The US legal betting landscape is closely connected to the history of gambling in the country itself. Games of chance made it to the US colonies when the first European settlers arrived to the New World. The public attitudes toward such activities varied significantly from one community to another, but the country lacked any large-scale restrictions on gambling at the time.
During the late 18th and early 19th century, lotteries were commonly operated as a means of raising additional revenue to fund various educational institutions like schools and universities. Gambling gradually spread throughout the entire country, with cities like New Orleans and San Francisco becoming major hotbeds for such practices. The vigorous growth unexpectedly came to a halt when gambling was uniformly prohibited across the whole of the United States.
Nevada’s Anti-Gambling Bill of 1909
Nevada may be considered the gambling mecca of the world but gaming activities have not always enjoyed a legal status in the Silver State. All forms of gambling were first prohibited in 1861 before Nevada was even a state.
Several years later in 1869, Nevada lawmakers passed a new law that legalized gambling and introduced the first licensing fees for such activities. This made Nevada the only state in the country with legal gambling.
Several legislative amendments took place in the decades to follow, many of which concerned the distribution of licensing fees. In 1907, it was decided that all gambling-related fees bar those for slot machines, would be retained by the counties. Meanwhile, the fees from slots were redistributed to the Silver State’s coffers.
Unfortunately, these favorable amendments were short-lived. Two years later, in 1909, the Reno Gazette Journal reported the state’s lawmakers had approved an anti-gambling bill that effectively outlawed all forms of gambling in Nevada.
Despite the efforts of gambling proponents to kill it with various amendments, the bill passed the Assembly with 27 votes “for” and 20 votes “against”. The ban officially came into effect on October 1st, 1910.
Six years later, the local authorities reintroduced legal low-stake gambling activities where the prizes were soft drinks, chewing gums, cigars, and monetary payouts of $2 or less. Illegal gambling for considerably higher stakes became rampant throughout the country.
The Wide-Open Gambling Bill Reintroduces Legal Gaming in Nevada
The following decades were marked by two important historical events that helped reshape the United States’ legal gambling landscape. The year 1929 saw the collapse of the New York Stock Exchange share prices, signaling the beginning of what became known as the Great Depression, a period of high unemployment rates and severe global economic decline.
Then there was the construction of the Hoover Dam (called Boulder Dam at the time) which commenced two years later. This was a massive project which called for significant financing. Legislators renewed their efforts to reintroduce legal gambling in the Silver State as a means of funding the construction.
Young assemblyman Phil Tobin from Humboldt County proposed a new piece of legislation called Assembly Bill 98. This law was actually authored by another lawmaker but he was too afraid to propose it himself because he feared this would be damaging to his political career.
March 19th, 1931 became a historical day as it saw the official signing of Assembly Bill 98 into law. The legislation was approved by Nevada’s Governor Fred Balzar and effectively ushered in a new era of wide-open gambling in the state.
Assembly Bill 98 covered a broad spectrum of gambling games including slot machines, blackjack, stud and draw poker, roulette, faro, monte, and keno. The law outlined new licensing fees for authorized gambling operators, designated the penalties for violators and prohibited “minors from playing and loitering about (casino) games“.
It stated that no individual in the Silver State was “permitted to deal, operate, carry on, conduct, maintain, or expose for play” any of the above-listed games “without having first procured a license” for offering these activities. Section 1 of Assembly Bill 98 also sheds some light on who could apply for a gambling license, stating that “no alien, or any person except a citizen of the United States, shall be issued a license“.
In the year 1945, the Nevada Tax Commission was mandated with the oversight of gambling licenses on a state level. It had the power to audit gaming operators and enforce compliance with the law. The Nevada Gaming Control Board was established in 1955 to assist the Tax Commission with various enforcement and licensing issues.
The local gaming industry’s association with organized crime syndicates strengthened in the following years. As a result, Governor Grant Sawyer pressured the state’s legislature into establishing a new gaming regulatory body, the Nevada Gaming Commission. This led to the introduction of Nevada’s current two-tier regulatory system. The Gaming Control Board acts as a full-time regulator while the Gaming Commission assumes a part-time regulatory role.
Legal Casino Gaming Arrives to Atlantic City
In the decades following the legalization, the gambling scene truly exploded in the Silver State, with many investors like Howard Hughes recognizing the enormous profit potential of this industry. The state of New Jersey decided to follow suit and legalize gambling in response to this immense success.
New Jersey’s residents were initially averse to this idea but in 1976, they eventually voted in favor of legal casino gaming with a majority of 56%. It was decided, however, to restrict betting activities to the territory of Atlantic City only.
