Federal Laws On Gambling

10.03.2021by

Here you will find an explanation of the specific laws that govern sports betting in the United States. These explanations are not a bunch of legal jargon that is reserved for lawyers and legal professionals but has been put into an accurate, easy to digest terms that allow those of us without a law degree to comprehend the legalities surrounding US-based sports betting versus US friendly sports betting.

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A payer is required to issue you a Form W-2G, Certain Gambling Winnings if you receive certain gambling winnings or have any gambling winnings subject to federal income tax withholding. You must report all gambling winnings as 'Other Income' on Form 1040 or Form 1040-SR (use Schedule 1 (Form 1040) PDF ), including winnings that aren't reported. The federal law on illegal gambling and gaming was passed in 1955, but the rise in online and sports gambling has implicated several other statutes of the U.S. Code and federal law. Illegal gambling could be prosecuted under several different criminal statutes, each with a different degree of punishment and potential outcome.

USA Sports Betting Laws

Sports betting laws in the United States are generally directed at either the state or federal level. As a democracy and a republic, the government which rules the United States of America recognizes the rights of individual states. Because of this dual level of government, there are going to be times when sports betting laws and their applications may seem confusing. For instance, today the most applicable laws to sports betting at the federal level are the UIGEA of 2006 (Unlawful Internet Gaming Enforcement Act), and The Federal Wire Act of 1961 (Interstate Wire Act).

Covering 45 years, these United States sports betting laws were each created at a uniquely different time in the evolution of the US Internet gambling industry. And in the future, there will no doubt be new Internet sports gambling laws which originate at the state and federal levels in the United States of America.

Currently, a prohibition of US-based companies offering online sports wagering options is in effect as we write this column. But nationwide prohibition has never lasted in the free country that is the USA. (See the alcoholic beverage prohibition from 1920 to 1933.) The legal USA online sports betting section of our website strives to keep you informed of all applicable sports betting laws which affect US citizens. Since this is obviously a constantly growing and changing subject, check back often for late-breaking updates.

Gambling Laws By State

UIGEA Law (Unlawful Internet Gambling Enforcement Act)

The most recent piece of federal legislation in the United States which applies to sports gambling on the Internet is the Unlawful Internet Gambling Enforcement Act or UIGEA. The Security and Accountability For Every Port Act of 2006 (SAFE Port Act) were passed by Congress and signed into law by President Bush on October 13 of that year.

Originally created to enhance port security throughout the United States, the SAFE Act included a last-minute rider, Title VIII. This is the UIGEA portion of the law. It keeps US gambling businesses from 'knowingly accepting payments' for bets and wagers over the Internet that are 'unlawful under any federal or state law.' Totally unrelated to the original port safety legislation, the UIGEA has continually been under fire since its inception. We offer a complete and detailed article explaining exactly what the UIGEA gambling bill is and how it relates to online sports betting.

Federal Wire Act Law (Interstate Wire Act)

Legal

Officially named the Interstate Wire Act of 1961, the Federal Wire Act tells you its intent in its title. Back in the late 50s and early 60s, organized crime syndicates around the United States used wired communications to run illegal gambling operations. Since this most usually concerned sports betting, the Federal Wire Act became known as an anti-sports betting law.

This is the oldest piece of federal sports wagering legislation in the United States which is still alive and well, and is constantly referred to by both proponents and opponents of the US online gambling industry. This section of our website explains the Interstate Federal Wire Act of 1961 completely, and we will consistently update you as new federal and state level legal opinions are released concerning this law and online sports betting.

PASPA Law (Professional and Amateur Sports Protection Act) - Repealed 2018

PASPA was a federal domestic ban on sports betting in the United States from 1992-2018. PASPA prevented all but 4 states from enacting sports betting laws. Delaware, Nevada, Montana, and Oregon were exempt from PASPA because they had previous sports betting legislation.

In 2018, the Supreme Court ruled in favor of New Jersey (New Jersey vs. NCAA) and repealed the PASPA act. Since PASPA was repealed several states has already enacted domestic sports betting legislation and many more are expected to follow suit in the upcoming years.

With PASPA stricken down, it is likely the Federal Wire Act is next. This would allow states to add online sports betting to their now-legal brick-and-mortar ventures. Nothing has come to fruition as of yet. Read more about PASPA and how it might affect anyone who bets on sports.

