Since time immemorial, sports betting has been a popular pastime. Some experts believe that the ancient Greeks and Romans introduced sports betting to the world. Realizing its great revenue-generating potential, many countries decided to liberalize the industry. At the moment, the sports betting industry is legal in many countries across Europe.
Unfortunately, things are not that cut-and-clear in the United States because the sports betting industry is subject to state and federal regulations. Whether it is legal to bet on sports largely depends on the state you are physically located in. And even if you reside in a state that legalized sports betting, you cannot bet on sports if you are under the age of 21.
The History of Sports Betting in The USA
Before the 20th century, the most popular sport among US bettors was horse racing. Betting on traditional sports emerged on the surface with the establishment of the National League (NL) in 1876. Two decades later, the American League was founded and the popularity of sports betting kept on rising. At that time, sports betting was perceived as a form of entertainment and no regulations were in place.
But it did not take long for the first sports betting scandal to stir the pot. In 1919, eight members of the Chicago White Sox (a professional baseball team) were accused of being bribed to throw the game against Cincinnati Reds. Even though some states decided to restrict bookmakers from offering betting services, the demand for sports betting kept on increasing. This gave rise to illegal sports betting operations.
Nevada – The First State to Legalize Sports Betting
Out of doubt, Nevada, and more specifically Las Vegas, is the gambling Mecca in the USA. The state moved to regulate the sports betting industry back in 1949 in an attempt to boost its tourism industry. Interestingly, Nevada legalized most forms of gambling in 1931. A 10% tax was imposed on all sports bets. The heavy tax resulted in an exodus of operators from the market and the closure of betting shops. In a bid to reinvigorate the sports betting industry in the state, the US Congress lowered the tax to 2%.
The Federal Wire Act
The Federal Wire Act
Senate Bill 2460
In the meanwhile, organized crime kept on having a firm grip on sports betting operations throughout all other states except for Nevada. Legislators ramped up their efforts to crack down on illegal sports betting operations. In 1961, the Federal Wire Act was passed to prevent bookmakers from accepting bets on sports placed over wire communications. In fact, the federal law did not target bettors, but bookmakers.
But the law was enacted before the invention of the Internet. Hence, we can interpret “wire communications” as referring to bets placed over the phone. However, the Internet is also a form of wire communication, which means that the Federal Wire Act may pertain to online sports betting.
The Professional and Amateur Sports Protection Act
A growing number of states started eyeing the opportunity to regulate gambling and sports betting. In 1976, Delaware launched a sports lottery. At that time, New Jersey passed a referendum to allow casinos in the state. In 1986, the Montana Lottery was launched, and in 1989, the Oregon Sports Action parlay game came on the scene.
As a result, the US Congress decided to adopt stringent measures to stem the further expansion of the industry. In 1992, President George H.W. Bush signed the Professional and Amateur Sports Protection Act (PASPA) into law to ban states from regulating betting on professional or college sports events. The law became a hindrance to the development of the sports betting industry.
However, the states that have already regulated sports betting or some forms of it were exempt from PASPA. These include Oregon, Delaware, and Montana. Residents of Delaware were allowed to place parlay wagers on the outcomes of at least three NFL games. Montana could continue to offer sports pools and square betting.
Oregon sports fans could place parlay bets on NFL and NBA games until 2007 when the state forced the local lottery, also known as “Sports Action”, to cease operations in an attempt to attract collegiate basketball tournaments.
The US Congress provided New Jersey with a one-year window to regulate sports betting as casino gambling was already legal throughout the state. However, New Jersey failed to pass laws regulating the sports betting industry within this time frame and missed the opportunity to legalize its betting market.
The Legal Battle Against PASPA
It all started in 2011 when New Jersey held a referendum on whether PASPA should be amended to allow betting on sports at local racetracks and casinos. Voters approved the referendum, and the state presented a bill that was signed into law in 2012 by Governor Chris Christie. The NCAA, NFL, NBA, and NHL opposed the Governor’s decision.
