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  • Wagering on horse races is the most prevalent form of sports betting, but football matches—including soccer, rugby, and Australian rules football—also are the focus of considerable gambling.
  • Each time a new state passes a bill to make gambling on sports legal or changes a law to allow more competition among betting platforms, known as sportsbooks, it becomes ground zero in a battle.
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States, casinos, teams, and fans all hope to cash in on legal sports betting. Can they all be winners? Here's everything you need to know:

Where is it legal?
Sixteen states have passed legislation permitting sports betting over the past year, and six have already set up betting operations. Last May, the U.S. Supreme Court struck down a federal law limiting sports gambling to Nevada, ruling that the law unconstitutionally intruded into state decisions. New Jersey led the charge to overturn that 1992 ban, in the hope of reviving its moribund Atlantic City casinos. Since then, there's been some $9 billion in legal action nationwide on professional and college sporting events in Delaware, Mississippi, New Jersey, Pennsylvania, Rhode Island, and West Virginia. In recent months, Arkansas, Illinois, Indiana, Iowa, Maine, Montana, New Hampshire, Tennessee, and Washington, D.C., passed sports betting laws, and dozens more are mulling legalization. Analysts believe the U.S. is still just scratching the surface of what could become a $400 billion industry.

What's in it for the states?
A new source of revenue. Americans bet up to $150 billion on sports in 2017, only $4.9 billion of which was legal. The legalization argument echoes the case for legalizing marijuana: If people are going to do it anyway, why not regulate and tax it? In New Jersey, legalization has generated nearly $200 million in revenue and helped create more than 3,300 full-time jobs, many of them in Atlantic City. Legalization has 'brought new life and new customers to our racetracks and casinos,' Gov. Phil Murphy said recently. 'New Jersey can very soon and will very soon dethrone Nevada as the sports gaming capital of America.' Yet while states charge sportsbook companies millions for licenses and impose steep taxes, revenue in most states is falling far short of projections; Rhode Island, for example, expected to collect $11.5 million in taxes during the first fiscal year of legalization. In three months it took in just $150,000. Mississippi, Pennsylvania, and West Virginia have had less than half the expected revenues.

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Why the poor results?
There is a lot of competition for the dollars of people who like to gamble, including casinos, state lottery games, and online betting, and not everyone has enough sports savvy to confidently bet on the outcome of pro games. And in sports betting, the house doesn't always win. Rhode Island sportsbooks lost $2.35 million in February, after the New England Patriots won the Super Bowl and covered the 2.5-point spread. Long-shot underdogs can burn bookies even worse: James Adducci of Wisconsin went to Las Vegas in April and placed the first sports bet of his life — $85,000 — on Tiger Woods to win the Masters. When Woods won his first major title in 11 years, Adducci got a payout of $1.19 million.

Are the leagues on board?
Yes, though they were almost uniformly opposed just a decade ago. Pro football, basketball, baseball, and hockey feared scandals in which athletes, coaches, and referees could be secretly paid to corruptly influence game results. But with the explosive popularity of online sports betting sites such as FanDuel and DraftKings, each valued at more than $1 billion, the leagues found the lure of a new profit source irresistible. After the Supreme Court paved the way for legalization, Mark Cuban, owner of the NBA's Dallas Mavericks, said franchise owners 'just saw the value of their team double.' Since then, each league has licensed its proprietary statistics to casino corporations for tens of millions of dollars. The leagues are also pushing to get 0.25 percent of every bet as an 'integrity fee' for the burden of preventing point shaving and other corruption, to stop teams taking bribes from gamblers to throw games — as the Chicago 'Black Sox' did in the World Series 100 years ago. 'If we have a scandal,' MLB senior vice president Bryan Seeley said, 'that could cost us hundreds of millions of dollars.' Legalizing sports gambling will also bring an inevitable boom in problem gambling and gambling addictions.

