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America’s Laws Against Gambling And Sports Betting

Lawbook With USA FlagWhen discussing legal online sports betting, the majority of America's government has a very regressive, prohibition-style attitude towards it, buying into a negative perspective concerning the morality of gambling entertainment. This is what has led to a variety of state gambling laws in the past.

There are no US federal laws that make it a crime for Americans to place bets at licensed offshore sportsbooks online.  There are two states that legally prohibit all online gambling, domestic or offshore, leaving residents in Connecticut and Washington without legally sanctioned online betting options, though they have yet to start enforcing those laws.

For the most part, state lawmakers are becoming more progressive concerning betting entertainment and recognize the value that this type of revenue stream can bring to the state. Individual states are actively analyzing what the legalization of domestic sports gambling can provide them with in terms of opportunities, tourism, and tax revenue, and many have already taken action one way or the other through new legislation.

Nevada, New Jersey, Pennsylvania, and West Virginia currently permit state-regulated online sports gambling, with a handful of additional states having launched land-based sportsbooks. Individual states began embracing sports betting the moment that PASPA was ruled unconstitutional by the Supreme Court in the infamous NJ case, with multiple states having had their legislation ready and waiting should the ruling go in the Garden State's favor.

Below we'll take a look at the relevant US federal gambling laws, and explain how state gambling laws intersect with federal laws to impact online and brick and mortar sportsbook gambling, as well as what these laws have to say about the legal status of offshore sports betting entertainment.

The Federal Laws on the Books

This sections below will detail and explain how each major federal law affects domestic gambling opportunities in the US.

The Federal Wire Act

Passed way back in 1961, the Federal Wire Act was passed in an effort to curtail the illegal gambling activities taking place over the phone. It prohibited the transmission of wagers or betting information from being carried across state lines via telegraph or telephone. The Federal Wire Act targeted these illegal bookie operations as a means to curb the mafia from manipulating games and making a profit through these tactics.

This law was strictly focused on interstate gambling, and only targeted those accepting bets and not the individuals placing the bets.  The goal was to crack down on illegal gambling services, not prosecute bettors.  Between the DOJ Legal Opinion of 2011 and the repeal of PASPA, today's application of the Wire Act prohibits any gambling business from accepting bets across state lines or from foreign sources.

With the changes still being fully implemented, we are not sure yet how this will affect those states that had entered into interstate gambling pacts with one another, sharing player pools for their online gambling initiatives. Once that aspect of the legal situation becomes more clear we will update that information here.

The Professional and Amateur Sports Protection Act

Also known as the Bradley Act, or just PASPA, the Professional and Amateur Sports Protection Act was a sweeping federal regulation that 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! PASPA strictly banned the act of sports betting in 46 of 50 American states until 2018. This law has since been struck down by the Supreme Court and is no longer applied in any capacity.

New Update On Paspa - May 14th, 2018

The Supreme Court of The United States ruled that the PASPA act violated the constitution and ruled in favor of New Jersey in the case. This change opened the door for individual states to pass legislation to allow or prohibit state-regulated sports betting within their borders, and many states have moved passed or pending legislation already on the books.

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. In 2006, then-President Bush 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.

The most reputable sites started a countdown and allowed Americans to withdrawal and close out.  Many trusted gambling sites left the US market at this time.  After the dust settled, and the financial and gambling industries learned how to comply with the regulatory oversight provided by the UIGEA, many of these reputable gambling sites have returned to provide services to US players.

The UIGEA did end up making the online gambling market safer for both the bettors and the operators by imposing a more reliable and stricture regulatory structure for how gambling related transactions are processed.  Gambling sites invested in top tier payment processors while all parties implemented higher level security protocols to ensure the validity and safety of those transactions that are processed.

While US online gambling funding options are still somewhat limited in some regards, things have stabilized.  The emergence of cryptocurrencies have filled the void left by the elimination of US friendly e-wallets and failed credit card transactions. The UIGEA does not make it illegal for Americans to gamble online.  The law simply regulates how online gambling transactions are processed.

The Department of Justice's Interpretation of Federal Laws

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 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 and therefore established that each US state has the authority to determine their own fate concerning online gambling with the exception of sports betting.  The repeal of PASPA took care of freeing sports gambling as the last remaining federally prohibited form of state-regulated online gambling.

As of now, all 50 states have the legal ability to legalize and offer online gambling such as casinos, poker, bingo, and sports gambling. To date, only a handful of states have taken advantage of legal domestic online gambling. However, many states have pending bills to allow this form of gaming.

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 there are no federal laws making gambling illegal in the United States either online or offline, and this includes sports betting. States now determine the legal status of all gambling entertainment within their borders. As a sports betting resource guide, we want to make this point clear.

You'll just have to travel to a state with legalized sports betting or use a licensed offshore sportsbook. You can check out our list of states that allow sports betting here or follow our recommended online sportsbooks.

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