The Legality of US Online Gambling
Online gambling has been a major subject of debate within the United States. Some states have already legalized online gambling, others are still discussing various bills in the Senate without any end in sight while others have outright outlawed online gambling.
This presents some gray areas in the affected states and also in the entire country as well. For instance, many people think that online gambling is illegal in the United States, which is wrong. This belief sprouts from a misunderstanding of the Unlawful Internet Gambling Enforcement Act of 2006.
Such confusion drips down to the states. However, if you’re unsure of the legal status of online gambling in your jurisdiction, it’s best to research the available laws. Some may be old (before the internet erupted).
Having said that, let’s take a look at the history of gambling from the first casinos to today’s US online gambling in each and every 50 state.
History of gambling in USATough 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 GamblingFortunately, 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 OrleansBy 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 GameThe 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 Las Vegas. By the mid-1960s, gambling was a very public and very profitable pastime.
Walking Federal and State LinesToday, 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 DivideBefore 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 OfflineHowever, 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 process 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 DOJIt 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 RegulationFrom 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 ExemptionTo 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 BansFinally, 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 MixIn 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 RegulationThe 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. Here’s an interactive map that shows, in brief, according to color codes, the status of each state:
Legal Status in Every StateHere’s an interactive map that shows, in brief, according to color codes, the status of each state:
- Online casino & sports betting is legal
- Sports betting is legal
- Considering legalizing online gambling
“Knowingly advances or profit from unlawful activity as a player.” This is just one of the few laws that would suggest online gambling in the State of Alabama is illegal. This particular statute falls under Class C Misdemeanor. As such, it’s safe to stay away from any online gambling activity when in Alabama.
“Possession of a gambling device,” is another statute that prohibits gambling. In fact, it’s categorized as a Class A misdemeanor. Nevertheless, the device will only be illegal if, “Any other gambling device, with the intention that it be used in the advancement of unlawful gambling activity.”
The only clear law that acts on gambling in Alabama is that a company or an individual is prohibited from operating any online gambling activity in the state. Having said that, it’s unlikely that anyone will face the law for online gambling, or if any state agency has the necessary installations that’ll pinpoint an individual engaging in this activity.
“Unlawful gambling” is considered an offense in the State of Alaska. This offense is categorized as any form of gambling not explicitly allowed the law. Social gambling is legal in Alaska but internet gambling is yet to get the green light and for this reason, chances are online gambling is illegal in Alaska.
While this act may be illegal, you’ll only be in violation because no “real” penalty is found to engage in such an activity. However, if found to engage in subsequent violations, the situation will escalate to a Class B Misdemeanor.
The laws in Arizona allow Social Gambling but the same laws state that anyone found to be engaging in online gambling is in contravention of the law. The exact words are, “Benefiting from Gambling” and is classified as a Class I Misdemeanor, “Except for amusement or regulated gambling, a person commits benefiting from gambling if he obtains any benefit from gambling.”
The “benefit” stated here is ambiguous, meaning that it doesn’t exclusively classify the benefit as financial. Therefore, you could be guilty of an offense if you benefit from fun while gambling online.
In 2015, California introduced four bills that would set up a legal and regulatory framework but only for intrastate online poker. However, as fate would have it, all four bills died on delivery because of inaction. Nevertheless, it’s anticipated that new bills may see the light of day.
Russell Lowery, Californians for Sports Betting consultant and also California Senate Republican Caucus former chief of staff, introduced a proposal in 2018 June 11th to legalize and regulate sports betting. This was right after US Supreme Court lifted the ban on sports wagering that fell under the 1992 Professional and Amateur Sports Protection Act (PASPA). Consumer protection and revenue from online gambling are considered the main reasons why many stakeholders are pushing for its legislation before the 2020 election.
Other than that, there’s no clear law in the state that exclusively prohibits any form of online gambling. However, it’s in your best interest to research and find out whether there are laws that may prohibit this.
The laws in this state are quite clear because apart from Social Gambling and Gambling prohibited by the state, any other gambling by a player is considered a petty offense. A Class 1 Petty Offense for that matter.
However, you can resolve this by paying a fine. You can also visit the Colorado Department of Revenue to read more on this issue.
Online gambling is legal in this state but operators must be licensed to operate in Delaware although no clause explicitly terms gambling on unregulated sites as illegal.
However, there’s a twist to all of this. According to state laws, it’s illegal to own a “Gambling device,” in fact, it’s classified as a Class A Misdemeanor. The real question here is, “what is a gambling device?”
Going by what gamblers use, this can be a smartphone or a computer, which makes it illegal to use while accessing the legal and regulated sites! Quite confusing, don’t you think? Overall, it’s likely legal to gamble online.
The next time you visit Georgia, be sure to stay away from any form of online gambling or gambling for that matter. Peruse the law and you’ll be sure to come across certain terms like, “Any video game machine or device, operated for any consideration, for the game of poker, Blackjack, any other card game or Keno, etc.”
There’s also, “Any slot machine, simulations or variation thereof.” Overall, Georgia doesn’t outlaw online gambling outright but from the definitions, it’s clear that all angles you may want to use to access online gambling are covered.
