Seemingly as soon as the world wide web was invented, somebody, somewhere, realized its potential as a means of allowing people to place bets. As soon as the technology was just barely capable of providing some semblance of an attractive user experience, the first online casinos began taking bets.
In the years since those first CryptoLogic& Microgaming online casinos and 2011, online gaming technology improved at a steady pace consistently around the globe. However, as some countries began to embrace this new method of gambling through licensing and regulation, others, such as the United States, did nothing.This changed in 2006, when an additional title was added to the SAFE Port at the last-minute known as the UIGEA, and signed into law by then-president George W. Bush.
This leads to some interesting questions about how we arrived at the current situation surrounding Online Betting in the USA, the various laws and companies which have been involved, and what the differences are between each of the fifty states.
Q. What is the UIGEA?
A. The Unlawful Internet Gaming Enforcement Act was a law passed in 2006 to make it illegal for American banks to process gambling transactions. The UIGEA does not actually prohibit American citizens from participating in online gambling, however, which is potentially one of the biggest deliberate lawmaking loopholes ever devised by a first-world government.
Q. What was the reasoning behind the creation of the UIGEA?
A. The early years of online gaming were spoilt for many by rogue casinos offering shady games. You could never be sure you were getting a fair game, what odds were being offered, or even if you would be paid when you did win. While some countries chose to introduce regulation to solve this problem, the US had a problem – existing federal legislation (PASPA) had already granted Nevada a virtual monopoly on sports betting, and online casino gaming was lobbied against fiercely as well.
There are other factors involved too, of course, but the result was that the USA went the other way and chose to ban gambling transactions – preventing ordinary Americans from using their debit and credit cards to gamble at US based online casinos. Unfortunately, things did not end well – third party processors sprung up to continue serving the rogue casinos, and nothing really changed for the first five years after the UIGEA was enacted.
Q. So, is Online Gambling in the USA Legal?
A. This is a complicated question, so answering it comes with several caveats. The activity is certainly not legal in the way that it is throughout much of Europe and the United Kingdom, that much is for sure. There is no regulation at the federal level, and different states have different views on what should and should not be permitted online.
Broadly speaking, American’s consider sports betting, online poker, and online casino games to be three very different things. Whilst sports betting is a much-loved pastime throughout most of the United States, views on casino gamblingvary wildly between ultra-conservative states such as Utah and the liberal strongholds of New York and California.
Q. How about Online Sports Betting then – is that legal in the United States?
A. Not everywhere, but it is seen as by far the most acceptable activity of the three. Despite this, it was online poker where the first signs of regulated online gambling sprung up in the USA. This occurred in the fallout from the indictments that followed the first serious repercussions from the UIGEA, when Nevada, Delaware and New Jersey decided to test the idea that the federal government did not, in fact, have jurisdiction over them with regards to any forms of online gambling not specifically controlled under PASPA.
You’ll find both the UIGEA and PASPA discussed in more detail later in this article, but for now, the most important thing to know is that in 2013 these three states became the first three states to legalize online poker. New Jersey went one step further and chose to legalize online casino gaming as well, a move which is widely credited with reviving interest in gambling in Atlantic City, which was lagging further and further behind Las Vegas in the early 2000s.
Q. Is New Jersey the only place in the USA with legal Online Casino Gambling?
A. Not quite, although it is one of only four states alongside West Virginia, Pennsylvania, and Michigan which permit all three forms of online gambling and was by far the earliest of the bunch to do so. One reason for this is the PASPA law, which was not fully tested at the Supreme Court level until 2017. Once PASPA was revoked, other states felt much more comfortable following New Jersey’s lead.
Major European gaming operators are now returning to the United States once again, such as Unibet, who began in New Jersey and now operate in many of the largest regulated online gambling states. Unibet IAlaunched in September 2021 and currently only offers sports betting, though Unibet does offer Poker and Online Casino Gaming wherever the law permits.
Q. How is it possible that Nevada would have no legal online casinos? It seems almost unbelievable!
The major land-based casinos of Nevada have lobbied extremely successfully against the legalization of online casino gaming in their state for years, believing that to allow this activity would damage the revenues of their world-famous land-based casino industry. This does seem a little strange – after all, it certainly hasn’t done Atlantic City any harm and much of Nevada’s gambling income comes from tourists from out of state. Still, this is one situation I wouldn’t place a bet on changing any time soon.
Q. How about PASPA? What was that all about?
A. The Professional and Amateur Sports Protection Act of 1992 banned sports betting in all states except those that already had active sportsbooks (or sports betting type games). In practice, this just gave Nevada a near-monopoly on the activity. New Jersey, the home of East Coast gambling hub Atlantic City wasn’t too keen on this, as you can imagine, and legalized sports betting within its own borders in 2012. In what was seen as a shock victory, New Jersey managed to defeat PASPA in the Supreme Court in 2017, opening the door for other US states to legalize sports betting.
Q. Okay, it seems clear that the situation in the United States is quite complicated – how does the average American gambler know if they are okay to place a bet online, or not?
A. The table below shows the current status of all US states with some form of legal online gambling. At present, just eighteen states have legalized online gambling in one form or another, so there is lots of room for growth at this stage.
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