So why go down this road?
Politicians love revenue from 'sin taxes' such as smoking, drinking, and gambling, since these activities are voluntary, and the leagues see betting as a way of juicing interest in their games. When a game turns one-sided, casual fans might leave early or change the channel. Gamblers stay on the edge of their seat, waiting to see if a team covers the point spread or if they'll win a bet such as 'Who will score last?' Golden State Warriors owner Peter Guber says he wants the fan to feel like 'more of a participant than a passenger.' Keith Wachtel, the NHL's chief revenue officer, says gambling revenue is actually an afterthought for owners. Seducing more fans to become even more engrossed, he says, is 'the holy grail of sports betting.'

The addiction problem
Any expansion of legal gambling always brings a spike in the number of people with gambling addictions. Charlie, an IT professional from Pennsylvania, quickly burned through $400,000 after the state legalized online sports bets. 'Imagine being an alcoholic sitting on your couch and there's no beer in the house, and then there's this app that you can press and magically a beer appears,' he said. 'It's tempting as hell.' Hotlines for gambling addicts in New Jersey received 21 percent more calls involving sports betting this year, and researchers believe about 2 percent of adults are susceptible to uncontrollable gambling. Arnie Wexler, a compulsive-­gambling advocate, says legal sports betting will unleash 'a volcano of gambling addiction in America.' The problem will grow worse if sportsbook operators are allowed to offer exotic 'prop' bets in real time: '$10 he makes this field goal,' or '$20 the coach calls a running play.' Every minute of a game could become a source for adrenaline-pumping wagers. In the U.K., such bets are already legal, and today there are more than 8,500 'betting parlors,' with half the top soccer teams promoting gambling services on their jerseys. An estimated 430,000 Brits are problem gamblers, up 50 percent in just three years.

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Exclusive online casino. When discussing legal online sports betting, the majority of America's government has a very regressive, prohibition-style attitude towards it, buying into a negative perspective concerning the morality of gambling entertainment. This is what has led to a variety of state gambling laws in the past.

There are no US federal laws that make it a crime for Americans to place bets at offshore sportsbooks that are operating legally within the industry. There are two states that legally prohibit all online gambling, domestic or offshore, leaving residents in Connecticut and Washington without legally sanctioned online betting options, though they have yet to start enforcing those restrictions.

For the most part, state lawmakers are becoming more progressive concerning betting entertainment and recognize the value that this type of revenue stream can bring to a state. Individual states are actively analyzing what the legalization of domestic sports gambling can provide them with in terms of opportunities, tourism, and tax revenue, and many have already taken action one way or the other through new legislation.

Iowa, Nevada, New Jersey, Oregon, Pennsylvania, Rhode Island, and West Virginia currently permit state-regulated online sports gambling, with nearly two dozen additional states having launched land-based sportsbooks. Individual territories began embracing sports betting the moment that PASPA was ruled unconstitutional by the Supreme Court in the infamous NJ case, with multiple states having had their legislation ready and waiting should the ruling go in the Garden State's favor.

Below we'll take a look at the relevant US federal gambling laws, and explain how state gambling laws intersect with federal laws to impact online and brick and mortar sportsbook gambling, as well as what these laws have to say about the legal status of offshore sports betting entertainment.

The Federal Laws on the Books

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The sections below will detail and explain how each major federal law affects domestic gambling opportunities in the US.

The Federal Wire Act

Passed back in 1961, the Federal Wire Act was made law in an effort to curtail the illegal gambling activities taking place over the phone by organized crime syndicates. It prohibited the transmission of wagers or betting information from being carried across state lines via telegraph or telephone. The Federal Wire Act targeted these illegal bookie operations as a means to curb the mafia from manipulating games and making a profit through these tactics.

This law was strictly focused on interstate gambling, and only targeted those accepting bets and not the individuals placing the bets. The goal was to crack down on illegal gambling services, not prosecute bettors. Between the DOJ Legal Opinion of 2011 and the repeal of PASPA, today's application of the Wire Act prohibits any gambling business from accepting bets across state lines or from foreign sources.

With the changes still being implemented, we are not sure yet how this will affect those states that had entered into interstate gambling pacts with one another, sharing player pools for their online gambling initiatives. Once that aspect of the legal situation becomes more clear we will update that information here.

