My wrists are tied, I'm in total darkness and a man very close to my face is shouting: "Get on your knees, bitch!"

I do what he says. It's when he puts a cold, wet hood over my head, tips my head back and pours water into my face that I start hyperventilating. The cloth clings to my mouth and nose and panic sends my heart hammering and my lungs heaving.

"Scream, bitch!" roars the voice. "Scream louder! You're not fucking getting out of here until you scream as loud as I want!"

This, I will tell my friends, is how I spent my Monday night: on my knees, being waterboarded and having paid $60 for the displeasure.

This is Blackout, a sold-out attraction deemed the most terrifying of the United States's estimated 3,000 Haunted Houses, which make up an industry thought to be worth an extraordinary $500m.

This year, for example, New Yorkers could opt for the shlocky – such as Blood Manor with its 37 gallons of fake blood per night; or the artsy, including the Steampunk Haunted House in the hipster-heavy Lower East Side; or, indeed, just the confoundingly expensive: Nightmare, which bills itself as "America's #1 Haunted House" and is now in its seventh year, offering "Super VIP" tickets for an alarming $100. Clearly, the opportunity to feel terror without danger is irresistible for a lot of Americans willing to part with a lot of cash.

The hottest ticket though, thanks to its infamy, is Blackout, which the New York Times deemed "the extreme theatre event of the year". But "theatre" seems too genteel a word and Haunted House – with its suggestions of shonky pop-up ghouls – a misleading term for an experience that's more Abu Ghraib than Scooby Doo. Adult-only visitors must navigate the space alone and in complete darkness, being terrorised and abused in a series of psycho-sexual horror scenarios. Unlike Abu Ghraib, there's a safety word to shout if things get too much and its organisers boast that around 20% of visitors use it each night. So why would someone pay around £50 to experience something so extraordinarily unpleasant?

"Audiences want to know if they can make it all the way through without calling 'Safety'," says Josh Randall, the show's co-creator. "The fear they experience in that time gives them a rush and makes them feel more alive."

There have been similar ventures in Britain before, such as Punchdrunk's 2009 show It Felt Like a Kiss, in which audiences were chased by a masked, chainsaw-wielding actor, but it's in the Halloween-mad States that the phenomenon of the Haunted House has really taken hold. Like any good subculture, it has its mass conventions – Pennsylvania's HauntCon, Ohio's Midwest Haunters Convention – its endless websites and chat-forums and, of course, its droves of horror-happy nerds.

Adam Irlander, 24, is one such nerd. At 6pm on a Monday evening I find a line of men in their 30s, mostly dressed in dark shades of fleece, queuing outside the blacked-out storefront in midtown Manhattan. Adam is at the front of the queue, wearing a T-shirt that bears a phallic, plastic monster erupting from the chest. It wobbles a little when he talks.

"I'm a fanatic," he says. "I go to three or four houses a night."

A night? I screech.

"A night," he confirms flatly. "I drive for up to three or four hours to go to a haunted house. I've been to New York, Delaware, Connecticut…"

This is his second visit to the Blackout Haunted House which, he says, "just doesn't compare. It's one of the best".

I'm scared, I say.

"You should be," he chuckles. His neighbour in the queue trumps him by revealing this is his third visit. Adam and the third-visit-nerd fold their arms with the hard-boiled air of true connoisseurs and begin to trade assessments: "You done Times Scare? The Penitentiary?"

I'm too frightened to listen to a nerd-off. Desperate for a shred of reassurance, I interrupt them and say I'm not keen on the idea of strangers shoving me around. Adam laughs. "Well," he says, walking his fingers through the air, "you better turn right round and walk out of here!"

But I don't. Inside, two young guys are seated at a desk in front of a huge black curtain. They're dispatching waiver forms, a document which reminds me that I am signing up for the following: "Graphic scenes of simulated extreme horror, adult sexual content, tight spaces, darkness, fog, strobe-light effects, exposure to water, physical contact, and crawling."

Every so often we hear a bellowed, "Get the fuck out of my house!" and a victim is spat out of a tunnel, shaking, panting and bewildered. Some laugh nervously. Most just look plain traumatised. Eventually, Adam and I witness the third-visit-nerd being expelled.

"Dude!" he says, breathless and eyes shining as he shakes his head. "I nearly couldn't hang in there! I nearly bailed!"

And then Adam is beckoned behind the black curtain. He gives me a little wave: "I would wait around for ya, but I got other haunted houses to get to tonight!"

I have never before wanted to cling to a man with a plastic monster protruding from his chest, but at this moment Adam is the only thing between me and whatever lies behind that black curtain. He ducks behind it and I lose the feeling in my legs.

By the time I step inside I'm ready to throw up. I decide to consider every moment that I don't wail "Safety!" a triumph. A torch is shone into my face and a voice snarls: "DON'T. FUCKING. MOVE."

And then the light goes. The darkness seems to get thicker. I stand in complete silence. Am I meant to do something? I can feel presences moving around me, but I could be imagining them. Something feathery inserts itself with sickening slowness into my left ear. Then a huge hand slams into the side of my neck and wrenches me, half-running, half-stumbling, through the darkness. Over the next 25 minutes I lose count of how many walls I am slammed up against, how many bodies press against me and how many mouths pant or suck or roar abuse at my ears. The water-boarding element is terrifying, but so too is crawling through small tunnels with unseen fingers grabbing at your ankles, or waiting alone in the darkness for more rough hands to seize you.

And then there are the plain ridiculous parts. In a Germaine Greer-esque flourish, a lady in a nightie pulls me into her padded cell and orders me to remove and suck her tampon. The gross-out section continues with a naked man in a toilet vile enough to make the one in Trainspotting look like a Glade PlugIn ad. He slams the cubicle door in my face and from behind it come extravagant sounds of bodily expulsion. Then he pulls me inside and demands that I fish a key out of the full toilet bowl.

"Do it!" he screams. I roll up my sleeve with an involuntary whimper. It's a very convincing texture. I gag a little bit.

"Say, 'I love it!'" he shrieks as he presses his paunchy nakedness against my leg. I oblige. "Say it's the best sex you've ever had!"

I mutter obediently. Then he shoves me out of his toilet lair screeching, "That wasn't sex, that was fishing a key out of shit, you sick fuck!"

Finally, I'm being grabbed from behind and someone is running me down a black tunnel, shouting those blessed words: "Get the fuck out of my house!"

My throat hurts from screaming, my vision's scrambled from all the torch glare, I'm weak and shaking and aching, but I'm ridiculously proud I made it through and coursing with relief and elation to be back in the normal, well-lit, world of mid-town Manhattan.

The next day I experience something even stranger than all the depraved weirdness of those 25 minutes. It's the creeping realisation that I really, really want to go back and do it all over again.