The District Court ruled against New Jersey’s bill, explaining that it violates PASPA. The Third Circuit Court of Appeals agreed with the ruling, and the Supreme Court declined to hear New Jersey’s case. In 2014, legislators in New Jersey introduced the so-called Senate Bill 2460 that was focused on repealing the existing provisions regarding sports betting at horse racing tracks and casinos located in Atlantic City.
Professional sports leagues contested the bill, stating that it violates PASPA because it aims at authorizing sports betting throughout the state. New Jersey’s bill again failed to pass, but state legislators did not give up. In 2017, the Supreme Court agreed to hear New Jersey’s sports betting case.
On 14th May 2018, the regulatory climate dramatically changed for New Jersey after the Supreme Court overturned PASPA. It was explained that PASPA violated the anti-commandeering provisions of the Tenth Amendment of the US Constitution. The repeal of PASPA paved the way for individual states to regulate the sports betting industry within their boundaries.
The Unlawful Internet Gambling Enforcement Act
In 2006, the US Congress enacted the Unlawful Internet Gambling Enforcement Act (UIGEA) in an attempt to stamp out online gambling and sports betting operations. Under UIGEA, online gambling and betting businesses are not allowed to process gambling-related payments. The Act was included in the SAFE Port Act. It was briefly introduced just before the congressional recess, so most Senators could not even understand what UIGEA is all about.
The word “Enforcement” plays a crucial role in interpreting the law. UIGEA can penalize existing offenders only. A common misconception is that UIGEA outlaws online gambling and sports betting, but in fact, it targets operators. This means that UIGEA does not penalize bettors. Daily fantasy sports (DFS), tribal gambling, horse racing, and lottery remained untouched by UIGEA were all exempt from UIGEA.
UIGEA forced many remote sports betting and gambling companies to look for alternative payment solutions, while others decided to leave the US market. This piece of legislation is the cause of poker’s “Black Friday”. Poker fans might remember that on 15th April 2011, the US Department of Justice issued an indictment against PokerStars, Full Tilt Poker, and Absolute Poker.
The three poker websites were accused of violating UIGEA. A civil complaint against the companies was also filed. As a result, PokerStars and Full Tilt Poker ceased operations in the USA immediately. This shook the thriving online poker industry to the ground.
Over the years, UIGEA has started to lose ground among players and bettors. At the moment, many reputable online sportsbooks accept punters from the US, providing them with convenient and safe payment solutions.
US States That Legalized Online Sports Betting
After the Supreme Court struck down PASPA, many US states decided to regulate the sports betting industry. Sports betting is an attractive source of revenue for the states. Besides, a regulated sports betting market provides a high level of consumer protection and curbs illegal operations. In the lines below, we will discuss the US states that have already regulated the sports betting industry.
On 15th September 2021, legislators in Arizona passed HB 2772 that fully came into effect in September, just before the start of the new NFL season. The piece of legislation regulates both retail and online bookmakers within the state. The bill states that 20 licenses will be split between online/retail sportsbooks and tribal casinos.
Experts believe that the sports betting market in Arizona has great potential because of the state’s large population. Before the passage of the law, Arizonans could either place sports bets at unregulated sportsbooks located offshore or travel to Nevada to visit a betting shop.
In November 2019, Colorado made the first step toward the liberalization of its sports betting market after its residents voted in favor of Proposition DD. On 1st May 2020, the sports betting market was launched after legislators presented the legal framework that will govern the industry. The Colorado Limited Gaming Control Commission and the Colorado Division of Gaming are the authorities responsible for regulating all aspects of the sports betting industry.
With the passage of Proposition DD, both online and retail sportsbooks are legal in Colorado. Currently, the most prominent online sportsbooks are DraftKings, FanDuel, betMGM, and BetRivers. It is crucial to note that online operators have to partner with one of the land-based casinos in the state.
