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Is Online Sports Betting Legal In The United States

With ever-changing laws surrounding online sports betting, its legality in the US may be unknown to you. All across the world, people use online bookmakers to wager on sporting events and these sites offer an easy and efficient method to place bets from the comfort of your own home. Many are concerned about getting into trouble with the law if they pursue the activity but know there are many regulations in place that address sports betting and the ability to use online services to place your wagers.

It’s no surprise that it’s so difficult to know whether or not betting on sports for Americans is legal. But it doesn’t have to be. All US anti-gambling laws apply only to bookmakers, or those who accept wagers for commercial gain, and certain domestic payment processors, such as banks. As for the individual bettors, they are – for the most part – never even mentioned in state and federal mandates. That said, it definitely behooves you to understand these laws, even if they do not apply to you as a private sports betting enthusiast.

The Wire Act Of 1961 And Its Effect On Legal Sports Betting In The USA

The Wire Act of 1961 and its effect on legal sports betting in the US cannot be overstated, albeit the law only has a few remaining consequences in modern times. The Wire Act (aka the Interstate Wire Act, Federal Wire Act, or Interstate Anti-Crime Act) was meant to prohibit certain methods of placing sports bets – namely any method that allowed easy transmission of wagers across state lines. The Wire Act mainly addressed the use of telephones in offering and accepting sports bets. (The government has provided the rationale that this was to curb the operations of organized crime, but a more complete historical perspective indicates that the Wire Act was actually designed to protect state monopolies of the lottery industry, as mobsters were running far more lucrative and popular numbers games along with their sportsbook services.)

The operative portion of the Wire Act says simply that anyone “engaged in the business of betting or wagering” who “knowingly uses a wire communication facility for the transmission in interstate or foreign commerce of bets or wagers…on any sporting event or contest” will be guilty of a federal crime, facing large fines and up to two years behind bars.

It is perhaps difficult for people in modern times to understand what constitutes the use of a wire-placed wager. Back in 1961, there was no Internet, so it obviously was not meant to ban this specific method of betting sports online in the US. Of course, that’s trivial, as the government (and common sense) both designate Internet technology as “wire-based” or equivalently so. In the same way the Second Amendment applies to muskets and modern guns alike, the Wire Act applies to telephone and Internet connections alike.

However, note that the law makes no mention of individuals placing these wagers, only individuals “in the business” of accepting them. Ergo, the Wire Act is only concerned with domestic sportsbooks that accept wagers across state lines or from those living in foreign countries. (Note: Though the Wire Act was historically interpreted to apply exclusively to sports wagering transmissions, the US Department of Justice in 2018 “clarified” that it applies to all forms of online gambling. This so-called reinterpretation is extremely controversial and is currently being challenged in court by several states, namely New Hampshire.

The UIGEA And How It Affects Legal Sports Betting In The US

The Unlawful Internet Gaming Enforcement Act, better known as the UIGEA, went into effect in 2006 after sneakily attaching itself to the SAFE Port Act. The purpose of the bill was to prohibit the processing of payments associated with online gambling to financial institutions that are based in the United States. The UIGEA does not make online sports betting illegal however, it is designed as a banking regulation. Despite the bill not outright making online sports betting illegal, it has made it difficult for many sports bettors due to blocking payments to banks.

These affects truly hit hard in 2011 during an event known as Black Friday where a multitude of popular online poker sites were found to be in violation of the UIGEA. Since then, however, online sports betting has been made easier with a slew of new payment methods that bypass the UIGEA’s restrictions. Those include cryptocurrencies like Bitcoin and Litecoin, prepaid international credit and gift cards, and also wire transfers that all have no connection to US banks. These methods have essentially made UIGEA a non-factor in online sports betting.

Overturned: PASPA – The Professional And Amateur Sports Protection Act

PASPA, the Professional and Amateur Sports Protection Act of 1992, was – by far – the law that had the largest and farthest-reaching effects on the legal sports wagering industry in America. Essentially, for the 25 years that PASPA was the law of the land, sports betting was not legal in the United States (except for in Nevada, Delaware, Oregon, and Montana, though these three latter states offered only the most limited possible versions of the pastime and were not able to offer Vegas-style single-game sports betting of the kind to which we are all now accustomed).

Briefly, PASPA was a failed attempt by New Jersey senator and former NBA player Bill Bradley to establish Atlantic City as Las Vegas’ East Coast counterpart. Because AC needed sprucing up and was in dire financial straits from the start, Bradley crafted PASPA with a key caveat: Any state that had 10 straight years of legalized casino gaming under its belt at the time of the law’s passage could legalize and open sports wagering venues within one year, thus exempting them from all of PASPA’s restrictions (as was the case with NV). The only non-Nevada state that met this criterion? You betcha: New Jersey!

Ironically, of course, internal political quibbling prevented NJ from offering single-game sports betting within that one-year window, and on January 1, 1994, NJ was barred from offering sports wagering outright, joining the rest of the US states. They fought this ruling practically ever since, and from 2012 to 2018, the state successfully got their case through the circuit courts and all the way to the Supreme Court. On May 14, 2018, PASPA was finally overturned by the SCOTUS in a 6-3 ruling (Murphy v. NCAA).

With PASPA now a thing of the past, all US states are currently free to establish their own sports wagering rules and regulations. But that doesn’t mean that sports betting is legal in the United States through and through. Yes, a few states have legalized the pastime and authorized such gaming to take place in certain venues or online via state-based vendors, but the vast majority of states have yet to pursue the initiative in any concrete way. Most industry insiders expect 35-45 states to have legal sports wagering installed within the next 3-5 years, albeit there is already a movement at the federal level to take back sole oversight of the industry. Hopefully, the states will not give such authority back to the same entity that foisted PASPA upon the nation, but political lessons are often tremendously difficult to learn the first time around. Only time will tell whether or not the US Congress gets involved again.

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