DOJ's Formal Opinion On The Federal Wire Act

Since the Federal Wire Act was first passed into law in 1961 there has been confusion surrounding the law's application. Years later lawmakers would try to construct the words mentioned in the Federal Wire Act to outlaw US-based online gambling even though the internet wasn't around when the law was originally drafted. States began asking for clarification on the law's application as technological advancements relevant to gambling entertainment began to flourish.

The Department of Justice (DOJ) was asked to step in and decide if the original Federal Wire Act pertains to state-regulated online gambling operations. The DOJ eventually released a formal opinion that provided clarification as to the scope of the Wire Act's intent and implementation. You can visit our page explaining the DOJ's Legal Opinion the Wire Act for more information.

RAWA Act (Restoration of America's Wire Act)

The RAWA Act is a piece of legislation designed to overturn the existing application of the Federal Wire Act. There have been several attempts to get this law passed but to no avail. The RAWA Act was first introduced in 2014 and if ever enacted the RAWA Act would drastically change American gambling laws.

The Act intends to reverse the Department of Justice's formal opinion on the Federal Wire Act and make all forms of state-based online gambling illegal. Even states that have voted to licensed online gambling entertainment for their region would be forced to stop allowing online betting if the RAWA Act was ever to be enacted. Fortunately for us, many conservatives are also against the Act and after several failed attempts it is highly unlikely we will ever see this Act become a law. Visit our page explaining Rawa for more information.


Sports betting laws in the United States are changing rapidly. While wagering on sports has long been an American tradition, many folks have been under the impression that the activity is largely against the law. Well, that used to be true; however, on May 14, 2018, the US Supreme Court overturned the Professional and Amateur Sports Protection Act (PASPA, 1992), lifting the ban on states being able to establish their own sports wagering industries. No longer does Nevada (primarily Las Vegas) have a monopoly on legal sports betting in the country and states are finally free to set up their own betting rules and regulations. Many already have.

Despite these positive developments, there are still federal laws on the book regarding sports wagering. The Interstate Wire Act of 1961 and the Unlawful Internet Gambling Enforcement Act (UIGEA) of 2006 both remain in effect. Both are limited in their application to gambling operators physically located within the United States, so bettors are still able to freely gamble despite those laws. As sports betting continues to become a more widely accepted in American culture, these laws will undoubtedly evolve, and they will likely eventually be repealed. Although no American laws prevent you from gambling, it would still benefit you to learn about them. Information is power, after all.

PASPA – The Professional and Amateur Sports Protection Act

PASPA, the Professional and Amateur Sports Protection Act, was passed in 1992 and went into effect on January 1, 1993. This law, since its inception to its ultimate SCOTUS overturn, has long been the sole real hurdle for eager American sports bettors. In practice, PASPA essentially allowed Nevada to have a total monopoly on single-game sports betting (aka full-service sports betting or “Vegas-style” sports betting). Given the overwhelming popularity of sports betting in the US, PASPA was a financial catastrophe. Not only did the law basically bankrupt major casino districts like those in Atlantic City, NJ, and Biloxi, MS, PASPA actually cost the government (both state and federal) an estimated $400-500 billion a year in taxable expenditure. It is not a stretch to suggest that during the law’s existence (1992-2018), PASPA has cost the state hundreds of billions of dollars (if not trillions of dollars) in potential tax revenue. Of all the sports betting laws in the United States throughout its history, PASPA was by far the biggest, most obvious mistake.

During PASPA’s reign, Nevada – the only legal bastion for real sports wagering – was estimated to receive only 1-3% of the total sports betting handle turned by US bettors. The rest of that action was either going underground or being sent to offshore sportsbooks (which, despite PASPA and other US anti-gambling laws, were and are able to operate legally, as they are based overseas and outside of US jurisdiction). Naturally, PASPA has been something of a massive financial boondoggle for the US, and now that the law is overturned, there is hope that much of that action being sent overseas can be recovered and kept in the US economy. As for the lingering effects of PASPA? Good riddance to bad rubbish!

Federal regulations on gambling

Read Our Article: What Is Papsa?

