U.S. gambling laws, and online gambling laws in particular, are becoming more readily accepted by local, state and federal lawmakers — and the general public. Fueled by the ability for individual states to approve sports betting, elected officials are more open to not just online and mobile sports wagering, but other types of gambling, including real-money online casino games, digital slots and internet poker.
State-level lawmakers have led the charge to approve games, but federal efforts have proven much harder to advance. Several major federal statutes open the door for states to approve new forms of online gaming, but other provisions of these very same laws remain major obstacles for those who want to gamble online.
With significant changes at the federal level increasingly unlikely and local legislation severely limited in scope, state-by-state legislation will prove the catalyst for any developments. Follow along with Gambling.com for any changes in gaming laws at the federal, state and local levels.
It’s been more than a decade since Congress passed a substantial online gambling bill, but previous efforts over the last century continue to shape internet-based gaming going forward.
The Interstate Wire Act of 1961, better known as the Federal Wire Act, remains among the most significant gaming law in the U.S. It has been used to regulate online gaming — even though it was signed before the commercial inception of the internet.
Introduced by the Kennedy Administration to combat organized crime, the bill specifically prohibits transmission (or “wiring”) of information and payments regarding sports betting across state lines. A 2011 re-interpretation of the statute opened the door for other types of gambling to cross state lines, but sports betting was still prohibited.
This has handicapped the nascent U.S. sports betting market, which is unable to pool players as is the case for online poker and iLottery. This requires that each state with legal sports betting act independently; players can only place legal sports bets with licensed providers in their state, not those in other jurisdictions.
This in turn limits player options as well as operators’ customer pools. Like with most other federal gaming laws, there is little likelihood for significant change. Senate Minority Leader Chuck Schumer (D-NY) and Sen. Mitt Romney (R-Utah) have introduced a bill that could better define the Wire Act, and federal sports betting regulations as a whole, but the legislation is largely opposed by the industry and there seems little political appetite to seriously consider the proposal on Capitol Hill.
In the meantime, the existing authorizations under the Wire Act may be in jeopardy.
In 2018, the Trump Administration revised the 2011 interpretation of the law to extend to all forms of cross-state gaming, potentially threatening the legality of online lottery, poker and more. That decision was challenged by multiple stakeholders, and a lower court has ruled in favor of the plaintiffs, postponing any impact on forms of gaming outside sports betting. The Justice Department has appealed the ruling, and industry observers believe this legal battle could carry all the way to the Supreme Court.
Gambling.com continues to report on developments and will post news updates on what will likely remain a complex (and lengthy) legal battle.
The Unlawful Internet Gaming Enforcement Act (UIEGA) also carries considerable authority over American gaming. Tacked on as a last-minute rider by anti-gambling activists as part of an unrelated port security measure, UIGEA bans online gaming entities from accepting funds, though payment processors may still accept bets in states that explicitly legalize real-money internet gambling.
Still, it effectively ended the online poker boom of the early 2000s when officials used the statute as justification for a crackdown on real-money online poker on April 15, 2011 in what is known as “Black Friday” in gaming circles.
The law specifically excluded payments from pari-mutuel horse racing and fantasy sports, which are allowed to operate across state lines. More significantly, it doesn’t prevent states from legalizing online casino gaming such as online slots and blackjack as well as poker, though these payment processors can’t technically operate across state lines.
Since UIEGA passed, a handful of states have legalized these games, and though they are able to form interstate compacts to pool players, they remain severely limited: just Nevada, New Jersey, Pennsylvania, Delaware and West Virginia have approved online poker. Only New Jersey, Pennsylvania, Delaware and West Virginia have legalized real-money online casino games.
Michigan lawmakers are still pushing for iGaming options, and several other states may consider authorizing these games in years to come. Gambling.com continues to monitor developments in statehouses nationwide and will update key details as they emerge.
What was once another consequential federal legislation is no longer in effect.
The Professional and Amateur Sports Protection Act (PASPA) banned nearly every form of sports betting in the U.S. outside of Nevada. While the Wire Act outlawed transmission of sports betting funds and information across state lines beginning in the 1960s, PASPA had a far more strict prohibition that precluded any state (except Nevada) from taking single-game sports wagers online or in-person.
In May 2018, the Supreme Court ruled the law violated the 10th Amendment of the constitution, which allowed individual states to change their own gambling laws to take wagers, though it didn’t allow wagering automatically in every state. Since then and led by New Jersey, 19 states and the District of Columbia have taken sports bets or passed laws to do so, with another dozen or so jurisdictions set to consider laws to do the same.