In June 2019, Gov. Pritzker approved S 690 to legalize retail sports betting in Illinois. A few months later, legislators decided to regulate the online sports betting industry throughout the state. Interestingly, the first sportsbook to enter the state’s market was BetRivers. Some of the most reputable sports teams are based in Chicago, including the MLB’s White Sox, the NFL’s Chicago Bears, and the NBA’s Bulls.
In August this year, the Chicago Cubs got the green light to build a two-story betting venue at Wrigley Field in collaboration with DraftKings. The Chicago Cubs is a prominent team in Major League Baseball.
Sports fans in Indiana can place bets online or in-person thanks to the passage of HB 1015 on 8th May 2018. The piece of legislation provided riverboat casinos and other gambling establishments throughout the state with the opportunity to offer sports betting services. The Indiana Gaming Commission and the Gaming Control Division are the authorities that regulate the gambling and the sports betting industry in Indiana.
A month later, online sportsbooks also got the nod to legally operate in Indiana. Mobile betting is also allowed throughout the state. However, bookmakers are required to partner with a land-based casino located within the borders of the state to offer sports betting services.
On 13th May 2019, Governor Reynolds signed Bill 617 into law to regulate online and retail sports betting across the state. Since January 2021, sports fans who prefer to place online bets are no longer required to register in-person at a land-based casino. In 2020, legislators agreed to ban the use of credit cards at sportsbooks in a bid to prevent problem gamblers from running into debts.
Even though most forms of sports betting are allowed, punters residing in Iowa cannot place bets on events in which the participants are younger than 18 years old. Live prop bets on college sports are also forbidden.
In June 2019, New Hampshire regulated its sports betting industry, allowing 10 retail and 5 mobile sportsbooks to enter the market. After a bidding process, New Hampshire granted a license to the DraftKings app and retail betting shops started operating in 2020. However, the bookie has to pay 51% of its online revenue and 50% of its retail revenue to the state.
Individuals have to be at least 18 years old to place sports bets. The authority that regulates the sports betting market throughout the state is the New Hampshire Gaming Regulatory Oversight Authority. Sports fans residing in New Hampshire should know that betting on high school sports/athletes is against the law. Betting on professional and college sports is allowed unless the competition includes the participation of universities located in New Hampshire.
Since 20th December 2019, the state of Michigan also enjoys a regulated online and retail sports betting market. Governor Gretchen Whitmer signed the Lawful Sports Betting Act into law. The first in-person bets in Michigan took place in March 2020. Even though online sports betting has been legal throughout the state since 2019, the Michigan Gaming Control Board (MGCB) granted licenses to online bookmakers in January 2021.
Betting on high school sports events is allowed only if the majority of the participants are 18 years old or above. Online bookies who want to operate on the Michigan market have to pay a $55,000 application fee, a $100,000 license fee, and a $50,000 annual renewal fee.
Sports betting has been legal in Nevada since 1949. For decades, Nevada was the only state with a regulated sports betting market. The Nevada Control Board has always been the authority that regulates the industry throughout the state. The sports betting industry in Nevada thrives simply because the state does not levy burdensome taxes and fees.
It is crucial to note that bettors have to verify their online sports betting accounts in person at a physical location. This means that online bookmakers have to operate in partnership with land-based gambling establishments. The state does not allow betting on high school sports events where the participants are under 18 years old.
New Jersey is the state thanks to which other US states were given the power to regulate the sports betting industry. A month after PASPA was repealed, Governor Phil Murphy approved New Jersey’s Assembly Bill 4111, legalizing retail sports betting. In June 2018, the state of New Jersey regulated the provision of online and mobile sports betting services across the state. Experts claim that New Jersey is the second most lucrative market in the US, after Nevada.
The state’s law does not allow betting on high school sports events, New Jersey collegiate teams, or collegiate games taking place within the borders of the state. Online bookmakers have to also operate a land-based venue. However, the state provides them with 270 days to establish a land-based betting shop.
On 27th August 2019, sports betting in Oregon was legalized. Only a month later, the first retail sports betting shop was launched at Chinook Winds – a tribal gambling establishment. In October 2019, the first betting app, the Scoreboard, went online, allowing Oregonians to place sports bets via their portable devices.
