INTRODUCTION
The online gambling market is growing quickly. By 2023, the sector should increase at a compound yearly growth rate of 11.6% to reach $92.9 billion. According to projections, the sector will advance due to emerging technologies like IoT, Blockchain, AR, and VR.
Because of this boom, local, state, and federal officials as well as the general public are more accepting of U.S. gambling regulations, and online gambling legislation in particular. Politicians are more accepting of not only online and mobile sports betting but also other forms of gambling, such as real-money online casino games, virtual slots, and internet poker, thanks to the capacity of individual states to legalize sports betting.
Legislators at the state level have taken the lead in approving games, but federal attempts have been considerably more difficult to proceed with. While some significant federal legislation allows states to permit novel types of online gambling, other aspects of these very same laws continue to provide significant barriers to people who wish to play online.
State-by-state legislation will act as the impetus for any advancements, with large changes at the federal level becoming less likely and municipal legislation having a severely constrained and limited reach.
This blog will offer a state-by-state overview of the legality of online gambling in the US, including details on the rules and legislation that apply to it in each state. We’ll also look at the many forms of online gambling that are accessible in the US, including online casino games, sports betting, and lotteries.
OVERVIEW OF THE LEGAL STATUS OF ONLINE GAMBLING IN THE UNITED STATES
The Wire Act of 1961 in the US governed the gambling industry for the longest time. It is a piece of legislation that was created before the Internet even existed to be used in conjunction with anti-racketeering laws and is therefore not applicable to online gambling. To legalize online gambling, states were permitted by the Department of Justice (DOJ) to draft laws in this regard in 2011.
The legality of online poker, lotteries, and other types of cross-state gambling may be in jeopardy as a result of the Trump Administration’s 2018 revision of the law’s original reading from 2011. Multiple parties appealed the ruling, and a lower court decided in the plaintiffs’ favor, delaying the effects on other types of gambling except sports betting. The Justice Department has appealed the decision, and legal experts predict that this case may reach the Supreme Court.
As we’ve already said, sports betting was made legal in the United States on a federal level in 2018. However, each state is in charge of its own legislation, and they all take various tactics to make online gambling lawful. For these reasons, giving a thorough assessment of online gambling for the entire nation might be challenging.
In the US, some of the more significant federal betting legislation that has been passed include:
- All states, except for Nevada, were forbidden under the Professional and Amateur Sports Protection Act (PASPA) from authorizing traditional sports betting. In general, PASPA gave Nevada a near monopoly on sports betting, but certain states received exemptions for specific types of betting. The Supreme Court notably declared PASPA to be unlawful in 2018.
- The Unlawful Internet Gambling Enforcement Act (UIGEA), passed in 2006, aims to stop Americans from placing bets at unlicensed offshore betting sites. The UIGEA forbids financial institutions from handling transactions to or from unlicensed gambling websites but does not penalize online gambling as such.
- The Interstate Wire Act of 1961 was intended to punish mafia organizations who operated sports betting businesses over state borders. The use of “wire communications” to facilitate interstate betting is prohibited under the Wire Act.
As of 2022, around half of the states had authorized or regulated online gambling in some capacity, and additional states are set to open up their online gambling markets shortly. As of September 2021, around 10% of American adults who play live and online casino games did it at least once every week. The size of the online gambling market in the United States increased from the previous year’s total of 8.7 billion US dollars to 9.5 billion US dollars in the same year.
Overall, there has never been a time when there has been greater talk about online gambling in the US. More Americans may now enjoy their favorite casino games, sports betting options, and poker games on their smartphones and desktops. In reality, there are infinite possibilities to gamble online close to wherever you reside in the United States.
STATE-BY-STATE GUIDE TO THE LEGAL STATUS OF ONLINE GAMBLING
As a result of states’ freedom to decide how to regulate online gambling, every region now has its own system. Hawaii and Utah are two states that outlaw all types of gambling, but New Jersey and Pennsylvania allow almost all commercial forms of gambling, including online casinos. The environment of gambling as a whole is still evolving, with new gambling legislation being enacted from time to time.
Americans have gradually warmed up to regulated gambling since the modern lottery was introduced in the 1960s. Most states now offer one or both forms of gambling thanks to the commercial casino and Native American booms of the late 1980s and early 1990s. In the early 2010s, New Jersey helped pave the road for online gambling, and its legal challenge to PASPA resulted in the growth of sports betting that is presently taking place.
Still, American gambling, particularly online gambling, has a long way to go. In any state that doesn’t specifically authorize the games, playing at online casinos is still unlawful. Federal law is theoretically broken whenever a gambler accesses an unlicensed gambling website in any state other than New Jersey, Nevada, Delaware, Pennsylvania (and eventually West Virginia).
Contrarily, as of late 2019, sports betting is lawful and operational in New Jersey, Pennsylvania, Nevada, Delaware, West Virginia, Mississippi, New Mexico, Rhode Island, Iowa, Indiana, New York, Arkansas, and Oregon. There are currently no mobile sports betting applications available for New Mexico, Delaware, Rhode Island, or New York (Mississippi allows mobile only on casino property) and Washington, D.C.