The Professional and Amateur Sports Protection Act

Also known as the Bradley Act, or just PASPA, the Professional and Amateur Sports Protection Act was a sweeping federal regulation that passed in 1992, with the supposed intent of protecting the integrity of sports by making sports betting illegal.

At the time the bill was passed, there were sports lotteries in Delaware, Montana, and Oregon, as well as licensed and regulated sports betting in Nevada, so those four states were exempt.

The law effectively prevented the expansion of the sports betting market throughout the United States in what many categorized as a discriminatory law that favored a few states while restricting others.

New Jersey took on the mission of challenging the law and after several years of court battles, was given a favorable outcome by the highest court in the land as SCOTUS ruled PASPA as unconstitutional, nullifying the law.

As of May 14, 2018, each individual state now has the authority to dictate sports betting laws within their borders. They can now choose to authorize or prohibit sports betting at their pleasure. Following PASPA's repeal, we have seen multiple states move forward with legislation that legalizes sports gambling at the state level.

The Unlawful Internet Gambling Enforcement Act

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This is the big one that shook the gambling industry to its core. Online gambling really started to explode during the early 2000's, especially in the realm of online poker. In 2006, then-President Bush signed into law the Unlawful Internet Gambling Enforcement Act, known all over as the UIGEA. In a nutshell, the UIGEA placed very stringent regulatory restrictions concerning how gambling-related transactions could be processed.

The most reputable sites started a countdown and allowed Americans to withdraw and closeout their accounts. Many trusted gambling sites left the US market at this time. After the dust settled, and the financial and gambling industries learned how to comply with the regulatory oversight provided by the UIGEA, many of these reputable gambling sites have returned to provide services to US sports bettors.

The UIGEA did end up making the online gambling market safer for both the bettors and the operators by imposing a more reliable and stricter regulatory structure for how gambling-related transactions are processed. Gambling sites invested in top tier payment processors while all parties implemented higher-level security protocols to ensure the validity and safety of those transactions that are processed.

While US online gambling funding options are still somewhat limited in some regards, things have stabilized. The emergence of cryptocurrencies have filled the void left by the elimination of US-friendly e-wallets and failed credit card transactions. The UIGEA does not make it illegal for Americans to gamble online. The law simply regulates how online gambling transactions are processed.

The 2011 Department of Justice's Interpretation of Federal Laws

With the growth of online commerce, several states became interested in offering lottery game services online. This raised questions concerning the application of the Federal Wire Act, driving the DOJ to issue a clarification of the law's reach.

The Department of Justice ruled, and accurately so, that the federal government had no right to tell states that they could not sanction online gambling and therefore established that each US state has the authority to determine their own fate concerning online gambling with the exception of sports betting.

The repeal of PASPA took care of freeing sports gambling as the last remaining federally prohibited form of state-regulated online gambling. As of now, all 50 states have the legal ability to legalize and offer online gambling such as casinos, poker, bingo, and sports wagering. To date, only a handful of states have taken advantage of legal domestic online gambling. However, many states have pending bills to allow various forms of sports betting.

The 2019 DOJ Interpretation of Federal Gambling Laws

Following the repeal of PASPA in 2018, the reach of the Federal Wire Act has again come into question. In a new interpretation, which many believe was coerced by anti-online gambling activist Sheldon Adelson, the Department of Justice has indicated that the Wire Act prohibits not only interstate wagers but also the sharing of information across state lines.

This determination will certainly harm those states that have entered into interstate gambling compacts to share player pools and resources with other states. The opinion is being formally challenged through a lawsuit headed up by New Hampshire. As the situation unfolds, we will provide updates here.

What You Need to Know Going Forward

All of this legal information is good knowledge to have under your belt, no doubt about it. However, all you really need to know going forward is that there are no federal laws making gambling illegal in the United States either online or offline, and this includes domestic and offshore sports betting. States now determine the legal status of all gambling entertainment within their borders. As a sports betting resource guide, we want to make this point clear.

For those of you interested in betting on sport but who live in a state that has not authorized state-regulated sportsbooks, you'll have to either travel to a state with legalized sports betting or use a legitimate offshore sportsbook such as the ones you find listed on this site. You can check out our list of states that allow sports betting here or follow our list of recommended online sportsbooks.

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