Online and retail sports betting likely won’t be legal in every state any time soon because of longstanding political and cultural opposition to gambling in many states. Still, with PASPA repealed, a majority of states will likely be taking bets as early as 2020. The Wire Act will continue to prohibit interstate sports wagering transactions, but there appears there will be an increasing number of options for bettors thanks to state-level legislation.
Federal legislation tends to create a broad framework of restrictions while giving states or smaller municipalities room to carve out exemptions. UIEGA created a wide prohibition on nearly all forms of online gaming, but doesn’t preclude states from legalizing the games if they so choose.
That has allowed state lawmakers in a handful of jurisdictions autonomy to make their own gambling decisions. Nevada, for example, approved real-money online poker but not iCasino games, largely because of fears an online market would hurt the revenues of its existing brick-and-mortar casinos.
At the local level, some towns, cities and counties have passed ordinances to approve new sportsbooks, casinos or other types of gaming facilities, but they remain largely unable to pass online authorization without state authority. This keeps most of the action toward new gaming laws squarely in state capitols.
With most forms of online gaming neither explicitly permitted in federal laws nor prohibited, it creates a patchwork of rulings and legislation at the state level. Daily fantasy games, which weren’t widely available at the time UIEGA passed into law, led some states to deem them forms of gambling while others didn’t consider them gambling and others still didn’t define them one way or another. A similar outcome will likely repeat itself when new forms of online gaming develop.
When that happens, it will again be up to state lawmakers to consider approving these games. The widespread federal bans remain in place, but states can continue to chip away by legalizing specific gaming options.
States’ authority to choose their own online gambling laws has created unique systems in essentially every jurisdiction. Some states, such as Hawaii and Utah, ban all forms of gaming while others, such as New Jersey and Pennsylvania, permit nearly every form of commercial gaming. New gambling laws are continually being introduced, and the overall gaming landscape remains fluid. Check out our U.S. home page and click on an individual state to find the most up-to-date information on all forms of online gaming in every jurisdiction.
Since the introduction of the modern lottery in the 1960s, Americans have slowly warmed up to regulated gaming. The Native American and commercial casino booms of the late 1980s and early 1990s have brought one or both types of gaming to most states in the country. New Jersey helped lead the way for online gaming in the early 2010s, and its legal challenge to PASPA brought about the sports betting expansion currently underway.
Still, there remains a long way to go for U.S. gambling, especially online. Internet casino gaming remains illegal in every state that doesn’t explicitly legalize the games. A player using an unregulated gambling site in any state but New Jersey, Nevada, Delaware, Pennsylvania (and soon West Virginia) is technically breaking federal law.
Sports betting, in contrast, is legal and live as of late 2019 in New Jersey, Pennsylvania, Nevada, Delaware, West Virginia, Mississippi, New Mexico, Rhode Island, Iowa, Indiana, New York, Arkansas and Oregon. Of those, all but New York, New Mexico, Delware and Rhose Island don't have mobile sports betting (Mississippi allows mobile only on casino property). Six additional states and Washington, D.C. are poised to take first bets in 2020.
The slow state-by-state expansion of the lottery and later casinos created a domino effect of states legalizing these games; as one state began offering these options it frequently compelled its neighbors to do the same as lawmakers remain remiss to lose residents’ dollars across state lines.
However, online gaming such as poker, slots and digital card games have been slower than some of these other forms. Centuries of gambling aversion still remain entrenched in much of the country and many lawmakers are concerned about the easy access of real money online casino games.
Still, an early wave of lawmakers have opened the door for others to follow, showing that these games don’t bring about the “social ills” some legislators fear and in fact can contribute millions of dollars to state coffers that otherwise would go to an offshore entity. It’s also no coincidence that four of the earliest states to approve real money online gaming laws are in the Mid-Atlantic region. It may be years in the making, but it seems inevitable more states will (eventually) follow.
Federal laws to open up online gambling in the U.S. aren’t likely to change any time soon. The good news is the existing ability for states to approve these games likely won’t be threatened either. That sets up a continually evolving American market — and one that will keep growing for years.
The U.S. commercial casino, Native American casino and state-sanctioned lotteries annually generate around $150 billion in revenue. Newer options, including online sports betting, casino games and poker, are still a fraction of that total, but they represent the newest growth avenues for more and more states as they slowly cast aside the previous aversion and look toward gambling as a viable revenue source. Gambling.com covers all the latest news in these areas — and more — so follow our site for all the latest insights and analysis.
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