Since lawmakers continue to be careless about losing citizens’ money across state lines, the gradual expansion of the lottery and later of casinos created a domino effect that led to states legalizing these games. As one state started offering these options, it frequently forced its neighbors to do the same.
Online games like poker, slots, and digital card games have, however, developed more slowly than some of these other betting options. Many politicians are worried about the widespread availability of real money online casino games since centuries-old gambling aversion still permeates most of the country.
However, a pioneering group of politicians has paved the way for others to follow, demonstrating that these games don’t result in the “social problems” that some lawmakers worry about and may instead divert millions of dollars from offshore entities to state coffers.
It’s also no accident that four of the Mid-Atlantic region’s states were among the first to enact legislation governing real-money online gambling. Even if it may have taken years, it appears certain that more states will (shortly) follow.
To simplify, the most progressive states in America that allow online gambling are:
- New Jersey
- Pennsylvania
- Michigan
- Delaware
- West Virginia
- Nevada
Here are the states that are in the process of legalizing online gambling:
- California
- Connecticut
- Indiana
- Illinois
- Massachusetts
- New York
On the other hand, here are the states that still prohibit online gambling:
- Alabama, Alaska, American Samoa, Arizona, Arkansas, Colorado, Connecticut, Washington, Florida, Georgia, Hawaii, Idaho, Kansas, Kentucky, Louisiana, Maine, Maryland, Massachusetts, Minnesota, Mississippi, Missouri, Montana, Nebraska, New Mexico, New York, North Dakota, Ohio, Oklahoma, Oregon, South Carolina, South Dakota, Tennessee, Texas, Utah, Vermont, Virginia, Wisconsin, and Wyoming.
TYPES OF ONLINE GAMBLING AVAILABLE IN THE UNITED STATES
These days, (depending on where you reside in the US) all you need to bet is a laptop, smartphone, or tablet with a steady Internet connection. Today, there are three primary categories of gambling games, including sports betting.
Online Casinos
Online casinos employ platforms that require user registration before they can begin. Customers don’t need to download or install any software, which is good. However, for games to function properly with all of the accompanying visuals and audio, a strong network bandwidth is required.
Desktop-Based Online Casinos
These games operate in the following manner: a player downloads and installs the online casino application, after which the software establishes a connection with the server of the service provider. The advantage is that desktop casinos operate quicker and animate better than their website counterparts. However, cyber threats like malware might appear after downloading so the player must make sure they have specialized antivirus software in place before utilizing these casinos.
Online Live Casino Sites
Real-time casino gaming is identical to what is done in conventional, on-site casinos. Through live video broadcasts, these casinos let players communicate with other players and live dealers at the tables exactly like they would in a physical casino.
Sports Betting
This is by far the most popular betting option in the US thanks to multiple states legalizing the activity. The wager is made in hopes of winning and making some money off of the outcome of a certain sport. Predicting the outcomes of sporting events entails a chance to win money for those who were right about their forecasts. Both online and offline customers can place bets on certain betting platforms and so-called “shops.”
SUMMARY OF THE LEGAL STATUS OF ONLINE GAMBLING IN THE UNITED STATES
As we mentioned at the beginning of this blog, there are only a few states where online casinos are legal and open to the public. This is why players must be mindful of their state’s laws on online gambling before they sign up. However, there is a good likelihood that Illinois and Indiana will also approve online gambling in 2023, so we hope that others will follow suit.
Only 8 of the 50 states have no casinos, and two of them outright forbid any form of gambling (Hawaii and Utah, with Utah unlikely to ever legalize it due to Mormonism). If online games involving real money are viewed as games of skill rather than games of chance, states are more likely to approve them. Daily fantasy sports is the best illustration (DFS). There are 41 states where DFS operators operate, however only 19 of them have legalized DFS.
However, virtually all states do provide a “virgin” form of online gambling in the form of social casinos, where you can practice, play, and enjoy the social aspect of online gambling without having to use real money, and sweepstake casinos, where you play with virtual money that has no actual value.
The good news is that due to the financial incentive of being able to tax gambling proceeds, some states are already thinking about relaxing their prohibition on online gambling. Most US states and territories, except for those that are the most conservative, are expected to legalize various types of online gambling in the future.
CONCLUSION
Federal regulations governing the legalization of online gambling in the US are not expected to change anytime soon. The good news is that it’s also unlikely that states’ current authority to allow these games will change either. This creates a market in the United States that is always changing and will continue to expand.
The biggest obstacle to more comprehensive online gambling regulation in the US is the morality of gambling, which is a contentious issue. Others regard it as a threat to people’s social and economic well-being, while some consider it as a pastime or an enjoyable activity. However, the majority of websites encourage ethical and responsible gambling and provide users with the option to self-exclude and establish loss caps.
Additionally, these platforms also generate tax money and jobs. Let’s be real, there is nothing that keeps US citizens from playing at offshore sites even if a state’s laws may not specifically address online gambling, and many do just that.
Therefore, it would be sensible for lawmakers throughout the country to consider enacting legislation that would prevent prospective tax income streams from migrating outside of US boundaries. While most states will likely legalize online sports betting soon, we cannot say the same for casino and poker sites with a great deal of confidence.