There are no other sports betting apps in the state as the Oregon Lottery holds a monopoly over all sports betting operations. In August 2021, media agencies reported that Oregon approved DraftKings to replace Scoreboard, taking over the sports betting operations throughout the state.
Pennsylvania regulated its sports betting market in November 2018. Initially, it authorized in-person sports betting only, but in May 2019, the state legalized online and mobile sports betting. Pennsylvania’s sports betting market has great potential. Unfortunately, the state imposes burdensome taxes on operators. That is why some reputable bookmakers decided not to enter the market.
In May 2019, the first online sportsbook and mobile betting app went online in Pennsylvania. Bettors residing in Pennsylvania should be 21 years old or above to bet on professional and college events. Betting on high school sports events is not legal. The Pennsylvania Gaming Control Board is responsible for regulating and overseeing the industry.
Retail sports betting has been legal in Rhode Island since 26th November 2018. A year later, online sports betting was authorized, but bettors were required to make an in-person registration. However, this requirement is no longer valid. At the moment, there is only one approved online sportsbook, Sportsbook Rhode Island, that is powered by William Hill and runs on an IGT platform. The other option to place a sports bet is to visit Twin River Casino or Twin River Tiverton.
Tennessee is an exceptional state that authorized online sports betting only. On 4th June 2019, the state passed the so-called Tennessee Sports Gaming Act, regulating online sports betting. The Tennessee Education Lottery Corporation regulates the industry throughout the state. People physically located in Tennessee cannot bet on events in which individuals under 18 years old participate.
Virginia regulated sports betting in March 2020. In January 2021, online sports betting was authorized throughout the state. Bills SB 384 and HB 896 set the regulatory framework for bookmakers. Placing a bet on a college sports event is allowed only if no Virginia-based college team participates in the competition. Bookmakers who want to receive a license to operate on Virginia’s market have to submit their application to the Virginia Lottery Board.
West Virginia regulated its sports betting market in August 2018 after passing the S 415 bill. Initially, only retails sports betting was authorized. A few months later, the state legalized online sports betting, either. However, the law states that bookmakers have to operate a physical location to provide online sports betting services. Betting on high school sports events is forbidden. However, the state does not outlaw bets on West Virginia collegiate teams or collegiate games taking place within the state’s borders.
In December 2018, Washington DC introduced the so-called The Sports Wagering Lottery Amendment Act in an attempt to regulate the sports betting industry. In 2019, the bill was signed into law, and the first bets were registered in 2020. DC Lottery is the regulatory body that oversees and regulates the industry. The council granted a license to the lottery provider Intralot that launched the only sports betting app GambetDC. However, GambetDC has no competition and is known for offering the worst betting lines. Individuals have to be 18 years old or above to place a sports bet.
Experts claim that legislators have to overhaul their laws if they want to deploy the full potential of the state’s online sports betting market. At the moment, most sports fans who are located in Washington DC prefer to place in-person bets.
Wyoming is another state that legalized online sports betting only. On 5th April 2021, Governor Mark Gordon signed HB 133 into law, regulating the provision of online sports betting services throughout the state. The Northern Arapaho Tribe is also allowed to offer sports betting at its casinos. DraftKings and BetMGM are the first sportsbooks to enter the market, but other bookmakers are expected to go live soon.
US Sports Betting Markets Pending Launch
The regulatory climate is constantly changing, and more and more states are about to legalize online sports betting. While some US states are still considering whether and how to legalize online sports betting, several others already introduced bills that were approved and are currently pending market launch.
Connecticut is one of the latest states to regulate the sports betting industry. Governor Ned Lamont reached a deal with the Mashantucket Pequot and Mohegan tribes in 2021, paving the way for retail and mobile sports betting. The passage of HB6451 provides the state lottery with the opportunity to operate up to 15 retail sports betting shops.
