Gambling is not new. If you live in the United States or are a citizen of one of its many territories and commonwealths, you can trace the history of gambling in America back more than two centuries. The story starts with a founding father and a legal precedent that’s still used today. The gambling law history continues with a peek at some of the most successful casinos globally, laws against gambling that were once questioned by presidential candidates and Supreme Court Justices, and the modern state of online regulation in the United States (and across international borders).
As technology improves, how we gamble changes, almost as much as the society around us. In our current reality, gambling laws are slowly adapting to innovations and activities. This article intends to provide an overview of the United States gaming regulations, where they come from, and how they’ve changed over recent history.
The most recent thing to drastically change the way we view gambling and gambling regulations is the Internet. Gambling (and casinos, in particular) has been around for a long time. Still, the rise of online casinos in the last 10 years has made it possible for anyone with a computer to explore and take part in gambling (for real money or not) from anywhere in the world.
The use of gaming websites has grown astronomically since 2001, becoming one of America’s largest entertainment industries. This would have been impossible before the advent of cheaply available broadband Internet access.
In some ways, American gaming law is liberal. This is especially true when it comes to internet gambling. While the United States passed the Federal Wire Act in 1961, this was really just an attempt to avoid federal anti-gambling laws. Anything that happened on a wire, like a telephone, was adjudged to be illegal.
The United States is known for displaying characteristics of both strong laissez-faire (hands-off) and strong regulation. The following are good examples of this.
- In over 44 US states, there are state-run lotteries.
- In more than half of American states, tribal casinos are in operation, with more being built.
- Card rooms can be found in most small towns and major cities.
- When it comes to charity betting or something for the elderly, there is little regulation.
Where Do The Gambling Laws Come From?
Unlike when it comes to lotteries, where each state has its own laws, online gambling is unique because it spans multiple jurisdictions. It’s not exactly clear which laws apply because servers’ location in many cases isn’t known (websites can be hosted anywhere). What’s more, legislation from over a decade ago focused on Internet-enabled sports gambling shows that lawmakers have been slow to react to the growth of online poker and casino games.
Because of this, and because the global online gambling and betting market is so large, billions of dollars are at stake. For this reason, US gambling laws have received a lot of scrutiny from federal lawmakers and politicians, state politicians and officials, legislators on both sides of the aisle, lobbyists and advocates in various industries, law enforcement agencies, anti-gambling groups, international bodies like the United Nations and Interpol, and even private individuals.
As a result, US online gambling laws are a confusing mix of federal regulation, state regulation, and special rules for Native American casinos. These laws have changed in recent years. Many now express an interest in regulating some forms of online gambling.
Federal Gambling Laws
There are federal laws worth knowing about why online casino wagers and internet gambling have had such a hard time in the United States.
Until recently, placing online bets was illegal in the US due to the Interstate Wire Act of 1961, which effectively banned all sports betting forms in America. Justice Department officials have interpreted the Wire Act as prohibiting all sports betting forms — online or otherwise. While that may have been true at one time, The Wire Act has recently been amended nearly 50 times to allow things like fantasy sports and daily fantasy sports (DFS) betting.
The act was passed not as a way to prevent US citizens from gambling but as a way to stop crime bosses profiting from organized crime. These gangs operated sports gambling by wire, meaning by telephone.
Back in the early to mid-1900s, people who were eager to place bets could only place their bets via telephone. Because traditional sports bets were made by phone, it made sense for the government to clamp down on organized crime by passing laws that prevented telephone betting.
The Act did not just target telephone betting. Rather, through several subtle (and some not-so-subtle) quirks and turns, it covered all bets made via phone, television (in any medium), radio, and even though the mail. Markets where crime bosses had no presence, were affected by the law. The Act was–and remains to this day–the strictest gambling legislation in the entire world.
In 1961 when the law was passed, no one could have imagined the internet, so interpreting the terminology and language used in the act led to many legal challenges. The ambiguity has been used to allow online gambling in some US states.
In 2011 the Wire Act was asked to be clarified by the US Department for Justice. They concluded that interstate transmission of wire communications that do not involve a contest or sporting event falls out of the 1961 Wire Act’s remit.
This meant that online casino games, poker, slots, bingo, and lottery games do not site within the Wire Act’s boundaries. This means that other than covering a sporting event or contest (for example, NFL or MLB), any website where the bets themselves (not the outcome) are transmitted from one place to another isn’t illegal. The definition of a “sporting event” is becoming increasingly ambiguous due to advances in technology and online gaming. Still, an argument could be made for any sport with a governing body.
