Online Gambling Laws in the USA

Pres. John F. Kennedy signed the Federal Wire Act into law. The law was part of US Attorney General Robert Kennedy’s war on the US mob, as the Wire Act targetted illegal bookmakers. Any interstate sports bets placed over the telephone lines were banned.

President George H.W. Bush signed PASPA, which banned sports betting in 46 states.

Four states had sports betting laws grandfathered in: Nevada, Oregon, Delaware, and Montana. Nevada had single-game sports betting, while the other three had sports lotteries (a form of parlay betting).

14 years later, President George W. Bush signed into a law the UIGEA. The UIGEA stated that any form of gambling banned under the Wire Act (over the phone lines) were now banned over the Internet.

The new law made it illegal for financial institutions or credit card companies to process gambling payments in the United States. This drove all publicly-traded gaming groups out of the US market, along with many payment processors.

The U.S. Department of Justice seizes the domains of online poker sites like PokerStars and FullTilt Poker. The DOJ also unsealed indictments against 11 online poker executives, claiming they violated the UIGEA, committed fraud, and laundered money.

This had a chilling effect on the offshore US online gambling niche.

Earlier in 2011, the Attorney Generals of Illinois and New York asked the US Department of Justice its opinion on the 1961 Wire Act and 2006 UIGEA.

In December, the DOJ’s Office of Legal Council (OLC) stated that the US Wire Act banned sports betting, but not poker or casino gambling. This was based on the fact that Wire Act prosecutions from the 1960s to 2000s always focused on sports betting — since poker and casino bets couldn’t be made over the phone.

Suddenly, US states were free to legalize, regulate, and tax online casino and poker betting.

Delaware becomes the first US state to legalize online gambling under the new DOJ interpretation.

The Delaware Gambling Competitiveness Act made online poker and casino gaming legal. Dover Downs, Harrington Racecourse, and Delaware Park could launch gaming portals.

Gov. Brian Sandoval signed Nevada’s online gambling bill, which legalized online poker (but not online casinos). Nevada became the second US state with legal online poker.

Gov. Chris Christie signed a bill that legalized online casino and poker rooms. Atlantic City casinos and New Jersey pari-mutuel wagering race tracks could launch online gambling sites.

In the spring of 2014, US Senator Lindsay Graham and U.S. Rep. Jason Chaffetz introduced Restore America’s Wire Act (RAWA) to both houses of the U.S. Congress and held committee hearings to debate the issue.

Both claimed (1) the original Federal Wire Act banned all forms of gambling instead of sports betting alone, (2) that GPS technology couldn’t tell if gamblers were playing in states that banned online gambling, and (3) online gambling might contribute to terrorism.

After a disastrous hearing in the House Oversight Committee in December 2016 in which these assertions were challenged, the two dropped the issue. The Coalition to Stop Internet Gambling (CSIG) shifted its efforts from congress and instead lobbied state governments and the incoming administration.

Facing a $2 billion budget shortfall, Pennsylvania legalized online casinos, poker sites, sportsbooks, and daily fantasy sports sites. The state’s land-based casinos and racinos could launch online gaming sites.

Gaming expansion, which included airport terminal betting and VLTs in convenience stores, was supposed to raise $200 million a year in tax revenue.

The U.S. Supreme Court repealed the PASPA sports betting ban in a 6-3 decision.

The SCOTUS stated, because PASPA favored four US states over 46 others, PASPA violated the Commerce Clause and the Equal Sovereignty Clause of the U.S. Constitution. Congress could ban sports betting in all 50 states, regulate it in all 50 states, or step back and let state governments decide for themselves.

In September 2019, media reports suggested that then-Senate Major Leader Charles Schumer (D-New York) and Sen. Mitt Romney (R-Utah) were working on a bipartisan sports betting bill.

This would have created one federal standard for sports betting laws, while undermining the 20+ US states that had (or would have) their own laws. Sports gamblers were concerned, because early talk of a federal sports betting bill might have had a 1% or more “integrity tax” paid to US sports leagues. Bookmakers claim such taxes were unfair and would ruin their margins on sports betting.

The bill has not received much attention for more than a year, so it seems a federal sports betting bill has little chance of passing.

Since May 2019, 20 US states and the District of Columbia have legalized sports betting in one form or another. Colorado, Illinois, Indiana, Iowa, Michigan, Nevada, New Jersey, Pennsylvania, Tennessee, Virginia, and West Virginia each have full mobile optimized sports betting apps, plus land-based sportsbooks.

Arkansas, Delaware, Mississippi, Montana, New Mexico, and New York have in-person betting. Mississippi, Oregon, and Montana technically have mobile sports betting, but players must enter a casino/sportsbook in order to place those bets. New Hampshire, Oregon, Rhode Island, and Washington DC. each have mobile sports betting through one single operator.

At present, 20 more US state legislatures are debating whether to legalize sports betting.

As of 2021, Louisiana, Maryland, North Carolina, South Dakota, and Washington state, have pending legislation (approved either by committee or in one house of the legislature). Arizona, Connecticut, Georgia, Kansas, Kentucky, Massachusetts, Missouri, Ohio, and Vermont have sports betting bills under consideration by the legislature.

Media reports suggest that Florida and Texas lawmakers might consider such bills in 2021, while North Dakota and Wyoming might have unileteral action by tribal casinos (like in New Mexico). Maine had a sports betting bill passed by both houses of the state legislature, but Gov. Janet Mills vetoed the bill.

The US Justice Department reversed its 2011 opinion on the Wire Act (and UIGEA), which stated that online casinos and poker sites were not banned under the UIGEA.

US Deputy Attorney General Rod Rosenstein stated that states and online gaming sites had 90 days to comply (he later extended the date to June 14, 2019). This sparked a new round of controversy and lawsuits over the DOJ’s federal online gambling enforcement efforts.

Just over a month after the new DOJ opinion was announced, the New Hampshire Attorney General sued the US Department of Justice over its threatened enforcement of online gambling.

New Hampshire doesn’t have online casinos or poker sites, but the state lottery sells lotto tickets over the Internet. New Hampshire argued that its tax revenues would be negatively affected by the DOJ’s overreaching and unconstitutional ban on online gambling.

A month later, the attorney generals of New Jersey and Pennsylvania joined the lawsuit, to protect their online casino/poker industries. The lawsuit is still ongoing.

On December 19, 2019, Michigan Gov. Gretchen Whitmer signed H 4916 and H 4311, which legalized online gambling sites and sports betting, respectively.

Throughout 2020, Michigan officials approved gaming licenses for expanded gambling. Michigan gaming operators plan to launch online casinos and poker sites throughout 2021.

The first 8 online casino apps launched in Michigan. These 8 gaming portals also had mobile sports betting apps. Each site features a partnership of a Michigan land-based casino and an online gaming software provider. The eight online casino operators and 1 sportsbook-only operator are:

• BetMGM and MGM Grand Detroit
• Fanduel and MotorCity Casino
• Wynn Resorts and Sault Ste. Martie Tribe of Chippewa Indiana
• Rush Street Interactive (BetRivers) and the Little River Band of Ottawa Indians
• Golden Nugget Online Gaming and Keweenay Bay Indian Community
• TwinSpirts and Hannahville Indian Community
• William Hill and Grand Traverse Band of Ottawa & Chippewa Indians
• DraftKings and Bay Mills Indian Community
• Greektown Casino and Penn Sports Interactive/Barstool Sportsbook (online sports betting app only)