The Volume of Illgeal Gambling in America

No hard data has been collected concerning the amount of money that is wagered illegally.

This lacks results from both the clandestine nature of the activity and the bureaucratic nature of data collection.

In addition, revenue estimates influence policy decisions concerning legalization; the argument that large financial resources are being siphoned off by illegal gaming operators and the state should get in on the action is often advanced by advocates of legalization.

Several legislatives and administrative commissions, including Kefauver's investigation in the early 1950s, the 1967 Johnson crime commission, and the presidential commission of 1986, have struggled with the question of illegal revenues.

Their estimates of annual wagering have ranged from $7 billion to $450 billion.

Perhaps the most accurate assessment came from a Kefauver investigator, who stated, 'No one has accurate figures regarding illegal gambling.'

The $450 billion figure was offered by John Scarne, internationally known as author of Scarne's Complete Guide to Gambling.

The methodology he used to arrive at this gigantic figure was never clearly established.

Since 1960, however, the $450-billion figure has been so bandied about in the media and before congressional hearings that it has taken on the weight of truth.

Early attempts to pinpoint the volume of illegal wagering used mainly police sources.

These estimates were far lower than Scarne's $450-billion figure. In the late 1950s, FBI and Justice Department officials estimated annual illegal gambling at $10 and and $11 billion respectively.

In 1967, the Commission on Law Enforcement and the Administration of Justice, citing 'agreement' among gambling enforcement officials, pegged illegal gambling at $7 to $50 billion per year.

In 1972, Oliver Quayle surveyed New York city to ascertain the amount of illegal gambling in that area.

His survey revealed that illegal gambling was widespread and that a hard core of heavy bettors (those who gambled over $500 a year) accounted for much of the money illegally bet with bookies.

Although these heavy bettors represented only 19 percent of the sample, they wagered almost 75 percent of the dollar volume.

In 1974, Alfred King of the Justice Department projected figures from Quayle's study of New York to the nation as a whole, estimating national illegal gambling at between $29 and $39 billion.

The accuracy of King's projection was sharply questioned by researchers who doubted that New York City bettors would accurately reflect wagering trends.

In 1975, the Survey Research Center (SRC) was commissioned by a federal gambling commission to put an end to the uncertainty over the volume of illegal gambling.

The results of the nationwide survey were extremely controversial, however, and raised more doubts as to the amount of illegal wagering.

Researchers who have analyzed the center's findings all agree that gamblers who consistently wager large amounts (heavy bettors) were not included in the survey sample.

This glaring oversight led to the inevitable conclusion that the SRC's estimate grossly underestimated the annual amount of illegal wagering.