The New Jersey Casino Control Commission was established in 1977 under the Casino Control Act, which authorized the provision of roulette, blackjack, craps, baccarat, slots, red dog, sic bo, mini-baccarat, pai gow poker, and “any variations or composites of such games, provided that (they) are found by the division suitable for use after an appropriate test or experimental period“. The Casino Control Commission was mandated with the responsibility of overseeing and licensing authorized gambling operators in Atlantic City.
The Casino Control Act underwent various amendments over the years. In November 2010, New Jersey Senators Raymond Lesniak and James Whelan introduced a new piece of legislation, Senate Bill S12, which deregulated the local gambling industry and transferred the day-to-day supervisory functions from the Control Commission to the state Division of Gaming Enforcement.
Senate Bill S12 was signed into law by then-Governor Chris Christie at the beginning of February 2011. This transferred the responsibility for licensing local casino operators to the Division of Gaming Enforcement along with the task of dealing with customers’ complaints. The regulator is also expected to undertake audits of licensed casino businesses and maintain a list of excluded customers.
The legislation outlines the criteria casino hotels must cover to receive licenses. The building should contain at least 500 sleeping units while the gaming floor should have maximum square footage of 60,000 sq ft.
Exceptions were made for every 100 sleeping units above 500, which increased the allowed footage by 10,000 sq ft up to a ceiling of 200,000 sq ft of gaming floor space. Providing casino gambling services without a valid license is deemed unlawful and subjected to fines ranging from $50,000 to $200,000 depending on the exact circumstances.
Indian Casino Gambling Regulations
Legal casino gambling eventually expanded outside Nevada and Atlantic City, largely thanks to one federal law that enabled Native Americans to operate games of chance within the territory of their reservations. It all started in the 1970s when the Seminole Tribe of Florida decided to build a large-stakes bingo hall on their Broward County reservation.
The trouble was the hall did not comply with Florida’s state law, which stipulated bingo halls could operate no more than two days per week and pay out maximum jackpots of no more than $100. By contrast, the bingo hall of the Seminoles operated six days a week and its maximum prizes went way beyond the legally allowed limit.
The situation escalated to such an extent that the tribe took the matters to the District Court, insisting it had sovereign rights over their reservation. Said rights were granted by the federal government and could not be interfered with by the state government. The District Court ruled in favor of the Seminoles and their bingo hall subsequently reopened in December 1979.
The Seminoles’ victory gave birth to the modern commercial Indian gaming in the United States. These events eventually led to the enactment of the Indian Gaming Regulatory Act (IGRA) of 1988, signed by President Reagan.
IGRA gave Native American tribes the exclusive right to conduct and regulate gambling activities within their reservations as long as said activities were not in violation of federal law. Of course, the tribes could operate gambling businesses only in US states that do not prohibit such activities.
The passage of IGRA led to the creation of the National Indian Gaming Commission, responsible for the regulation of high-stakes gambling in tribal reservations. The body is governed by a chairman appointed by the President of the US along with two other full-time members selected by the Secretary of the Interior. All three are investigated by the Attorney General before they are officially appointed.
Under the provisions of IGRA, the tribes can offer three classes of gaming. Class I constitutes social games with minimal-value prizes. Class II comprises games of chance like bingo while Class III groups together games like blackjack, craps, roulette, slots, chemin de fer, and baccarat.
The Arrival of Regulated Riverboat Casinos
An interesting phenomenon one is unlikely to see outside the US is the so-called riverboat casino. This type of gambling “establishment” was authorized in the early 1990s in several US states that had frontage on the Mississippi River and its tributaries, including Mississippi, Louisiana, Indiana, Missouri, and Illinois.
Illinois was among the first states to legalize riverboat casinos in February 1990, with the passage of the Riverboat Gambling Act. This legislation also led to the creation of the Illinois Gaming Board, responsible for the licensing and regulation of gambling boats. Licenses were initially granted to ten vessels on condition they cruised the river waters while gaming took place on their premises.
This requirement was invalidated after Illinois Governor George Ryan amended the Act in May 1999. This essentially transformed the riverboats into dockside gambling halls. All license applicants were expected to contribute a fee equal to $50,000 to cover the expenses associated with the investigations carried out by the state regulator before license issuance.
Should the costs exceed this amount, the applicant should pay the extra amount. Licensees are also required to “specify the place where (their) riverboats shall operate and dock“. The first ten licenses granted by the regulator expired after three years but were renewable after applicants repaid the necessary fees.
Licensed riverboats could welcome no more than 1,200 patrons at a time. The equipment used to conduct gambling activities should be purchased or leased from suppliers licensed under the Riverboat Gambling Act.