Online sports betting will be launched on 7th October 2021, with DraftKings, FanDuel, and Rush Street Interactive said to be the bookmakers that will provide online and retail sports betting services. The Mohegan Sun and Foxwoods casinos kicked off their sportsbooks on 30th September 2021.
On 18th May 2021, Governor Larry Hogan signed HB 940 into law, legalizing the sports betting industry in Maryland. The piece of legislation allows for 60 online and 30 retail sportsbooks to receive a license. However, the Maryland Lottery and Gaming Control Agency have to craft the legal framework that will govern the industry. Sports bettors in Maryland are still not able to place bets. According to forecasts, the sports betting market will go live by the end of the year.
After a referendum passed by Louisiana voters in 2020, lawmakers introduced bills to legalize and tax the sports betting industry in 55 parishes. Governor John Bel Edwards signed both bills into law. Allegedly, 41 online sportsbooks and 20 retail sportsbooks are to enter Louisiana’s market. The Louisiana Gaming Control Board is responsible for regulating the industry. Experts hope that the sports betting market will be launched by the end of 2021.
In April 2021, New York Governor Andre Cuomo signed a bill into law, legalizing online sports betting throughout the state. The online sports betting market is currently pending launch. New York State Senator Joseph Addabbo Jr. expressed his hopes that sports fans will be able to bet online on the 2022 Super Bowl that is scheduled to kick off on 13th February. At the moment, punters can place bets on their favorite teams by visiting one of the state’s land-based casinos that take sports wagers.
In May this year, the Florida legislature ratified a gaming compact between the state government and the Seminole Indian Tribe. Florida is among the US states with the highest resident population, and by regulating the sports betting industry, the government will significantly boost its economy. Under the gaming compact, the Seminole Tribe will hold a monopoly over the sports betting operations in Florida. The tribe will receive a share from all sports bets, including the ones made through portable devices.
Even though the gaming compact was not approved by the federal Department of the Interior, it was allowed to proceed. However, the gaming compact did not enjoy a smooth sail. In August, two gaming businesses based in Florida sued the Department of Interior over their decision to pass the gaming compact. In late September, a limited liability company, the No Casinos group, and several individuals filed a new suit against the gaming compact. If all legal hurdles are cleared soon, spots fans residing in Florida will have a good reason to celebrate.
US States with Retail Sports Betting Only
Most states that legalized online sports betting allow operators to provide betting services online only if they operate in partnership with in-state physical establishments. These can be land-based sports betting shops, tribal casinos, betting kiosks, racinos, etc. Only two states offer online-only sports betting, including Tennessee and Wyoming.
On the other hand, some US states decided to legalize retail sports betting only. This means that punters have to visit a land-based betting establishment to place a bet. Below, our readers will find a list of the states that allow sports betting in land-based betting venues only:
In states such as Mississippi and Montana, online sports betting is technically legal. However, sports fans are not allowed to place wagers from anywhere within the two states. Punters have to visit an authorized physical gambling or betting establishment to place a bet online.
States Still Considering the Legalization of Sports Betting
Sports betting is not legalized in all US states, but the list of states with regulated sports betting industry keeps on growing. At the moment, several states are making legalization efforts. In the lines below, you can find more information about these states and what actions they have already taken to liberalize their sports betting markets.
California could not legalize sports betting so far due to disagreement on behalf of the tribes as the sports betting operations throughout the state would not be under their control. However, the future of the sports betting industry in the state started to look bright after several major cities have expressed their willingness to legalize sports betting throughout the state, and a third sports betting proposal was filed. According to projections, California’s sports betting market will be worth $2.5 billion per year. The legalization of the sports betting industry in California might appear on the 2022 ballot.
In January 2021, Rep. Adam Koenig introduced House Bill 241 that would legalize sports betting across the state. The Kentucky Horse Racing Commission would be in charge of regulating the industry. The state’s racetracks and sports venues with at least 50,000 seats would qualify for a license. Backers of the sports betting bill explained that most of Kentucky’s neighboring states have already legalized sports betting. Unfortunately, the bill’s sponsor, Koenig, could not push the sports betting bill in Kentucky’s odd-numbered-year session this year. Kentuckians hope for a legalized sports betting market by 2022.
