Study: Illegal online gambling drains Puerto Rico’s gaming economy
Illegal online gambling operators are capturing the overwhelming majority of Puerto Rico’s online gaming revenue, undermining the island’s regulated sector and threatening public funds, according to a new briefing as U.S. gaming legislators met in San Juan over the weekend.
The analysis, prepared by technical intelligence platform Yield Sec for the Campaign for Fairer Gambling, found that illegal operators accounted for 84% of gross gaming revenue in 2024 and 85% during the first half of 2025. In dollar terms, that represented $131 million of a $156 million online gambling market in 2024 and $75 million of an $88 million market in the first six months of 2025.
“The illegal sector is in fact three times larger than the legal one,” the report states, challenging the assumption that legalization alone can displace unregulated gambling.
The briefing argues that policymakers are often presented with “a nine-fold discrepancy” between claims about the size of the legal market and the actual scale of illegal activity.
“Puerto Rico casinos in hotels rely on business from tourists and local people. It would be a disaster for Puerto Rico tourism if iGaming was legalized and casinos closed due to local spend switching to online iGaming,” said Derek Webb, founder of the Campaign for Fairer Gambling.
“At the release date of this briefing, the National Council of Legislators from Gaming States [was] holding a winter meeting in San Juan. U.S. authorities should be willing to help Puerto Rico legislators and regulators combat the illegal market, before legalizing iGaming is contemplated,” he said.
The findings come as Puerto Rico continues to evaluate the future of its online gaming framework. According to the report, only five legal operators were active on the island in 2024 compared with 1,327 illegal operators targeting local players. By mid-2025, the number of illegal operators remained high at 941, while legal operators increased slightly to six.
Audience exposure data underscored the imbalance. During the first half of 2025, “more than 93% of what Puerto Ricans see online when they look for gambling is related to illegal online brands,” the report notes. Yield Sec describes that exposure as an “early warning indicator” that illegal operators are likely to continue gaining market share.
The report rejects the idea that illegal gambling constitutes a “grey market” or simple leakage. “It is theft,” the briefing states, arguing that unregulated operators remove the “financial commitment to provide for in-jurisdiction commerce, community and consumer safety.”
Illegal operators, the report says, benefit from structural advantages: they “operate without constraints,” avoid taxes and licensing fees, and offer “unbeatable prices” and broader product selections. Legal operators, by contrast, “must abide by Puerto Rican legislation,” pay taxes and maintain ties to land-based resorts.
The report says these disparities carry wider economic implications. Puerto Rico’s resort casinos, which serve both tourists and residents, depend on regulated gaming revenue. Legalizing new online casino products without first addressing the illegal market, the briefing warns, could divert local spending and weaken the viability of brick-and-mortar casinos.
“With legal sports betting being such a small percentage of the total marketplace, and with illegal iGambling growing faster than legal, it would not make sense to introduce legal iGaming now,” the briefing states.
The report also highlights the breadth of illegal operators’ recruitment strategies, which target users across search, streaming platforms, social media, affiliates and peer-to-peer channels. Younger audiences are reached primarily through streaming and social content, while older demographic groups are targeted through search and advertising.
The authors argue that enforcement must come before expansion. “Illegal gambling is not ‘someone else’s problem’,” the report states. “It is every legal stakeholder’s problem.”
Ultimately, the briefing concludes, Puerto Rico’s online gambling debate hinges not on whether interested legal operators exist but on whether regulators can stem the loss of revenue and control. Without decisive intervention, the authors warn, illegal operators are poised to maintain their dominance, eroding public trust and economic returns.
