US Sports Betting

Legal sports betting became a reality in the United States following a years-long legal battle pitting the state of New Jersey against a federal law called the Professional and Amateur Sports Protection Act of 1992 (PASPA) and a consortium of leagues that sought to maintain the status quo.

The case began with a law passed in New Jersey seeking to legalize sports betting. The major pro sports leagues and the NCAA sued to stop the law from taking effect on grounds that it was a clear violation of PASPA.

Multiple lower courts agreed with the leagues, but lawyers representing New Jersey contended PASPA itself was an unconstitutional law. The case ended up going all the way to the Supreme Court and a ruling was finally sent down in May 2018. In a landmark decision, the Supreme Court declared PASPA unconstitutional, freeing every state in the US to legalize and regulate sports betting as it sees fit.

We’ll cover the case in more detail in a bit, but the main thing to know up front is that the end of PASPA did not automatically legalize sports betting in all fifty states. For sports betting to be legalized in any given state, lawmakers in that state must draw up legislation and pass it into law.

In-Person vs. Online Sports Betting in the USA

In-person and online sports betting have been legalized in a handful of states so far and legislation has been introduced in more than two dozen states on top of that. The state-by-state rollout of sports betting is expected to take a few years, but most analysts believe eventually more states than not will choose legalization.

Some states have opted to authorize in-person betting only while others have gone full steam ahead with legal sportsbooks, betting websites and mobile apps. With every state free to choose its own path forward on the sports betting issue, there are understandably quite a few questions regarding what’s legal and where.

It just so happens that one of one of our primary goals is to help our readers make sense of it all, so let’s begin with a quick look at which states have legalized sports betting to date and continue the discussion below.

States with Legal Sports Betting

  • Arkansas: In-person sportsbooks authorized, still waiting for first launch
  • Delaware: In-person sportsbooks now active
  • Mississippi: In-person sportsbooks now active
  • Nevada: In-person and mobile betting apps now active
  • New Jersey: In-person and online sports betting now active
  • New Mexico: In-person sports betting now offered at two tribal casinos
  • New York: In-person sportsbooks authorized and mobile under consideration, but waiting for additional legislation
  • Pennsylvania: In-person sportsbooks now active, mobile betting coming soon
  • Rhode Island: In-person sportsbooks now active
  • Washington DC: In-person and mobile, but additional regulations needed before launch
  • West Virginia: In-person and mobile sports betting now active

Mobile Sports Betting in the US

Mobile sports betting is an attractive proposition for fans, operators and lawmakers alike for a variety of reasons including convenience, reduced operating costs, more betting activity and increased tax revenues to the state. Whereas physical sportsbooks are costly and can only handle so many customers at a time, mobile betting sites are always open, require no employees to record wagers and provide more convenience to customers.

All wagering activity is required by federal law to take place within state lines. This means you must be physically located in a state with legal online betting in order to place wagers through apps licensed in that state. Note that you do not need to be a legal resident to place wagers through apps licensed there; you only need to be physically present at the time the wager is placed.

Licensed betting sites in New Jersey and elsewhere take the issue of location seriously and make sure of geolocation technology to ensure their apps are only accessible within their respective states.

If you sign up for a mobile betting account and see a pop-up asking permission to access to your location, fear not. That’s just your betting app attempting to verify you’re within state lines so it can legally provide you with sports betting services.

States with Legal Online Betting

Nevada: Online betting is available in Nevada through apps operated by each of the state’s land-based sportsbooks. Some in Nevada are pushing to authorize online registrations, but currently all customers must visit a sportsbook in-person first to register for an online gaming account.

New Jersey: As the state whose sports betting laws initiated the court case that would eventually overturn PASPA, New Jersey was able to move quickly on sports betting following the Supreme Court decision. New Jersey’s mobile betting industry is competitive, well-regulated and highly profitable.

Pennsylvania: Pennsylvania was ready to act when the Supreme Court issued its opinion in 2018 thanks to legislation approved the year before to legalize online gambling and sports betting. Pennsylvania’s first land-based sportsbooks are now open for business and the first betting apps are expected to launch shortly.

Washington DC: Washington DC legalized in-person and online sports betting within city limits in late 2018. A mobile betting app available within city limits will be coming online shortly while four of the city’s stadiums will be allowed to operate in-person sportsbooks. Additionally, bars and restaurants will be able to apply for sports betting licenses.

