Since 2018, when the Supreme Court struck down the federal ban on sports betting, over half the country has legalized online sportsbooks—bringing in billions in tax revenue. But California is heading in the opposite direction. Its laws are so strict, the State Attorney General may end up making online fantasy sports illegal.
In 2017, even before online sports betting was legal, the illegal sports betting market was estimated to be between $149 billion and $500 billion. By 2023, that estimate had dropped to $63.8 billion. In just six years, illegal sports betting fell by more than half—using the low-end estimate and without adjusting for inflation. Despite claims that legalization would cause an increase in gambling, states without any legal sports betting saw larger increases in gambling than states that legalized online sports betting. Illegality doesn’t stop bettors; it just pushes them into the shadows. Californians will still find ways to play fantasy sports—they just won’t be above board.
The transition away from illegal sports betting is happening in states that legalize it. One 2022 study showed that 51 percent of sports bettors use only legal channels, while another 34 percent use both legal and illegal sports betting options. At the time, only 57 percent of gamblers lived in states with legal sportsbooks—and fewer had access to legal online sports betting. The growth of legal gambling alongside the expanding legalization shows bettors are moving away from illegal betting options in favor of legal ones.
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Justin Leventhal is a senior policy analyst for the American Consumer Institute, a nonprofit education and research organization. For more information about the Institute, follow us on X @ConsumerPal.