Operating an online casino in this state will get you in serious trouble. In fact, if you engage in online gambling as a player, you’ll be guilty of a Class B Misdemeanor. Also, according to state laws, your device will, without a doubt, be considered as an illegal gambling device.
The law here is clear but how strict the law enforcement is regarding online gambling is fuzzy. All in all, steer clear of any online gambling.
If you’re an ardent gambler, you may want to keep off this state because of it’s strict and clear laws that prohibit any form of online gambling. Making any bet in Iowa is a crime according to state laws.
Apart from the fines imposed as penalties, the situation can escalate to a felony depending on the amount of money involved in the illegality. In addition, any proceeds from any online gambling will be seized.
The laws in this state will have you fearing for your pocket. For starters, the law explicitly prohibits gambling in public places. This is in addition to an ocean of laws that prohibit gambling operators from setting up shop in the state.
For individuals caught engaging in gambling other than that prescribed under Chapter 23K and winning $5 or more is liable for a fine double the amount they won during the bet.
If you plan on gambling online while in Michigan, make sure you don’t win more than $50. According to the law, online gambling is considered,” Illegal Gambling.” winning under $50 is still a misdemeanor, however, it looks like you’ll be let off the hook.
Other than that, the law states that you could face a jail term or a fine or both. The jail term is no more than a year while the fine is capped at $1,000.
In 2015, the State of Montana updated its gambling laws. Before we can take a look at the laws, don’t even dare gamble in this state.
According to 23.5.112(21) and 23.5.112(20), it’s illegal to gamble online and both sections define it as a crime. Moving on to 23.5.156, you’ll come across the penalty for anyone caught engaging in an illegal gambling enterprise or owns a gambling device.
It states that, “A person who in an activity involving gambling offers or obtains money, property, or anything of value that does not exceed $750 in value by misrepresentation, fraud, or the use of an illegal gambling device or an illegal gambling enterprise is guilty of a misdemeanor and is punishable as provided in 23-5-161.”
For a first offender, the fine is capped at $500. A second offender within 5 years will face a maximum fine of $1,000 or 6 months in county jail. A third offender within 5 years and a fourth offense will see the offender rack up to $10,000 in fines or spend a year in a county jail or both.
Engaging in any form of gambling not permitted by the state or risking, “Something of value,” is considered illegal. According to section 28-1104, betting under $500 in a day is classified as a Class IV Misdemeanor. Go over this and you’ll be charged with Promoting Gambling in the Second Degree.
However, according to the literature used, the latter charge doesn’t appear to affect players. Moving on, section 28-1110 states that if you gamble in a jurisdiction that permits gambling, outside the state, you cannot use this as defense, which means it’s still illegal. Also, all proceeds gained from the act will be seized under section 28-1111.
Online poker is legal in Nevada but only for authorized operators. However, it’s not as popular in the Silver State as one would expect. In fact, revenues from these poker rooms only beat the $1,000,000 mark on one occasion.
This is attributed to the numerous B&M Casinos in the state. In addition, chances are the offers at these casinos beat those at online casinos. Nevada even entered a joint partnership with New Jersey to up the traffic in the poker rooms.
Otherwise, it’s a misdemeanor to transmit any form of communication outside or within the state to make a bet.
New Jersey was the first state to legalize online gambling. The state legalized online gambling on February 26, 2013, through the passage of bill A2578.
Nowadays gambling in New Jersey is completely legal and is one of the few states in the US that allow this. However, any other form of gambling not specified and permitted by the state is illegal. Most of the laws in the state seem to focus on operators rather than players and the latter will be in the clear courtesy of section 2C 37.
The revenues from online casinos and poker sites was $245 million in 2017, which is an increase over 21% increase from 2016.
In 2018 the revenues for online casinos, online sportsbook and online poker increased 18% from 2018 ending the total revenue for the year just shy of $300 million.
At the moment New York’s Senate has a Bill on the floor seeking to categorize Poker and its variants as games of skill. Therefore, all eyes are on the house to see whether the bill see the light of day.
Other than that, New York’s definition of illegal gambling is quite broad but it seems that the law is more ruthless to operators compared to players.
Engaging in any form of gambling not permitted by the state is conditional illegality in North Dakota. Conditional because if you place a bet with under $25 per bet or event, you’ll not be charged. However, anything above $25 is an infraction and is considered a Class A Misdemeanor if goes past $500.
Playing any game of chance in public not prohibited by Ohio’s State Laws is illegal. Nevertheless, there’s not a penalty prescribed by the law for anyone found to be gambling online.
However, there are some exceptions including participating in illegal gambling as a main income stream or bookmaking. That includes using a bookmaker to place a bet.
It’s outright illegal to participate in any form of gambling. In fact, transmitting or receiving, by electronic means including the internet, any gambling information is considered a Class C Felony.
While this may be the laws that apply, HB 1114 is always getting mixed reactions when introduced in the house. This bill seeks to legalize and regulate internet poker but it remains to be seen whether the bill will ever make it to the finish line.
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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.
From the status of each state, it’s clear that a huge percentage of the laws still in operation are outdated and haven’t been updated in a long while. With that said, you may want to stay away from any form of gambling in the states where it may be potentially illegal to do so.
Even then, it’s still unclear on the type of punishment you’ll land for engaging in online gambling or whether law enforcement takes a keen interest in prosecuting offenders.