West Virginia: The first sportsbook in West Virginia opened in August 2018 and the first mobile app went live that December. West Virginia gambling laws permit each of the state’s five casinos to operate up to three individual betting sites.

In-Person Sportsbooks in the US

Some states have opted to take a more measured approach to legalization by authorizing land-based sportsbooks but not online betting.

In some states, it’s a matter of wanting to take things slowly as lawmakers evaluate the social impacts of sports betting and ensuring local operators are capable of maintaining functional sportsbooks in the real world before authorizing online betting.

In other states, tribal gaming compacts and other legal issues simply made it easier to legalize land-based sportsbooks while lawmakers consider potential avenues for online betting.

Each of the following states has legalized in-person betting at certain authorized locations. Mobile betting remains a distinct possibility in the future, but for now these states are keeping it old-school.

Arkansas: Sports betting was legalized in Arkansas through a referendum approved by voters during the 2018 midterm elections. The passage of the referendum automatically approved sports betting at two racetracks as well as allowing two casinos that may be constructed in the future to apply for sports betting. The Arkansas Racing Commission must now issue regulations before the first sportsbooks are allowed to go live.

Delaware: Delaware has the noteworthy distinction of being the first state in the US other than Nevada to book a legal sports wager. Although it was New Jersey that led the fight to decriminalize sports betting in the US, Delaware was first to the punch due to having laws in place allowing the state’s three casinos to begin accepting sports wagers as soon as federal law changed.

Mississippi: Mississippi passed a sports betting law in 2017 and the Gaming Commission approved regulations governing the activity in 2018. Today, Mississippi has a thriving sports betting market with nearly all of the state’s casinos operating a sportsbook.

New Mexico: Sports betting came to New Mexico with no new legislation needed. A few months after the Supreme Court issued its fateful decision, the Pueblo of Santa Ana announced they would be commencing sports betting at the Santa Ana Star Casino as allowed by their gaming compact with the state. Buffalo Thunder near Santa Fe followed suit several months later. Sports betting is now offered at both casinos and state officials have made no indications they have any intention to challenge the activity.

New York: New York sports betting is a work in progress. A referendum measure approved by voters in 2013 authorized the state’s four upstate commercial casinos to offer sports betting should the federal prohibition be rescinded. However, regulations are still needed before the first NY sportsbooks may go live. Tribal casinos in New York are likely to also get in on the action as gaming compacts they have with the state allow them to offer the same games as commercial casinos. Lawmakers are still considering expanded sports betting legislation that may include mobile betting.

Rhode Island: Rhode Island legalized sports betting through a budget bill approved in 2018 that included a measure authorizing the state’s two casinos to offer sports betting. Both sportsbooks opened in late 2018. Some state lawmakers have expressed interest in authorizing mobile sports betting as well and have introduced legislation to that effect.

How Sports Betting Was Legalized in the United States

The Supreme Court of the United States ended the federal sports betting prohibition on May 14th, 2018. That decision did not actually legalize sports betting all by itself, but instead struck down a federal law that prohibited all states except Nevada from legalizing or regulating sports betting.

Getting to this point was a long road with many twists and turns and, if we were so inclined, it is a road we could trace all the way back to the very founding of the country. But today, we’ll stick to the cliff’s notes version and save the full history of sports betting for another day. Suffice it to say, gambling and sports betting have been controversial for about as long as the United States has been a country.

National Prohibition Enacted in 1992

Today’s story begins in 1992, the year the Professional and Amateur Sports Protection Act (PASPA) was signed into law.

The key portion of PASPA read as follows:

“It shall be unlawful for –

(1) a governmental entity to sponsor, operate, advertise, promote, license, or authorize by law or compact, or

(2) a person to sponsor, operate, advertise, or promote pursuant to the law or compact of a government entity, a lottery, sweepstakes or other betting, gambling, or wagering scheme based, directly or indirectly (through to use of geographic references or otherwise), on one or more competitive games in which amateur or professional athletes participate, or are intended to participate, or on one or more performances of such athletes in such games.”

To put it in plainer terms, PASPA prohibited states from legalizing sports betting. For as long as PASPA was in effect, there could be no expansion of sports betting in any state across the country.

The authors of PASPA included within the law a provision that one year would pass before the law takes effect. During that time, any sports betting schemes in place at the state level would be exempt from PASPA.