Only individuals of legal age (21 years old) are permitted in areas where gambling activities take place. As for the games allowed on board, these include baccarat, poker, roulette, twenty-one, slots, keno, and faro for Illinois riverboat casinos. Note that each state has passed individual laws that govern these activities, so the exact requirements in Louisiana, for example, may differ from those in Illinois.
Three Laws That Shaped US Gambling Legislation on a Federal Level
1The Interstate Wire Act of 1961
We previously mentioned that Nevada was the only state with legal gambling until casinos were legalized in Atlantic City. However, this did not prevent organized crime groups based in Las Vegas from facilitating wagers from all over the country with the help of telecommunications, i.e. by wire. This led to the introduction of the Interstate Wire Act which was meant to aid the government’s efforts against racketeering and organized crime. It was signed into law by President John F. Kennedy in September 1961.
This piece of legislation stated that persons engaged in the business of betting or wagering who knowingly use wire communication facilities for the interstate transmission of wagers or wager-related information are committing a criminal offense. Violators faced monetary sanctions and imprisonment.
This outdated law specifically targeted sports wagering over the telephone. At the time, it was impossible for US lawmakers to even imagine betting on sports or casino games via an Internet connection would be possible fifty or so years later.
According to a 2002 ruling of the US Court of Appeals for the Fifth Circuit, the Wire Act pertains only to sports wagering and does not explicitly prohibit online gambling on games of chance.
2The Professional and Amateur Sports Protection Act of 1992
As if the Wire Act did not make it tough enough for sports bettors already, the US authorities decided to strike again in 1992 by introducing the Professional and Amateur Sports Protection Act (PASPA).
Officially known as “An Act to prohibit sports gambling under State law“, this legislation had a big impact because it outlawed wagering on the outcomes of sporting events in all but four states, Nevada, Oregon, Montana, and Delaware. It was officially enforced at the beginning of January 1993.
Under the provisions of PASPA, it was unlawful for any governmental entity or individual to “sponsor, operate, advertise, or promote gambling […] on one or more competitive games in which amateur or professional athletes participate, or are intended to participate, or on one or more performances of such athletes in such games“.
This prohibition continued for over twenty years until eventually the state of New Jersey decided to take matters to the US Supreme Court. New Jersey was keen on regulating sports wagering on a state level but PASPA made this impossible.
Luckily for the Garden State, the Supreme Court overturned PASPA in May 2018 on grounds that it was unconstitutional. This ruling was a crucial moment in US gambling history because it enabled individual states to regulate sports wagering on a state level if they deem fit.
3The Unlawful Internet Gambling Enforcement Act of 2006
The United States is a jurisdiction with a very murky legal landscape when it comes to online gambling. One legislation that had a significant impact on these activities is the Unlawful Internet Gambling Enforcement Act, or UIGEA for short.
The story behind this piece of legislation is actually quite interesting because UIGEA did not go through of its own accord. There were discussions about prohibiting online gambling on several occasions but legislators failed to bring the matters to pass.
UIGEA was attached to another legislation, the SAFE Port Act (Security and Accountability For Every Port Act), which had nothing to do with online gaming. It was approved, along with the SAFE Port Act, in the very last moment before the US Congress was adjourned for the elections on November 7th, 2006. Almost none of the lawmakers had the chance to see the final version of the bill before it was enforced.
One important thing to keep in mind is that UIGEA does not explicitly state online gambling is against the law. Instead, it aims to hinder such activities by making it illegal for payment service companies and banks to process money transfers to and from gambling sites.
The logic was “US citizens cannot gamble on the web if we make it impossible for them to process payments to and from online casinos”. As one direct excerpt from the bill reads, UIGEA “prohibits any person engaged in the business of betting […] from knowingly accepting payments in connection with the participation of another person in unlawful Internet gambling“.
This pertains to payments made with credit cards, electronic funds transfers, checks, drafts, and other similar instruments. Many US citizens falsely presume UIGEA makes it illegal for them to gamble online. It does not. It simply makes the transfer of payments to offshore gambling operators a painful process.
US States with Legal Forms of Online Gambling
After PASPA was overturned by the Supreme Court in May 2018, legal online sports betting became a reality in several US states, with more states expected to follow suit in the near future. Some have already passed laws to allow for such activities, while others are in the process of drafting their sports betting bills.
With that said, certain forms of online gambling may be legal in a given state while others may be prohibited. The operators need authorization from the respective state’s regulators before they can offer their services on the web. Below we list some US states where online gambling is permitted along with the activities residents can partake in.