The consensus now is that interstate sports betting is still illegal under the original Wire Act, with other forms of online gambling not covered by the act. The Wire Act’s emphasis was always targeted at the providers of gambling services, not those looking to place a bet. To our knowledge, no one has been prosecuted under the Wire Act for placing a sports bet with a gambling company.
The Wire Act’s history doesn’t quite end here as in 2014, Senator Lindsey Graham and Jason Chaffetz pushed to have the original interpretation of the Wire Act reinstated. Had they been successful, then all forms of online gambling would have been made illegal.
The Unlawful Internet Gambling Enforcement Act (UIGEA)
The Unlawful Internet Gambling Enforcement Act, the UIGEA, was actually passed by Congress and signed by President Bush in late 2006. The UIGEA wasn’t just the first US law to regulate online gambling – it was the first law to prohibit banks and financial institutions from doing business with online gambling sites.
The law’s goal was to cut off the flow of money to online gambling sites by amending the Bank Secrecy Act, a federal law dating back to 1970 that prohibited financial institutions from knowingly accepting “ill-gotten gains.” Under the UIGEA, a financial institution is defined as any company involved in transmitting funds between a gambler and an online betting site, including payment processors such as credit
The act banned financial institutions from moving money that they knew was involved in online gambling. As it turns out, many financial institutions refuse to process payments related to online gambling. The result is that the legislation has severely limited both use and getting paid for online gambling.
The UIGEA has serious implications for the online gambling industry. First, it outlaws the processing of credit card transactions, deposits, and withdrawals, from American customers on foreign sites. Even if a player isn’t using their credit card to make a deposit, simply logging into an online casino via a US-based IP address triggers an instant ban.
The second major effect is that offshore sites have been forced to block US players from entirely accessing their sites. Poker rooms are strict about enforcing this restriction; many rooms don’t even allow Americans to sign up for accounts unless they use payment methods impossible for the site to process.
More shocking than its passage, however, was the secrecy surrounding it. Until 2007, many lawmakers were not even aware of UIGEA’s existence. There were no committee hearings, no public debate on the merits of its provisions, and virtually no media coverage. Though UIGEA was signed into law on October 13, 2006, it wasn’t until late 2008 (three years after its passage) when it actually took effect.
The problem is that there are no laws, especially outside of the US, that force any person or company, including banks, to comply with US law. This means an American who wants to continue online gambling can easily open a bank account in a country such as Antigua, known for its liberal online gambling regulation.
Of course, the easiest solution for Americans is to oft-overlooked offshore betting sites, which have been built to cater to foreign bettors and are designed to accept bets from almost anywhere.
In recent years digital wallets have started to become a more common way for players from the United States to fund their online gambling account, as the same laws do not bind these companies like banks or payment processing companies like PayPal. Prepaid accounts to fund online gaming has also become popular among players in countries where this is legal.
Professional and Amateur Sports Protection Act
The Professional and Amateur Sports Protection Act (PASPA) is a federal law of the United States, signed into law by President Bush on November 28, 1992. The law basically maintains the status quo for American sports betting. Despite its sweeping name, PASPA’s main function prohibited state-sponsored sports gambling in all but four states, which had legalized it already: Delaware, Montana, Nevada, and Oregon.
The Bill covers 37 leagues relating to sports such as baseball, football, and horse racing. This bill prevents states from legalizing bets on the sports that the government deems “unlawful activities.”
After prohibition in 1920, illegal sports betting was a thriving business. However, with this bill’s passing, over two-thirds of these illegal businesses were closed because sports betting is now strictly regulated and controlled by the government and professional sports leagues.
PASPA is also known as The Bradley Act (after Senator Bill Bradley, a former pro basketball player), prohibited state and professional sports organizations from fixing their games and placing a “Betting Line,” thereby making it illegal to wager on the winners. Because of its importance in preventing blatant acts of corruption in sports and keeping the integrity of professional leagues intact, the act is lauded in its exacting role as a watchdog for sport integrity.
The Bradley Act was labeled the most-discussed piece of sports legislation in the United States history after it put a tremendous control on sports betting and gambling. The bill closed down bookies and pushed gambling underground, literally. The end effect of this was an increase of corruption in professional sports. The Act had many direct effects on players, gamblers, lobbyists, and even coaches and ownership groups. It also forced gamblers looking to place a bet on a game to “go underground.”
