America’s Laws Against Gambling And Sports Betting

Law Book With USA FlagAmerica is a great nation. People from all over the globe have been trying desperately to get here for centuries. Though the colloquial saying is that America is so desirable because of its enormous amounts of freedoms. And in a certain context, this is true. Religious freedom, cultural freedom, employment freedom; America offers it in spades. However, when speaking about legal online sports betting, the majority of America's government still have a very regressive, Prohibition-style attitude towards it, believing that gambling is some sort of immoral sin and should be blocked and kept away from people. This is what has led to a very hefty assortment of state gambling laws, and a few federal laws that have really thrown a wrench in the gambling industry.

Only Nevada, New Jersey and Delaware currently allow for state regulated online gambling, with the rest of the states unable to legalize it due to Paspa. The fed's laws are the ones that really rule the roost. However, as we explain further down this page, the DOJ released a formal opinion about certain laws and essentially left it up to each state to determine their own destiny regarding whether or not they want to legalize online gambling.

The Federal Laws on the Books

Apropos if you're a gambler, the federal laws in America create a trifecta of blockage, especially for online gambling, and the field gets a little tough to navigate. Let's have a quick yet detailed look at these federal laws on the books.

The Federal Wire Act

Passed way back in 1961, the Federal Wire Act was started as an interstate act. For context, let's say that you lived in Michigan back in the '50s, and you were gambling with a bookie in Illinois. You called in your bets over the phone, and money was delivered in some fashion when you won or lost. The government doesn't like this, of course; they believe gambling is Satan's season on Earth, the dramatics that they are. But what do they do? Do they punish the guy in Michigan for betting, or do they go after the guy in Illinois for accepting the wager? Both states might want jurisdiction, but it gets cloudly. It's not illegal for the guy to place a bet in Michigan, though it is to accept one in Illinois but, then again, he was accepting it from Michigan, technically not breaking state laws. Well, like all things, when politicians have doubts about how to control people, pass another law! Enter the Federal Wire Act. This is strictly about interstate gambling, and so states willingly handed over jurisdiction to a federal body. It is subsequently illegal for the transmission of any sort of gambling over a wire – although the government has yet to rule on whether or not it applies to online gambling. The FWA even acted as the framework for the UIGEA, but more on that below. The following link from UNLV offers an excellent breakdown on the original intent of the wire act, and how it affects state based gambling.

The Professional and Amateur Sports Protection Act

Also known as the Bradley Act, or just PASPA, the Professional and Amateur Sports Protection Act is a sweeping federal regulation that was passed in 1992, with the supposed intent of protecting the integrity of sports by making sports betting illegal. At the time the bill was passed, there were sports lotteries in Delaware, Montana and Oregon, as well as licensed and regulated sports betting in Nevada, so those four states were exempt. But every other state in the union had to follow what amounted to one simple law: No sports betting! Even if the state has casinos, those casinos are not allowed to offer a sportsbook. There's an awful lot of technical jargon we could get into, like reference numbers and statutes and the suchlike, but suffice to say that PASPA strictly bans the act of sports betting in 46 of 50 American states, and although it's supposed to be against the United States Constitution for the federal government to impose its will on the states in this fashion, PASPA has been consistently upheld through every challenge and it's quite clear that, if the feds want, the feds get to control the states and there's little to no recourse. We're not Constitutional scholars or lawyers, but we are literate. We can read the clause that states, paraphrased, those things not in the Constitution will be left up to the states. Well, sports betting wasn't in the Constitution, but the federal government decreed, because it wanted to, that all states must obey.

The Unlawful Internet Gambling Enforcement Act

This is the big one that shook the gambling industry to its core. Online gambling really started to explode during the early 2000's, especially in the realm of online poker, but enter George W. Bush. Fighting wars and ignoring hurricanes apparently wasn't enough for our esteemed President. He also wanted to leave his mark on the gambling world. So, in 2006, he signed into law the Unlawful Internet Gambling Enforcement Act, known all over as the UIGEA. In a nutshell, the UIGEA made it illegal for banks or financial institutions to process any transactions related to online gambling. We would refer back to the un-Constitutionality of it all, but there's no point in being redundant. The most reputable sites started a countdown and allowed Americans to withdrawal and close out. Though many just panicked and cut ties, for fear of what Bush might do. This was known as Black Friday in the gambling community. And love or hate Bush as a President, one thing is a certainty here: You never knew what Bush might do! While the dark skies surrounding the UIGEA have cleared up partially since '06, there's still a storm cloud hanging over most states, as the UIGEA has many states scared to even type the word “gambling” online. The FWA actually served as the framework—the precedent—for this sweeping regulation that would otherwise be unprecedented.

The Department of Justice's Interpretation of Federal Laws

This is an incredibly complex, long and outright boring topic, if we're honest, so we're going to try to keep this as succinct as possible. Long story short: All three of the federal regulations you read about above have been challenged in court, but only in 2011, when the DOJ heard the UIGEA appeal, was one actually overturned – or, more accurately, reinterpreted. The Department of Justice ruled, and accurately so, that the federal government had no right to tell states that they could not sanction online gambling. However, the irony bug manages to bite us all, even when the feds get something right. In truth, they only ever get it half right, at best. You see, while they ruled the UIGEA was unlawful, in a nutshell, they let PASPA stand. So, apparently, the DOJ believes, on principle, that the federal government cannot tell states that states cannot offer online gambling. Unless, of course, the gambling in question is sports betting, then the government says, “Well, that's different....because reasons.”

So, as of 2011, all 50 states can now offer online gambling such as casinos, poker, bingo, etc, but not sports betting. To date, the only three states to take advantage of this have been Delaware, New Jersey and Nevada. The other 47 states are scared of the large and rabid conservative coalition that is trying desperately to sue the DOJ for telling the federal government that it can't impose its will on every state. As we said, it's a mess. Suffice to say that, as of 2011, online gambling (save sports betting) is not illegal in the US unless a state deems it so. So the 47, the silent, scared majority, can no longer cite the Wire Act or the UIGEA as their reason for abstaining. They just don't want to anger the uber-religious conservative base.

What You Need to Know Going Forward

All of this legal information is good information to have under your belt, no doubt about it. However, all you really need to know going forward, is that the act of gambling is not illegal in the United States, even the act of sports betting. As a sports betting resource guide, we want to make this point clear. For some odd reason, all of the federal government treats sports betting like capital murder or organized crime. But in terms of going out and placing a bet, you are perfectly free to do so. You'll just have to find an offshore site that is licensed in a jurisdiction that offers legal online betting, and this is where we can help by pointing you in the right direction. You can check out our list of states that allow sports betting here.