The Complete Guide to US Sports Betting Laws
According to George G. Fenich’s paper, A Chronology of (Legal) Gaming in the US, gambling has been a part of our culture since 1492. Although we don’t have a clear picture of what went on back then, the evidence suggests that those sailing under Columbus gambled on the shores of America. However, this laissez-faire attitude soon changed. As the country started to evolve, state-by-state prohibition took place. Starting with the Puritans of Massachusetts in 1638, gambling bans that spread across the country to Pennsylvania (1682), New Hampshire (1721), New Jersey (1721) and beyond.
The Revolutionary War and Gambling
Fortunately, in among the moves against cards and dice games, lotteries were starting to become an integral part of US culture. This, in turn, helped other betting activities flourish in later years. Before that could happen, lotteries needed to establish a base. This happened in 1776 when ticket sales helped to finance the American Revolutionary War. As per Fenich’s research, the Continental Congress organized a $5 million lottery between 1776 and 1777. Proceeds from the draw were subsequently used to support the revolutionaries. This connection with lotteries increased during the 18th and 19th centuries as ticket sales were used to support schools and universities.
The Rise of New Orleans
By 1815, the wave of anti-gambling legislation was stopped in its tracks by New Orleans. A decade before the original Gold Rush started in the Mississippi River valley, state officials started to license and tax casinos. Despite the tax revenue going to charities, other states continued to rail against the industry. However, by 1827, Crescent City House opened its doors in New Orleans. Acting as a precursor for today’s modern casinos, the venue provided 24-hour gambling and complimentary meals for patrons. Using Crescent City House as a blueprint, John Pendleton opened the first casino in Washington in 1827.
Desert Gambling Changes the Game
The proceeding years saw lotteries banned and casino operators forced to take their businesses onto riverboats in order to avoid prosecution. However, as the 20th century dawned, the early efforts by New Orleans helped change the tide. State lotteries started to reappear and Nevada made gambling legal in 1861. For many, this was the seminal moment in US gambling history. With a legal foundation set, Nevada went on to actively encourage commercial gaming via the 1931 Wide Open Gambling Bill. This led to the growth of Reno and then Las Vegas. By the mid-1960s, gambling was a very public and very profitable pastime.
Walking Federal and State Lines
Today, much of the legal landscape is still a mashup of federal and state laws. However, with Las Vegas proving that regulated gambling can be profitable, more regions have been willing to adjust any previous objections they had to gambling. Naturally, as with all laws in the US, this isn’t a universal truism. In general, however, all popular forms of gambling are legal in one way or another, somewhere in the US. To show you what we mean, we’ve broken down the four main categories and explained whether they’re legal, how they’re legal and where said laws exist.
The Offline/Online Divide
Before we explain US gambling laws as they pertain to casino, poker and sports betting, it’s important to acknowledge the divide that exists between offline and online entities. Despite offering similar services, the two mediums aren’t always subject to the same laws. One of the main reasons for this discrepancy is the 1961 Wire Act. In an effort to tackle the threat of organized crime, Attorney General Robert F. Kennedy introduced a law that would stop mobsters from running sports books via wire communication systems. At the time, this specifically referred to telegrams and telephone betting.
2006: UIGEA Takes Online Operators Offline
However, despite being written in a world before the internet, the Wire Act was used to prohibit online gambling. A dispute over how law's interpretation led to online casino and poker operators offering their services in a legal grey area. However, by 2006, the Unlawful Internet Gambling Enforcement Act (UIGEA) made it illegal for internet betting sites to processes payments from US players. Although the act of gambling online was never outlawed, banning financial transactions essentially closed down the industry. For those that stayed active in the US, an April 2011 indictment unsealed by the Department of Justice (DOJ) put the final kibosh on the industry.
2011: All Change Thanks to the DOJ
It was all change, though, in December 2011 when the DOJ offered its opinion on the Wire Act. After reviewing pleas from various states, the legal body stated that the law only applied to sports betting. The upshot of this was that it gave states the right to regulate online casino gaming and poker as they saw fit. Nevada, New Jersey and Delaware were the first to take advantage of the new dynamic and this was the start of state-by-state iGaming regulation in the US. Interestingly, during this time, offline gambling laws in the US remained virtually unchanged. In fact, one of the most confusing aspects of the current regulatory framework is the differences between the two mediums. However, as a general rule, it’s important to remember that a state’s live gaming laws don’t always extend to the virtual arena.
Casino and Poker Regulation
From a federal perspective, casino gaming is legal in the US. However, the way states manage their own affairs means that this doesn’t mean you can bet on roulette and blackjack where you want.
Perhaps the most important point to note when it comes to casino laws in the US is that only two states, Nevada and Louisiana, have “state-wide” regulations in place. In other words, you can only legally play blackjack, roulette, craps etc in every city in these regions. Beyond these states, localized gambling is allowed in certain cities. For example, casinos are legal in New Jersey, but they can only be located in Atlantic City. It’s a similar story in Mississippi where you can only betting on baccarat et al in Tunica.
