O'Connor made the acknowledgement in an agreement with the government to defer prosecution for two years while she attempts to repay the debt.
O'Connor was the Democratic leader of California's second-largest city from 1986 to 1992. The two-term mayor was elected San Diego's first female leader after eight years on the City Council. She was married to Robert O. Peterson, founder of the Jack-In-The-Box restaurant chain.
Prosecutors said her gambling winnings amounted to more than $1 billion from 2000 to 2009 but she lost more than that.
Her defense attorney estimated the debt at $13 million.
O'Connor gambled in Las Vegas, Atlantic City, N.J., and San Diego.