UIGEA – Unlawful Internet Gambling Enforcement Act

The Unlawful Internet Gambling Enforcement Act of 2006 (UIGEA) was written to deter US financial institutions from processing payments related to Internet gambling. Included in the SAFE Port Act 2006, the UIGEA is a provision that requires banks and other payment processors to monitor designated payment systems such as cards, checks, and bank wires for “restricted transactions”, While the UIGEA will make it more difficult when using your Visa or MasterCard to make a deposit at an online sportsbook, there are certain sites that have higher success rates than others. Like most federal sports betting laws, the UIGEA only applies to businesses and not the individuals placing bets.

While the UIGEA sounds scary and intimidating, it doesn’t actually do much to stop “unlawful Internet gambling”. That’s probably because most of the gambling it actually addresses isn’t unlawful in the first place, given that offshore sportsbooks accessible over the Internet do not constitute illegal bookmakers. The law is further neutered by the advent of Bitcoin and other cryptocurrencies, which allow bettors to fund their accounts and receive payouts without ever going through a banking service on either end. All in all, the UIGEA is the poster child for ineffective legislation to address nonexistent problems. Hopefully, the law will be eradicated in due time, but until then, if you ever have a card declined while trying to fund your sports betting account, simply wait a bit and try again, use a different card (like an Internet Visa prepaid/gift card), or just use Bitcoin or another supported altcoin. Indeed, there is some debate about the origin of Bitcoin itself, with many analysts claiming that the catalysts for its creation were the strict sports betting laws in the United States.

Read Our Article: What Is The UIGEA

RAWA – The Restoration of America’s Wire Act

The Restoration of America’s Wire Act, or RAWA, was designed to strengthen and broaden the Wire Act after the DOJ ruled in 2011 that the law only applied to sports betting. While this received some notable support in the legislature after its initial proposal in 2014 (co-sponsored by Republican Senator Lindsey Graham and Utah representative Jason Chaffetz), the bill gained no support and never advanced.

The necessity for RAWA, in effect, at least temporarily obviated when the DOJ, in 2018, reversed course, stating that the original Wire Act did indeed apply to all common forms of gambling. This, it seems, has deprioritized the issue, albeit a DOJ statement is not nearly as binding as an official law (and, as shown, can be reversed at any time). Lobbyist and casino magnate Sheldon Adelson was the main driving force behind RAWA, as online gambling threatens his land-based casino interests.

The Interstate Wire Act

The Interstate Wire Act (also called the Federal Wire Act, the Interstate Anti-Crime Act, or simply the Wire Act) was a piece of legislation signed into law in 1961 by former president John F. Kennedy at the behest of his brother Robert F., who was the US Attorney General at the time. Sold to the public as a means to stop the proliferation of mafia-related numbers rackets across state borders, the real impetus for the very first of the US sports betting laws was to stop sports gambling and underground lotteries from competing with state-sanctioned lotteries. Naturally, the states could not abide competition in this arena, as their own lotteries provided huge amounts of income to fund their programs and schemes.

The way that the Wire Act seeks to curb unlawful interstate gaming is to make it illegal to use wire communications (hence the law’s name) to accept sports wagers or other kinds of bets over things like telephones and telegraph systems. Indeed, semaphore is even outlawed! Naturally, with the advent of the Internet, this new communications form, traveling over wires, was also covered by the Wire Act, as is wireless wagering in our modern times. In 2011, the US DOJ stated that the Wire Act applied only to sports wagering. However, in 2018, the same US DOJ stated that the Wire Act does in fact apply to other forms of gambling, as well.

The only real effect of the Wire Act now, however, is that it prevents residents in one state from picking up the phone or logging onto the Internet to place a sports bet in another state. This is called geo-fencing, and even the casino and sports betting apps in Nevada are bound by GPS to only allow those physically in the state to place wagers. This problem, of course, doesn’t exist with legal offshore sportsbooks, as they operate entirely outside of the reach of US laws, and the Wire Act conveniently applies only to bookies, not individual bettors. That’s why these overseas books exist and continue to thrive.

Us Online Gambling Laws

Read Our Article: What Is The Wire Act?

Proposed Federal Gambling Laws

There is one particular sports betting law that is in the works, although it has not been officially filed as of yet. Back in September of 2019, US Senators Chuck Schumer and Mitt Romney began working on a form of legislation with the goal to create federal standards or guidelines for states who plan to regulate sports betting in the future. Currently, in the US, sports betting is handled on a state by state basis, making the rules vary drastically from one state to another. The proposed bill would make a unified sports betting set of rules that any state who regulates sports betting would then follow. Schumer initially tried to create a similar sports betting law earlier in the year but was ultimately a waste as the bill went nowhere. This newer proposed bill has more potential going forward, however.

