One of the most heavily searched topics in the United States among anyone interested in any form of online gambling questions its legality. The entire online gambling industry in the US has been in a constant state of flux since the advent of the Internet and, legal questions aside, it has grown into a multi-billion-dollar entity.
How Can I Find Out If Online Gambling Legal in the United States?
Citing a summary on the topic of legal online gambling in the United States on www.legalzoom.com, there are no federal laws on the books prohibiting any form of gambling online. Placing wagers online is legal as long as they are placed in one of two ways:
International online gambling sites that are located in a country with laws legalizing the practice of online gambling. Four of the biggest regions in the world with laws favorable to gambling would be Latin America, the Caribbean, the UK and Australia.
US online gambling sites located in a state with laws legalizing the practice of online gambling. Current states falling into this category with some form of online casino gambling would include Nevada, New Jersey and Delaware with legislation pending in a number of other states.
What is definitely considered illegal is gambling on an online site that is based in the United States outside of the borders of any state with legal gambling.
Online Gambling Industry Overview
The online gambling industry in the US is a direct offshoot of land-based casinos, Sportsbooks and poker rooms. It is also closely related to the lottery system that is legal in many states. Everyone knows that Las Vegas, Nevada is the gambling capital of the world with some of the most famous casinos located on the Strip. Atlantic City , New Jersey was the first hot spot for casino gambling on the East Coast.
Over the years, more and more states legalized land-based casinos along with Native American Indian Tribes on their federal lands. The land-based casino industry continues to expand all across the nation to help pave the way for the growth of the online gambling industry as well.
State by State Guide of Online Gambling
The first online gambling sites started to appear on the internet back in 1994. Most of those original sites were based in countries with favorable gambling laws such as Antigua and the Isle of Man. The first sites located in North America popped up in 1996 when a ‘First Nations’ group outside of Montreal created a gaming commission to issue licenses for online casino and poker sites. The gaming group was the Mohawk Territory of Kahnawake and the commission went by the title of the Kahnawake Gaming Commission.
The fledgling online gambling industry exploded over the coming years from a handful of sites to hundreds of online gambling venues in a relatively very short amount of time. Published industry online gambling trends estimated total revenues of $800 million by 1998.
The US government’s initial response to the expansion of online gambling operations that were starting to pop up on the internet were aimed at illegal sports betting through the Federal Wire Act in 2002. The passage of Unlawful Internet Gambling Enforcement Act in 2006 did not make online gambling illegal. However, it did prohibit the transfer of funds from one party to another engaged in the act of illegal gambling.
Online Slot Machine Laws By State
This US law was, for the most part, unenforceable other than having the ability to shutdown sites operating within the country’s borders. This, in turn, gave rise to online gambling sites operating in foreign countries were gambling was perfectly legal.
One common misconception when it comes to the question ‘is online gambling legal in the United States’ is a person’s legal right to transfer funds to an international entity with legal online casinos. To date, there are no provisions in the UIGEA that would penalize any individual player from gambling online or engaging in the act of transferring funds to do so. All enforcement efforts over the years have been aimed at shutting down illegal online gambling sites that have been accepting funds from US players.
Today’s online gambling industry in the US can be broken down into two main categories:
Regulated online gambling sites located in a state offering many of the same gambling activities to its residents and guests.
Both entities continue to grow and expand at a rapid pace according to recent online gambling trends.
International Online Gambling Sites
Offshore casino gambling operations and sportsbooks in legal jurisdictions turned to the internet to tap into the US market. In the absence of any real enforcement from the US government, the US Justice Department has tried to make life difficult for international gaming sites catering to US players, but that has done nothing to stop the continued growth of this form of online gambling.
One of the more notable enforcement attempts came on April 15, 2011. It was known as Black Friday when the US government shutdown online poker sites such as PokerStars, Full Tilt and Absolute Poker for violating certain provisions of UIGEA . A settlement was reached over the payment of funds and the sites were back in business in the US.
There is a long list of online casinos that currently accept US players. A few of the biggest sites would include:
- CryptoSlots Casino
- Desert Nights Rival Casino
- Fair Go Casino
- Miami Club Casino
- Red Stag Casino
- Slots Capital
- Uptown Aces
There is also a wide array of international sports betting sites open to US players that also offer a racebook for horse betting as well as their own online casino. Some of the biggest players in this group include:
There is legislation on the books in certain states that prohibit online gambling in any form, so players still need to be mindful of these laws. However, they are mostly unenforceable against the international sites that are legally operating within their specified geographic locale. All of these sites are registered and regulated by the gaming laws on the books in their designated country of origin.