Although the bill was designed to protect the integrity of athletic competition, the bill’s wording was so vague that it led to a legal challenge from the state of New Jersey, who, despite being the home of Atlantic City, wasn’t included in the original bill. The challenge was successful, and on May 14, 2018, the U.S. Supreme Court voted 6-3 to strike down PASPA, clearing the way for legalized sports betting across the country.
The Federal Laws are such that in 2021 it’s possible to place a sports bet in the United States so long as the bet is not placed interstate, is made using a licensed bookmaker or casino in a state where gambling is legal.
This then clears the way for legal sports betting and gambling so long as it’s permitted within the state where you are placing a bet.
Understanding which states allow you to place bets online can be confusing. Gaming laws are in constant flux around the world, and the US is no exception. While some states are more forward-thinking than others, a few states still don’t allow online gambling of any kind.
This is even true for residents of a state. Depositing funds into a gambling site without proper knowledge of the law could land you in trouble.
The Dominant Factor Test
The Dominant Factor Test determines if a game still qualifies as gambling or not, so if an element of skill is required to play it successfully, it’s not deemed gambling.
It also comes down to how important an element of skill is compared to the importance that chance is in the game’s overall outcome. Namely, if an activity has been determined to be based solely on chance, it is more than likely that activity violates state law and is therefore illegal under state law.
We’ve provided more details for each state and what the gambling laws currently are:
California holds the key to online sports betting in America. As the most populous state and a leader on 3 major fronts, California’s potential for such an industry is unparalleled. However, progress has been slow as gambling groups try to figure out how they can come together without compromising too many of their own principles or breaking any laws along this complicated path ahead.
The future of legal sports betting in California is looking a lot brighter with the Native American tribal casinos filing to legalize gambling.
The state has a population of 5.6 million, making it the 31st largest U.S. state, with a betting market that rivals larger markets such as Illinois (5.7 mn) and Ohio (11.7 mn). Colorado residents have embraced the legalization process and already participated in their first sanctioned esports event hosted by BetRivers in January 2019.
With hundreds of new accounts created each week, the online sports betting market in Colorado is attracting wagers on a wide variety of sporting events. Individual games have reached average handle levels that would make them top 10 weekly games in Las Vegas while nearly every sport and special event has seen movement.
Sports betting in Michigan is a big deal for several reasons. First, it’s the second-largest state to legalize it. There’s a lot of excitement about how sports betting has opened up to all of Michigan, but there are still some who aren’t sure what it actually entails. If you fall into this category, this guide is for you. Here, you’ll find what sports betting is and the options available to you in Michigan.
Boardwalk. The Sands. The Claridge. Tropicana. These hotels and their gambling empires existed in the golden age of Atlantic City, when the city was a destination on the East Coast, roughly between the prohibition and legalization of gambling in 1976. The fact that Atlantic City is known as one of the most famous gambling spots in history seems almost forgotten today, as does the era of glamor and glitz that it brought to what many would have considered a straightforward summer vacation destination town.
Its decline in popularity has probably led to the states’ desire to want to succeed online, which is why New Jersey offers the most options for online sportsbooks and casinos. There are more online legal casinos and sports betting than in any other state.
New York was one of the first states to legalize sports betting back in 2013; however, the journey to legalizing online sportsbooks and apps has not been straightforward for the Empire State. Things are progressing slowly, with the situation set to be resolved by 2022, almost 10 years. You can read about why the road to legal online sports betting in New York has been a long one.
Casinos That Accept US Players
Listed below are casinos that are known to accept players who are resident in the United States:
Lucky Red Casino
Real Time Gaming
Club USA Casino
Win A Day Casino
Red Stag Casino
Liberty Slots Casino
Intertops Casino Classic
Miami Club Casino
Intertops Red Casino
All Star Slots
High Noon Casino
Aladdins Gold Casino
Desert Nights Rival Casino
Black Lotus Casino
Diamond Reels Casino
All You Bet Casino
Vegas Crest Casino
Sun Palace Casino
Lotus Asia Casino
Lucky Club Casino
Grand Fortune Casino
Vegas Casino Online
Jackpot Wheel Casino
This article is intended to raise awareness about gambling in the United States and how it affects you as a participant. It’s important to be aware that this article is not legal advice and we are not lawyers. Please see your local Government Attorney if you have any additional questions about whether you can gamble online.