The United States of America is the third most populous country in the world with a population of over 325 million people, and global leader in industrial, scientific and cultural development. Composed of fifty states, the USA is among top four largest countries on Earth, has the highest global GDP per capita and ranks amongst the leading nations in categories of the average wage, human development and productivity per person.
Overview
The USA have rich gambling history with tales going back to Wild West and legendary poker games. The era of gambling machines began with the Liberty Bell, first mechanical slot invented by Charles Fay in 1896. It paved the way for other one-armed bandits and gambling devices which — hand in hand blackjack, craps, roulette, baccarat, and others — made Las Vegas the hospitality icon on US entertainment map, among others.
Online gambling did not have so straightforward development, which is kind of intriguing considering USA might in the technology field. The reason? Peculiar legal framework and various interpretations of Federal laws that have regulated online casinos business in the past.
Today, however…
…online gambling is not illegal in the USA and American citizens can play in US-based online casinos, in accordance with state-by-state regulations.
Considering widespread misconceptions about governing of this field, the primary purpose of this section is to provide a comprehensive single-point-of-reference for online gambling in the USA.
It offers up-to-date information on federal laws and legislative outline for each state including Restrictions Scoring System (RSS) that you can find below.
Federal Legal Framework
The gambling industry in the United States is one of the most developed and structured gambling environment in the world. All of its aspects — both land-based and online — are regulated with three key legislation:
- The Interstate Wire Act, also known as the Federal Wire Act;
- The Professional and Amateur Sports Protection Act (PASPA); and
- The Unlawful Internet Gambling Enforcement Act (UIGEA).
In addition, there is are two initiatives in the making with regulative outcomes yet to be determined:
- The Restoration of America’s Wire Act (RAWA)
- The Sports Wagering Market Integrity Act of 2018 (SWMIA)
Since each one of them made an impact on US online gambling environment, limitedly or otherwise, let’s see the chronological overview of their features that shape present regulations framework.
The Federal Wire Act of 1961
This legislation regulated the transfer of betting and wagering information through wire communication in interstate or foreign commerce, stipulating that anyone doing it shall be fined. The same outcome awaited the wire transmissions which entitled the recipient to receive money or credit as a result of sports bets or wagers. The Federal Wire Act postulated that any entity assisting in the placing of bets or wagers through a wire communication shall be fined too. Potential legal consequences of breaking this law included imprisonment for not more than two years plus fines, or both.
In November 2002 the U.S. Court of Appeals for the Fifth Circuit (5th Cir.) ruled that the Wire Act prohibitions apply only to sports betting and not to online gambling.
In September 2011, the US Department of Justice released a formal legal opinion concluding that sporting events and contest fall outside of the Wire Act reach.
PASPA of 1992
The Act was meant to be a widespread tool for the regulation of sports gambling. Recognized as a national problem that inflicts harms beyond the borders of the states that sanction it, sports betting and gambling came in the cross-hairs of the Senate.
Based on public hearings findings the Congress exercised its authority and enacted PASPA, also known as the Bradley Act. The Act prohibited sports betting within the US except in States where land-based sports betting was legal at the time of PASPAs implementation, or, in any State which authorized sports betting within one year of PASPAs implementation date. Four States — Delaware, Montana, Nevada, and Oregon — qualified for exemption under this clause known as the “grandfather clause”.
Effectively outlawing sports betting across the USA the PASPA was formally challenged from the onset.
Upon years of formal legal initiatives, led by New Jersey, in May 2018, the Supreme Court determined that PASPA was unconstitutional since it violates the 10th Amendment rights.
This milestone decision effectively allowed each state to enact its own laws that regulate betting and gambling.
UIGEA of 2006
Fueled by the hurry to fill the legislation gap made by the ruling of the 5th Cir. in November 2002, UIGEA was passed on the last day before Congress adjourned for 2006 elections. In doing so, UIGEA was included in the SAFE Port Act signed into law by George W. Bush.
What The Economist labeled as the act that was “hastily tackled into the end of unrelated legislation” in essence prohibits “gambling business from knowingly accepting payments in connection with the participation of another person in a bet or wager that involves the use of the Internet”.
UIGEA de facto enacts to block payments from financial institutions to interactive gambling sites.
The focus of UIGEA are operators — online casinos, betting shops, banks, and financial institutions (check collection systems, money transmitting business and wire transfer systems) — not the players.
The language of UIGEA makes it illegal to accept money transfers from someone looking to “illegally” gamble online; it doesn’t do anything to make transfer initiation illegal.
The third-party payment processors — that inevitably provided the immediate bridge between ambiguities — have a responsibility to ensure that the payments they process do not violate any terms of services of the financial institution. These provisions of violation, though, are not specifically governed under any federal law.
Thus it is no wonder that “UIGEA failed to contain any express provisions on interactive sports betting and, subsequently, technological developments limited the effectiveness of the Act within the US”.
RAWA
While the Supreme Court decision opened the “appetite for regulation” of online gambling market on a state-by-state level, there is a piece of custom-made Federal legislation called The Restoration of America’s Wire Act (RAWA) that is noteworthy.
Championed by casino mogul Sheldon Adelson the bill was first introduced to Congress in 2014, again in 2015, and has been floating ever since. RAWA aims to extend the impact of the Wire Act by rewriting it with addendums to ban most forms of online gambling regardless of states’ laws and excluding the grandfather clause.
For now, though, RAWA is engulfed in challenges and lack of congressional interest in the subject. Furthermore, it has been argued that RAWA would have a damaging impact on the economic benefits currently experienced by States that legalized and regulated online gambling.
SWMIA
The Sports Wagering Market Integrity Act, on the other hand, is a comprehensive, 101-page bill introduced in 2018, by the U.S. Senators Orrin Hatch (R-Utah) and Chuck Schumer (D-New York) — later is current Senate Minority Leader — with a goal to provide federal oversight to the legal sports betting market.
The bill is not focused on banning sports betting but to create a framework for federal authorities to supervise the integrity and character of professional and amateur sporting contests. This is to say that States interested in passing sports betting laws would have to meet the terms of federal standards and get approval from the U.S. Attorney General. (One of those standards is to restrict online wagers only to individuals located in the state.)
The bill enjoys overwhelming support from professional sports leagues and the NCAA regardless of sports betting market expansion through a number of strategic partnerships between major leagues and gaming companies since the Supreme Court ruling in 2018.
Before the SWMIA can be formally reintroduced to the new Congress in 2019, another Republican champion and sponsor will have to be identified since Senator Orrin Hatch, one of the principal authors of PASPA, retired in 2018.
If enacted, the SWMIA would amend the Wire Act of 1961 and the Sports Bribery Act of 1964.
The State of the States
After all is read and ruled, said and done, each State is empowered to individually regulate its online gambling markets.
You can keep track of their legislative frameworks and regulations’ status in the outline below. You can also use our Restrictions Scoring System (RSS) to learn more about restriction levels in any State.
The RSS is established to determine (as accurately as possible) the individual State stance on online gambling. The scoring mechanism is based on:
- State laws and legislative history (to the extent that such can be found);
- Evaluation of restrictions if they exist and need-to-know information;
- Opportunities to play in States with no restrictions.
Included in RSS is an extensive list of ALL friendly venues available to American players in the USA.
As always, we’ll do our best to cover all angles so you can have the best possible info. If you do come across a tip or advice or experience while you play, give us your feedback that can help others to enjoy in their pastimes even more.
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