United States Online Gambling Sites
Going back to the Federal Wire Act of 2002, which was primarily aimed at stopping illegal online sports betting, an updated opinion by the US Department of Justice in December of 2011, upheld the ban on sports betting. This, in turn, paved the way for individual states to explore the idea of online gambling for casino games, poker and the lottery. The following summer, Delaware took the lead by becoming the first state to legalize online gambling by passing the Delaware Gaming Competitiveness Act.
In February of 2013, Nevada joined the party by issuing online poker licenses. New Jersey quickly countered by issuing licenses for online poker and online casino games to its land-based casinos in Atlantic City.
Ultimate Poker went live in Nevada in April that year and by November of 2013 online poker as well as online casino gambling was up and running in Delaware and New Jersey .
New Jersey took the issue of legal sports betting all the way to the US Supreme Court in a long-running lawsuit against the federal government and several of the biggest professional sports leagues in the US as well as the NCAA for college sports.
How are Online Winnings Taxed
Following a favorable decision that allowed individual states to set their own laws governing the issue of sports betting, New Jersey, Delaware, Mississippi and West Virginia quickly enacted legislation to join Nevada with legal sports betting within their state borders.
This decision has also paved the way for legal online sports betting through the land-based sportsbooks that are currently up and running in states such as Nevada, New Jersey and Delaware with plans in the works for online sports betting in West Virginia and Pennsylvania.
The net result of all of these recent changes has thrown the online casino, sports betting, poker and lottery industry in the United States into an even deeper state of flux. Legislation concerning all forms of online gaming is on the table in eight additional states, including Illinois, Louisiana, Massachusetts and New York.
The driving force is additional tax revenue which begs the question of how are online winnings taxed? All income regardless of how it is earned or won is taxable at the federal level. Tax rates will vary from state to state when it comes to any money won gambling within their individual borders.
One of the best resources for a state by state guide to online gambling is PlaySlots4RealMoney.com. This comprehensive guide has become a go to site for online slot machine laws by state as well as general online gambling trends. It also attempts to finally answer the burning question of ‘is online gambling legal in the United States’?
Online Gambling Trends
The following is a look at the current online gambling options at a few of the most progressive states in the overall gambling industry.
The Garden State has one of the widest selection of online gambling options starting with casino gambling through sites operated by six different Atlantic City land-based casino and hotel resorts. The list includes sites such as:
Golden Nugget Casino
Mohegan Sun Casino
Going back to 2016, the NJ Gaming Commission reported online gambling revenues of $196.7 million. This represented an increase of 32.1 percent against the revenues reported the year before. This revenue grew to $245 million in 2017 and the recent addition of online sportsbooks should help boost the year-end figure for 2018.
A few of the top New Jersey sportsbook sites include:
•SugerHouse Online Sportsbook
As mentioned, the First State was also first to legalize online gambling back in 2012. The state’s three horse tracks (Delaware Park, Dover Downs and Harrington Raceway) own and operate the current online sites offering video slots, table games such as Blackjack and Roulette along with video poker.
Online gambling revenues in Delaware were reported as $3 million in 2016 with Delaware Park leading the way at $1.4 million.
The Keystone State passed a comprehensive gambling expansion act in October of 2017 to legalize satellite casinos, sport betting and video gaming in designated truck stops. Provisions in this act added online poker, an online lottery and online daily fantasy sports to the list.
Earlier this year, the Keystone State offered an interactive gaming license to its 13 land-based casinos at a cost of $10 million. This would give them permission to offer online slots, table games and poker. To date, nine of the 13 casinos applied for the license with a few noted exceptions. Presque Isle Downs did not add online poker and Mohegan Sun Pocono decided not to bundle all three, choosing to apply for each separately.
More recently, these licenses were also made available to qualified gaming entities outside the state.
The Mountain State took the lead for legal sports betting by becoming the fifth state to open a sportsbook in the Hollywood Casino Charles Town in August. Since then, the sportsbook at The Casino Club at The Greenbrier Resort is up and running with future books set to open at Mardi Gras Casino & Resort and Wheeling Island Hotel-Casino Racetrack.
Plans are also in the works for legal online sports betting in West Virginia with all five of its land-based casino properties exploring options for an online sports betting app or online site for its patrons.
Following New Jersey and Delaware’s rush to open their land-based sportsbooks in time for this year’s football season along with an established market in Nevada, the state of Mississippi was the fourth state in the country to offer legal sports betting through its land-based casino industry in Tunica and Biloxi.
Along with Nevada as the birthplace of casino gambling and sport betting in the country, these other states have been on the forefront on expanding online gambling options within their borders. Time will tell how many more states jump on the bandwagon in the coming months and years, but common sense tells us that the lure of additional tax revenue to fill the current void in state budgets dictate that expansion should continue at an accelerated pace all across the nation.
• Source: Online Gambling: Is it Legal? From LegalZoom.com