

Prediction markets, crypto casinos, and gamified financial products now exist between gambling, fintech, entertainment, and speculative trading. That convergence now creates a regulatory vacuum. State gaming regulators argue that prediction markets resemble sports betting. Financial regulators continue classifying them as derivative products. Consumers, meanwhile, simply view another platform where they can speculate on outcomes.

No single framework currently governs the full ecosystem. Vali argues regulators require broader visibility instead of fragmented oversight systems.

M, P, E and O for monitor, police, enforce and optimise. That’s how any regulator, government, treasury team needs to look at their marketplace and say, “I need all the information, all the intelligence from that marketplace to be able to make the right choices, the right actions and dominate and control my marketplace.”

He followed that warning with another point:

“If you cannot see the entire marketplace across regulated, unregulated and unacknowledged segments, you cannot control it.”

That challenge may shape the next stage of digital gambling regulation.

Expert Analysis: Why the Gambling Sector May Reach A Structural Breaking Point?

The strongest takeaway from the GCI report may not centre on the $5.9 trillion headline itself. The deeper issue involves the collapse of the traditional regulatory perimeter.

Consumers now move between legal sportsbooks, crypto casinos, prediction markets, illegal streams, and social betting experiences without recognising boundaries between them. That weakens the effectiveness of state-by-state licensing systems originally designed for another version of the internet.

Commercial pressure also intensifies for licensed operators. Modern offshore platforms are able to compete better than their regulated counterparts because of product integration, flexible payments, global reach, and low-friction onboarding processes. Regulation-bound organisations will always have to bear costs for licenses, compliance issues, advertisements, taxes, and product approvals.

If regulation does not adapt to technology in time, market share recovery might be hard in the future. Prediction markets could become the gambling industry’s largest strategic disruption. Continued classification of event contracts as financial derivatives would allow platform companies that operate using financial regulations to incorporate gambling-style participation without being subject to the same rules as sportsbooks.

Traditional gambling companies run the risk of alienating their younger, speculative customers to companies that blend both fintech and gambling in a way that is more aligned with cryptocurrency culture and digital interaction.

However, the industry as a whole will incur reputation risks. The link between streaming violations, cybercrimes, spyware, and gambling acquisition channels creates room for a joint approach by regulators regarding cybersecurity, advertising, finance, and content distribution.

Yet the disruption also creates opportunity.

Companies capable of building compliant cross-vertical ecosystems combining sports, prediction products, media engagement, and digital payments inside unified regulatory structures could emerge as dominant players across the next generation of online wagering. Regulators may also move toward federal or multinational oversight systems as state-by-state structures struggle to contain borderless digital products.