Kansas is another state that wants to legalize sports betting. So far, a few proposals to regulate the industry were introduced but none of them have achieved their goal. In March this year, the majority of Kansas legislators voted against SB 84 to legalize sports betting. A Substitution for SB 84 was introduced, but the Kansas House Committee of the Whole did not pass it. The Substitution for SB 84 would allow the in-state physical casinos to open their retail sportsbooks and partner with online operators. The tribal casinos would also be allowed to offer sports betting services.
It seems that Maine missed the opportunity to legalize sports betting this year. Earlier this year, the House approved LD 1352 to legalize retail and online sports betting throughout the state. But the Maine Senate did not pass the bill during its 2021 legislative session. The bill sponsor, Senator Louis Luchini, did not include a tethering requirement in the original version of the bill. An amendment that requires online bookmakers to be tethered to in-state casinos was approved. But Luchini disagreed with the amendment, explaining that tethering would create an “anti-competitive and anti-free market”.
Minnesota regulates various forms of gambling, including bingo, raffles, social gambling, and others. But when it comes to sports betting, the state still makes efforts to legalize the pastime. The latest proposal to regulate the sports betting industry came in January 2021. DFL Senator Karla Bigham introduced a bill in the Senate, but neither the Senate nor the House considered it. The bill would initially regulate retail sports betting, and after a year, it would allow online sports betting.
Missouri lawmakers have been trying to legalize sports betting across the state since the Supreme Court repealed PASPA in 2018. But it seems that sports betting will be addressed next year. Sen. Denny Hoskins supports the idea of legalizing sports betting in Missouri. He promised to sponsor any further attempts to legalize the industry in 2022. In 2020, he proposed Senate Bill 98 that would legalize sports betting and allow video poker terminals, but it still awaits consideration.
In 2020, the Oklahoma legislature reached an agreement with two Native American tribes, paving the way for the legalization of the sports betting industry. The gaming compact would allow the Indian tribes to offer sports betting at their casino properties. However, further actions were discontinued due to a conflict between the state and competitive gaming entities. In 2022, lawmakers will be busy again with the liberalization of the sports betting market.
Betting on Daily Fantasy Sports
Daily fantasy sports (DFS) is an industry that keeps on growing at a rapid pace. According to Research & Markets, the global fantasy sports market will grow by 9.5% up to $22.31 billion. The rise is mainly propelled by the young population, the advent of technology, and the launch of daily fantasy sports apps.
In the USA, DFS started to gain steam in 2006 when UIGEA came into force. In 2013, DFS enjoyed unprecedented growth. Two years later, DraftKings became the official partner of Major League Baseball (MLB). At the moment, DraftKings and FanDuel are the biggest daily fantasy companies in the USA. The legalization of DFS was possible because it was classed as a game of skill by the US court. On the other hand, betting on regular sports was defined as a game of chance.
That is why DFS has never been subject to anti-gambling laws in the USA. It is regulated in some states in which the legalization of online sports betting is still under discussion. What is more, not all daily fantasy operators accept players from every state due to legal concerns. But if the state you are residing in does not explicitly ban DFS, you will most likely find a DFS operator to serve your needs.
For example, DraftKings does not accept players who are physically located in Alabama, Iowa, Nevada, Hawaii, Louisiana, Washington, Idaho, or Montana. FanDuel restricts the same states as DraftKings, with Arizona added to the list. Interestingly, no DFS brand operates in Nevada. The reason for this is because the state defines DFS as a gambling product and operators do not agree with this classification. Hence, no DFS operator wants to provide its services to players located in Nevada.
In some states, the legal status of DFS remains murky. For example, South Dakota does not regulate the industry, but the law does not penalize operators or players. At the moment, FanDuel, DraftKings, Fantasy Draft, and Yahoo Daily Fantasy accept players located in South Dakota. The states in which no DFS operator does business are: