A Comprehensive Guide to Legal USA Online Gambling and Licensing
There aren’t many social activities that have had such a complicated history as gambling in the United States of America. Through the years, there have been all sorts of debates about the morality of the act. Thus, it is inevitable that the law would step in to give the final say.
Although constantly faced with a lot of legal battles, many of which are still ongoing, the gambling industry in the United States looks like it is here to stay. However, there are laws right now that determine what is allowed with respect to online gambling. It is the responsibility of every gambler to find out what these laws are to ensure that they are not committing any crimes.
In this detailed guide, we will explore the most important points that all gamblers should keep in mind as regards online gambling in the USA. This includes the legality of online gambling, the kinds of gambling allowed in different locations, and licensing bodies. Keep reading and by the time you’re done, you’ll be glad you did.
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Online Gambling in the United States
The three major forms of online gambling in the USA are online casinos, online poker, and online sportsbooks. Because of the Unlawful Internet Gambling Enforcement Act (UIGEA) which we will discuss shortly, many US residents tend to avoid online casinos. Only New Jersey, Delaware, and Nevada have legally licensed casinos operating within their borders.
They can do this because, in 2010, the Department of Justice (DOJ) allowed states to legally create, license, and regulate their own online casino and poker markets. The only condition was that these online casinos would have to be self-contained in these states.
Online sports betting is now legalized in many US states. This form of online gambling has also had a complex past in the country because of the Professional and Amateur Sports Protection Act (PASPA). A ruling by the Supreme Court of the United States in 2018 canceled the ban on online sports betting. Now, it is entirely up to state governments to determine if they want it legal in their states. These are some of the states that have legalized online sports betting in the US:
- Colorado
- New Jersey
- Nevada
- Pennsylvania
- Tennessee
- West Virginia
Just like USA online casinos, the Wire Act of 1961 and UIGEA restricted gamblers from playing online poker in the US even though land-based poker games were legal. One of the biggest online gambling indictments, commonly referred to as “Black Friday”, was due to circumstances surrounding online poker. Now, however, the same conditions for the legality of online casinos apply here. Online poker sites in the US are legal, provided that they serve customers in their jurisdictions. Today, only residents of the following states can play online poker on sites regulated by the state:
- Delaware
- New Jersey
- Nevada
- Pennsylvania
Laws Governing Gambling in the United States
The United States of America is regarded as one of the foremost countries of the world and a major reason for this is the order that is seen there. There are laws for virtually every industry in the country and the gambling industry is not an exception.
If you’re a gambler who lives in the United States, it would do you a lot of good to know the laws that govern the industry and that is what we aim to achieve here. This is especially important since the laws governing gambling in the United States are not so straightforward; read on and you’ll see what we mean.
The two bodies that heavily influence gambling laws in the US are the state and federal governments. The federal government has enacted laws that don’t actually prohibit gambling. However, each state has the ability to determine the specifics about the types of gambling that are allowed within its borders.
Hence, if your question is, ‘Is online gambling illegal in the US?’, the answer is that on a federal level, it is not, but it could be in your state. It is important to note that although online gambling is not a federal crime, you’re not allowed to gamble across state lines.
Some states have legalized all forms of gambling, but there are others where only certain forms are allowed. For instance, online casinos, poker rooms, and sports betting are legal in New Jersey and Pennsylvania, but only online sports betting is legal in Illinois.
As well as this, gambling in riverboat casinos is legalized in some states whereas it is completely outlawed in others. Some states’ legalities include the size of the vessel, the kinds of games that can be played, maximum wagers, and so on.
Some of the most important laws that govern online gambling in the States are:
- The Federal Wire Act of 1961
- The Unlawful Internet Enforcement Act (UIGEA)
- The Professional and Amateur Sports Protection Act (PASPA)
The Unlawful Internet Enforcement Act (UIGEA)
The UIGEA is one of the most prominent laws in gambling circles in the United States. It was passed by Congress in 2006 and targets gaming companies and financial institutions that work with online gambling platforms.
This law ‘prohibits any person engaged in the business of betting, as defined, from knowingly accepting credit, electronic fund transfers, checks, or any other payment involving a financial institution to settle unlawful internet gambling debts.’
Many gamblers tend to think that the UIGEA stops them from gambling but that is not the case at all. Rather, it prevents financial organizations in the US from processing payments for illegal online gambling platforms. This just proves that online gamblers are actually the ones for whom this law was passed.
The goal of the law was to reduce cases of fraud, money laundering, and financial crimes in general, that had to do with online casinos in the USA. However, to be on the safe side, many online gambling platforms pulled out of the American gambling space. Today, many online casinos and sportsbooks in the USA still do not allow players from the United States to use their platforms because of the UIGEA; those who do only allow e-wallet platforms for these users.
It is important to note that the UIGEA does not affect online gambling sites outside the US, although financial institutions in the country are affected. The law is supposed to protect you from harmful gambling platforms, so ensure that you look carefully before you leap.
Licensing Bodies for Online Gambling in the US
The sensitivity of online gambling in the USA has made the development of regulatory bodies very necessary. In states where any form of online gambling has been legalized, online gambling platforms must be licensed by an organization.
The aim of licensing is to ensure that these online gambling platforms adhere to set standards of operation, especially as regards their safety and fairness to customers. The following bodies are responsible for licensing and regulation of online gambling platforms in the United States:
The Kahnawake Gaming Commission (KGC)
Based in the Quebec province of Canada, the Kahnawake Gaming Commission has been in the business of regulating online gambling companies since 1999. Since they began operations, they have been able to successfully license over 50 operators with more than 250 sites in North America.
The commission covers US online poker sites, online casinos, and online sportsbooks in the region. They have built a reputation of promptly addressing all valid player complaints, setting themselves as a worthy example for other regulatory bodies.
The Nevada Gaming Control Board (NGCB)
Nevada is the home of gambling in the United States, thus, a licensing body sprung up from there pretty early. The Nevada Gaming Control Board, also known as the State Gaming Control Board, was set up in 1955 by the Nevada Legislature.
Since then, the government agency has overseen the vast casino industry in the state. However, since the emergence of more online gambling companies within the state, their tasks have increased. They now also ensure that any online gambling platforms in their state keep the law and are fair to all their customers.
The New Jersey Division of Gaming Enforcement (DGE)
New Jersey is another US state with an extensive gambling culture. Since land-based casinos and other gambling companies are so prominent in the state, it was only a matter of time before online gambling casinos would pop up too.
The DGE has managed the integrity of old, land-based casinos, they now issue licenses to online gaming platforms that operate within the state too. Today, they offer the widest amount of online betting venues with some of the best online casinos and sportsbooks in the US available here.
The Michigan Gaming Control Board (MGCB)
Online casinos in Michigan just began to spring up since online gambling was only recently legalized in the state in January 2021. The Michigan Gaming Control Board (MGCB) has been put in place to regulate their activities, as well as other online gambling platforms. Some forms of gambling regulated by the MGCB are online casino gaming, sports betting, and the purchase of lottery tickets.
The Pennsylvania Gaming Control Board (PGCB)
The PFCB was founded in 2004 and the agency’s primary responsibility is to regulate casino gambling in the State of Pennsylvania. Slot games, in particular, are monitored by the PGCB, and this is done at their slot-machine testing center. They are also responsible for the management of laws regarding Horse Racing in the state. However, other games of chance such as lotteries, are not under their jurisdiction.
History of Online Gambling Law in the United States
Gambling in the United States can be traced as far back as the Pre-Columbian era before the Europeans arrived in the territory. The Native Americans who lived in the area at the time engaged in some forms of wagering activities as part of their culture. However, as the British colonists came along, they brought other games of chance with them, most prominent of which were lotteries and horse racing.
Lotteries were introduced in the 17th century by King James I, as a means of generating public revenue. The first lottery was done in Virginia, the first of many British settlements in North America. The lottery quickly became popular among the social elite of the time and soon spread to other parts of the colony. With time, the first versions of the most popular casino games today were created. One of them was roulette, reportedly created by Blaise Pascal, a French mathematician.
In the early 18th century, the British colonies faced a gambling problem, as it quickly degenerated into a social vice. Many aristocrats were plunged into financial lows as a result of this. The solution came with the Great Awakening of the late 18th century. Gambling was thereafter considered sinful and harmful to society.
Gambling was normalized again after a while in the US, becoming prominent in areas like New Orleans and Louisiana. By the 1930s, it was legalized in many states. The first gambling license was issued in April 1931 in Las Vegas. Gambling as a business was affected by the war but it began to grow back shortly after. In the decades that followed, more structures were put in place to regulate it.
The 1990s saw the launch of the first internet gambling sites in the Caribbean and they soon reached the US. Online casinos, sportsbooks, and poker sites gradually became popular in the states. Today, we have mobile casinos on smart devices, live betting on online sportsbooks, and live dealer games in online poker rooms.
Legal US Gambling FAQ
What is the minimum age for gambling in the United States?
The minimum age for gambling in the United States varies from one state to the other. The most common ages are 18 and 21, so check to see what the required age for your state is.
Is online gambling legal in the US?
According to the country’s federal laws, online gambling is legal in the United States. However, state laws have a higher influence on the legality of online gambling in the US, so ensure that you check with your state’s laws before gambling online.
Which states in the United States of America do not allow any form of gambling?
Utah and Hawaii. If you live in either of the states, engaging in any form of gambling activity is considered illegal.
Does the UIGEA prohibit online gambling?
No, it doesn’t. What the UIGEA prohibits is the involvement of financial firms in the United States with unauthorized online gambling platforms, especially as regards facilitating payments to or from these platforms.
Is sports betting legal in the United States?
Yes, it is. The Supreme Court has lifted the ban on sports betting in the US, but its legality now lies in the hands of state governments. Confirm that it is legal where you live before you use an online sportsbook.
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