The United States has gone through many changes concerning gambling laws. When organized crime came into fruition in the mid-20th century, congress passed gambling laws to put an end to sports betting.
Today, U.S. states can create their own gaming legislation with little government involvement. We will start from its beginnings.
The 18th Century
Horse racing and lotteries were both forms of gambling during this era. Ten million dollars in taxes came from government-sanctioned lotteries to fund the American Revolutionary War. Proceeds were also used to establish universities and to build cities. Horse racing was not quite as widespread at that time as it is today. It was only limited to horse owners and partisans; as the first racetrack in the U.S. was originally constructed in Long Island in 1665.
Casino gambling slowly evolved when roadhouses and taverns allowed card and dice games. As the population increased by the early 1800s, casinos became more widespread. With gambling regulations established at the state level, horse racing continued to remain legal across the United States, with the first stakes race taking place in 1867.
The Late 19th and Early 20th Century
During the turn of the19th century, card rooms grew in popularity along with the debut of the slot machine. Betting on boxing has not been legalized, but neither was it illegal.
During this era, there grew a major concern with gambling fraud. One example being the scandal of 1919, when eight team members of the Chicago White Sox were indicted for taking a bribe of $10,000 apiece to overthrow the game against the Cincinnati Reds. During this time, various forms of gambling was banned that involved bookies and gaming facilitators.
Judge Kenesaw Mountain Landis was appointed the first commissioner of the U.S. Major Baseball Leagues. During his reign from 1920 to 1944, Landis established an anti-gambling template based on restoring public trust and integrity. Legislations were again put in place – which drove sports betting underground.
The Mid-20th Century
In 1949, Nevada became the first state to legalize sports betting for the purpose of bringing tourism into the area. Other forms of gambling were already legalized in the state. In 1951, the federal government initiated a 10% tax on sports bets. This did not work out in the long run since the juice was too much, causing a major loss in profits. In 1974, congress reduced the taxes down to 2 percent. Outside of the state, illegal sports wagering and gambling continued during the 1960s.
The 1960s Through 1980
Attorney General Robert F. Kennedy united with congress to pass the The Federal Wire Act which enforced stricter laws to incriminate sports bettors. Nevertheless, illegal bookmaking continued to increase throughout the 70s and 80s.
This was when the U.S Department of justice decided to minimize the level of priority that was given to anti-gambling laws. These laws remained on the books for over the next decade. There were a few instances of betting activity that were reported. In 1976, New Jersey residents voted to allow casinos and gambling in Atlantic City.
The Turn of the 21st Century
The Professional and Amateur Sports Protection Act (PAPSA) was a law that was passed in 1992 that banned government and state systems from legalizing sports betting. Through a grandfathered clause, New Jersey and other states were provided an exception to continue sports betting since its already been in operation. The clause also gave New Jersey casinos one year to legalize sports betting. However, in 1993, a ballot defect along with other circumstances caused the state not to meet the exemption guideline.
Congress passed a law in 2006 that targeted online sports betting. The Unlawful Internet Gambling Enforcement Act, made it illegal to accept betting funds via EFT transfer, credit, money transfer, or any other payment methods. All banks and the U.S Attorney General are required to block illegal transactions and identify the perpetrators.
In 2009, competition from growing casinos along the northeast caused a decline for New Jersey casinos. Delaware governor, Jack Markell, voted in favor of reinstating the NFL parlay betting that was introduced in 1976. This violated the PAPSA law. New Jersey began fighting for a non-binding amendment to permit sports betting in the state.
In 2012, the legislature amended the Casino Control Act which permitted the Casino Control Commission to offer licenses to racetracks and casinos to take sports bets. Unfortunately, New Jersey lost their case due to the PAPSA time limit in their clause.
In October 2016, New Jersey requested a Supreme Court review of their case, which they did. The decision was made in May 2018 to strike down the PASPA. As of December 2018, sports betting was declared legal in New Jersey, West Virginia, Pennsylvania, Mississippi, Delaware, Arkansas, and Rhode Island. In 2019, another 6 to 10 states will be added.