Potential For Similar Laws In The Future

Will there ever be a PASPA style law passed in the future within the United States? The likeliest of answers is no. The US has lived both in a PASPA world and a post-PASPA world and the economy has thrived in one more than it has in the other. Sports betting will always be something that Americans participate in. To ban it would only be hurting the country and the revenue it gains from the industry. It wouldn’t hurt the consumer as there are outside outlets to gamble are sporting events that are completely legal.

The only difference if another ban were to occur would be the US not profiting from those outlets the way they do in a post-PASPA world with their own platforms, which is why it would be highly unlikely that any legislation would pass like that of PASPA in the future. That’s not to say that there won’t be proposals that will come along as some people will always be opposed to legal sports betting but to go as far as becoming a law again, a betting man would wager on the side of “No.” The legal sports wagering industry is just too lucrative in the US to ever be banned again.

GAME Act – Gaming Accountability and Modernization Enhancement Act

Introduced by Representative Frank Pallone, Jr. (D-NJ), the GAME Act was intended to effectively repeal and replace PASPA. Introduced in 2017 as HR 4530, the GAME Act sought to return to the states their rights to legislate their own sports betting rules. There were other considerations involved, namely a passage codifying daily fantasy sports (DFS) as “gambling,” which the DFS lobby is vehemently against. Needless to say, the Supreme Court overturn of PASPA temporarily derailed the GAME Act, though it may come about if the federal government wishes to regulate gaming nationwide. Hopefully, the states – which all now have total gambling sovereignty – will resist any efforts to bring sports betting back under the umbrella of the US government.

Read Our Article: What Is The GAME Act?

Sports Betting Laws By State

Most states (all of them except Nevada, Oregon, Montana, and Delaware) used to be bound by the same sports wagering prohibitions set forth by PASPA. However, now that each state is free to make its own rules for wagering on athletic contests, you can expect a host of divergent laws to apply, depending on where you are. Analyzing the sports betting laws by state is something that you will have to do if you plan on hitting the road to do some sports wagering in the future. But that’s OK, because – while the laws might vary a bit – all the states with sports betting (or those pending sports betting legislation) will generally follow the same mold. In most cases, you can expect the legal minimum age to bet on sports at these venues to be 21, and you can expect land-based wagering to launch before Internet sports betting follows suit.

If you don’t want to do the research and just want to get to the bets, however, you should use a legal offshore sportsbook. These sites operate in all 50 states (with very limited exceptions, in the case of Bovada), and they’re as good as or better than any land-based venue you’re likely to come across. Really, the only reason to bet on sports at a brick-and-mortar book is to soak up the ritzy atmosphere of the casino and to watch the games in its sports betting lounge. If you simply want to wager and get on with your day (or night), then don’t worry about any sports betting laws in the United States and simply sign up at an overseas Internet sportsbook.

States With Legal Sports Betting (Land-Based)

  • Nevada
  • Delaware
  • New Jersey
  • Mississippi
  • West Virginia
  • Pennsylvania
  • Rhode Island
  • New Mexico
  • Arkansas
  • New York
  • Iowa
  • Oregon
  • Indiana
  • Illinois
  • Montana
  • Michigan
  • Colorado (pending)
  • New Hampshire (pending)
  • North Carolina (pending)
  • Connecticut (pending)
  • Washington DC (Pending)
  • Washington (Pending)

States With Legal Sports Betting (Online)

  • Nevada
  • New Jersey
  • Pennsylvania
  • Iowa
  • Oregon
  • Indiana
  • Rhode Island
  • New Hampshire
  • Colorado
  • Illinois (pending)
  • Delaware (pending)
  • Tennessee (pending)
  • Michigan (pending)

States Currently Considering Sports Betting Legalization

  • Alabama
  • Arizona
  • Kansas*
  • Kentucky
  • Louisiana
  • Maine
  • Maryland*
  • Massachusetts*
  • Missouri
  • Ohio*
  • South Dakota*
  • Virginia*

Interstate Gambling Law

* States that gave legal sports betting a serious consideration and are expected to be the next wave of sports betting legalization.

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