The Tribal Exemption
To add another wrinkle to gambling fabric of America, Native American Tribes can offer casino games on their reservations. Thanks to the Indian Gaming Regulatory Act of 1988, states have carved out exemptions for betting controlled by recognized Tribes. Today, there are approximately 460 gambling operations owned by 240 Tribes spread across California, Oklahoma, Connecticut, Idaho and New York. Although the majority of states allow Tribal Casinos to operate independently of any local gambling laws, the likes of South Carolina, Virginia and Utah don’t.
Not All Casino Bans Are Bans
Finally, you have states where casinos are completely prohibited. Of the 50 US states, 28 don’t allow any form of commercial casino gambling. This list includes the likes of Alabama, Alaska, Florida and Montana. However, it’s important to note that this doesn’t mean you won’t find games of chances in these regions. For example, in Florida, you can find casino games inside Tribal venues, on gambling boats and at some racetracks. Therefore, even though every state doesn’t have its own Las Vegas like Nevada does, you can typically find some sort of gaming options that aren’t classed as commercial ventures.
Poker’s Place in the Mix
In general, poker regulation follows the same trajectory as those that govern the casino sector. Because poker rooms are typically found inside casinos, the same laws are in place. Therefore, if a state allows any form of casino, be it a commercial and Tribal venture, you’ll find poker. However, as we’ve noted this only applies to live games. In fact, the same is true for casino gaming. As it stands, only players located in Nevada, New Jersey, Delaware and Pennsylvania can bet online. Although the landscape is constantly changing, the scope for playing poker and casino games online is a lot more limited at the current time.
Sports Betting Regulation
Away from betting on casino games and poker, the other major subsector of the gambling industry involves sports. Historically, the US has taken a tough line against sports betting. Over the last few centuries, states outlawed wagers on everything from basketball to hockey. One sport that’s often been under the spotlight is horse racing. Being a sport that’s essentially founded on betting, states have been given the right to implement their own local laws thanks to the Interstate Horseracing Act of 1978. Signed by President Carter, this law made it legal for racing racings to place bets at official booths inside regulated racetracks. Today, 27 US states allow betting on horse racing.
Unlike horse racing, other sports in the US haven’t had the luxury of a regulatory framework. In fact, as we’ve said, the Wire Act stopped a lot of legal betting. Furthermore, the Professional and Amateur Sports Protection Act of 1992 (PASPA), explicitly outlawed betting on sports other than horse racing outside of selected regions was illegal. The law was intended to rule out corruption and cheating, but many argued that it contravened the Tenth Amendment. Despite efforts to have the law overturned, only Nevada was allowed to offer sports betting between 1992 and 2018. Additionally, Oregon, Delaware and Montana were able to run sports lotteries.
However, things changed in 2018 thanks to New Jersey Governor Chris Christie. Following a long-running battle to have PASPA overturned, Christie won his appeal at the Supreme Court. Under the Tenth Amendment, states have a right to maintain their sovereignty. Christie argued that PASPA breached this right as it prevented his office from implementing an intrastate sports betting law. In essence, Christie argued that a federal law (PASPA) was taking away a state’s right. The Supreme Court agreed in 2018. As well as giving New Jersey the ability to enact their own sports betting law, the ruling essentially overturned PASPA. Today, all states in the US have the right to create their own regulations if they wish.
Daily Fantasy Sports Regulation
The final sector to come under the legal spotlight in the last decade is daily fantasy sports (DFS). Although it’s been argued that this isn’t a form of gambling, some states have taken exception to the industry. In simple terms, DFS tournaments are a form of pool betting. When a player buys into an event, they have to draft a fantasy team in order to accrue points. The leading players then win a share of the prize pool. Due to the fact results aren’t purely determined on the basis of skill, there is a gambling element to DFS.
In light of this, there are certain places that have outlawed DFS. However, unlike more traditional forms of gambling, the acceptance rates have been a lot higher. In fact, many more states have also decided to reverse their original position on DFS. In 2018, 14 states had regulated DFS and 18 were considering bills. For the most part, it’s expected that DFS will be available in virtually every US state within the next few years.
US Gambling Laws: A Complex Puzzle of Opinions
US gambling laws can be described as complex at best. Despite acceptance of most forms of betting at a federal level, states ultimately hold the trump cards. This, naturally, makes describing the legal landscape in a few sentences difficult. Hopefully, this guide has given you a general overview of how things shape up at the moment. However, to give you more of an insight into what’s happening across the US, we’ve shone a light on each individual state. By combining our state-by-state gambling law guides with the information presented here, you should be able to piece together this notoriously tricky puzzle.