Nevada already had legal sports betting at the time and was therefore granted the sole exemption from PASPA for full-on sports betting. Limited sports lottery games in Oregon and Delaware were also exempted, while a law in Montana allowing establishments to run betting squares contests also received an exemption.

No new laws legalizing sports betting were passed during the one-year waiting period specified by PASPA, so true sports betting was effectively banned everywhere in the US other than Nevada.

The First Challenge to PASPA and Responding Suit

The prohibition went unchallenged for nearly 20 years, until voters in New Jersey started the process that would eventually result in PASPA being struck down. In 2011, New Jersey voters approved a referendum to alter the state’s constitution such that the legislature would be permitted to introduce legislation legalizing sports betting at casinos, racetracks and over the internet.

Less than two weeks later, the Sports Wagering Act to authorize sports betting in New Jersey was introduced. The Sports Wagering Act of 2012 was approved by the legislature in January 2012 and Governor Chris Christie signed the bill into law a few days later.

The NCAA, NFL, MLB, NBA and NHL filed suit in August 2012 against Governor Christie, NJ Division of Gaming Enforcement Director / NJ Assistant Attorney General David Rebuck and NJ Racing Commission Director Frank Zanzuccki to enjoin the Sports Wagering Act from being implemented.

The leagues’ main argument was that New Jersey’s Sports Wagering Act was a direct and clear violation of the Professional and Amateur Sports Protection Act.

This set the stage for a court case that would be named Christie v. NCAA (later to be renamed as Murphy v. NCAA after a change in governorship)

The sports leagues held high ground as their argument was difficult to debunk. What New Jersey was attempting was indeed a clear-cut violation of PASPA. However, lawyers representing New Jersey did not even attempt to argue the Sports Wagering Act was compatible with PASPA. Instead, they argued PASPA itself was unconstitutional and should be ruled as such.

The US District Court in New Jersey ruled in favor of the leagues and the Third Circuit Appeals Court affirmed the decision in 2013. There was some hope among betting proponents that New Jersey could get the case in front of the Supreme Court, but the Supreme Court declined to hear the case in 2014.

Second Challenge to PASPA

The Supreme Court’s decision not to hear the case was a major setback for New Jersey and there was some talk at the time that it might be the end of sports betting legalization efforts for some time. Nevertheless, New Jersey officials went right back to the drawing board and decided to take a different tack.

In 2014, lawmakers introduced a law in New Jersey playing off a single sentence found in the Third Circuit’s decision: “We do not read PASPA to prohibit New Jersey from repealing its ban on sports betting…”

Under the Sports Wagering Act of 2014, New Jersey partially repealed “prohibitions, permits, licenses, and authorizations concerning wagers on professional, collegiate, or amateur sports contests or athletic events” at casinos and racetracks.

The idea here was to get around PASPA by not explicitly authorizing or licensing sports wagering; New Jersey simply wanted to end its prohibition at casinos and racetracks.

Although this was fairly described as a long-shot effort by some, the Sports Wagering Act of 2014 set the stage for a whole new round of legal maneuvering.

The NCAA and other pro sports leagues jumped to action once again and sued to stop the law from being implemented. Predictably, the District Court and Third Circuit both ruled against New Jersey.

New Jersey Gets Its Day in (Supreme) Court

Undeterred by previous setbacks, New Jersey appealed again to the Supreme Court in 2016. The Supreme Court issued New Jersey its first major victory of the entire saga in 2017 when it agreed to hear the case.

The Supreme Court’s decision to hear the case marked a significant turning point in the long-running legal battle. The fact the highest court of the land would even consider the case was a victory of its own because it indicated New Jersey’s argument that PASPA was unconstitutional held enough merit to be worth considering.

Oral arguments were presented before the Supreme Court in December 2017 and early reports from those present said the Justices hearing the case seemed sympathetic to New Jersey’s arguments. As those early reports indicated, the Supreme Court was indeed very sympathetic.

Victory

The Supreme Court of the United States settled the matter once and for all on May 14th, 2018. PASPA was ruled unconstitutional and stricken down in its entirety.

The 7-2 ruling opened the door to legal sports betting in the US by returning to individual states their right to regulate sports betting as they see fit. Numerous states have taken advantage of the opportunity since then and more are on the way.

It is also important to note that the Supreme Court ruling does not preclude Congress from regulating or even banning sports betting at the federal level. The main problem the Supreme Court has with PASPA was the way in which it dictated to state legislatures what they may and may not do, in violation of the anticommandeering principles of the 10th Amendment.