Gambling laws in united states

What U.S. States allow Gambling?

It’s to be expected that different regions of the world, and different countries, all have different laws regarding gambling, online casinos, free slots, and betting. But the United States is one of the only countries that have several different laws regarding gambling within their country, depending on what state you live in. In this article, we’ll go over what laws apply to gambling and online casinos in the U.S., whether you’re in Nevada, New Jersey, or Hawaii.

Introduction to U.S. State Gambling Laws

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Nevada and Louisiana are the only two states in which casino-style gambling is legal statewide. Both state and local governments impose licensing and zoning restrictions. All other states that allow casino-style gambling restrict it to small geographic areas (e.g., Atlantic City, New Jersey or Tunica, Mississippi), or to American Indian reservations, some of which are located in or near large cities. As domestic dependent nations, American Indian tribes have used legal protection to open casinos, which has been a controversial political issue in California and other states. In some states, casinos are restricted to "riverboats", large multi-story barges that are, more often than not, permanently moored in a body of water.

However, Online gambling has been more strictly regulated. The Federal Wire Act of 1961 outlawed interstate wagering on sports, but did not address other forms of gambling, such as online gambling and casinos. The Unlawful Internet Gambling Enforcement Act of 2006 did not specifically prohibit online gambling; instead, it outlawed financial transactions involving online gambling service providers. Some offshore gambling providers reacted by shutting down their services for US customers, while other operators have continued to circumvent the law and have continued to service US customers. 

The approximately 450 commercial casinos in the United States in total produced a gross gambling revenue of $34.11 billion in 2006.

Charitable Gambling in the US

Almost all states in the US allow charitable gambling, except Hawaii, South Carolina, Tennessee, and Utah. Charity gambling tends to be privately operated with no political affiliation, they do not retain private profits from the gambling, they donate a “substantial part” of the funds to the charity (generally recommended that 80% of turnover is spent on charity), that the gambling supports the charities overall objectives, and tend to provide long-term funding.

These laws tend to vary by country, and certainly by state. They are generally very vague and may in some cases be up to individual judgment.

However, while the gambling laws are vague, you are nonetheless allowed to run gambling (usually bingo, roulette, and especially lotteries) as a charity organization in all but 4 US states.

Pari-mutuel Gambling in the US

Pari-mutuel gambling, also called pari-mutuel betting, is a betting system in which all bets of a specific type are placed together in a pool, with any bookmaker fees are deducted, and the payoff odds are calculated by sharing the pool among all winning bets. Pari-mutuel betting/gambling differs from what is called fixed-odds betting int hat the final payout is not calculated and determined until the pool is closed – whereas in fixed odds betting, the payout is agreed upon at the time the bet is sold.

So pari-mutuel betting isn’t a specific type of gambling, or a specific type of casino game, but instead a way of collectively betting in a group. The pari-mutuel system is particularly used with gambling on horse races, greyhound races, jai alai, and practically all shorter sporting events where participants are ranked in order. Some lottery games also use a modified pari-mutuel system.

To give an example, in a hypothetical event that has eight possible results, in a country using a decimal currency such as dollars, each outcome has a certain amount of money wagered:

1 $60.00

2 $140.00

3 $24.00

4 $110.00

5 $220.00

6 $94.00

7 $300.00

8 $80.00

Thus, the total pool of money on the event is $1028.00. Following the start of the event, no more wagers are accepted. The event is decided, and the winning outcome is determined to be Outcome 4 with $110.00 wagered. The payout is now calculated. First, the commission or take for the wagering company is deducted from the pool. For example, with a commission rate of 14.25% the calculation is: $1028 × 0.1425 = $146.49. This leaves a remaining amount of $881.51. This remaining amount in the pool is now distributed to those who wagered on Outcome 4: $881.51 / $110.00 = 8.01 ≈ $8 per $1 wagered. This payout includes the $1 wagered plus an additional $7 profit. Thus, the odds-on Outcome 4 are 7-to-1 (or, expressed as decimal odds, 8.01).

So, now that you have a better understanding of what pari-mutuel betting is, what states actually allow this type of gambling in the US? Again, most states do allow it, but a total of 15 US states do not. The states that do not allow this type of gambling is Alaska, Am. Samoa, Connecticut, Washington DC, Georgia, Guam, Hawaii, Mississippi, Missouri, North Carolina, Northern Mariana Islands, South Carolina, Tennessee, and Utah.

In fact, a state like Utah is one you’ll see several times on this list, as they do not allow ANY type of gambling – no online casinos, lotteries, racetracks, or any other form of gambling.

Lotteries in the US

But what about lotteries, is that type of gambling allowed in the US? Again, you guessed it, whether gambling is legal or not depends on the state! Most states in the US, however, do allow lotteries as it’s seen as a very mild form of gambling, and rarely results in large unpayable dept. Because of this, all but 6 US states allow lotteries as a form of gambling. These 6 states are... yes, you’ve definitely seen some of these before... Alaska, Am. Samoa, Hawaii (which also doesn’t allow any type of gambling whatsoever), Utah, Alabama, and NEVADA!

Yes, you probably didn’t expect that last one, Nevada, home to Las Vegas? Surely you would expect the state holding Las Vegas would allow practically any form of gambling, betting, and casinos – but that’s certainly not the case. In fact, apart from just lotteries, Nevada has also banned all forms of racetrack betting and gambling.

A lottery is a form of gambling that involves the drawing of numbers at random for a prize – this can be an object or money, it doesn’t matter. Lotteries are outlawed by some governments, while others endorse it to the extent of organizing a national or state lotteries. It is common to find some degree of regulation of lottery by governments; the most common regulation is the prohibition of sale to minors, and suppliers must be licensed to sell lottery tickets. Though lotteries were widespread in the United States and some other countries during the 19th century, by the beginning of the 20th century, most forms of gambling, including lotteries and sweepstakes, were illegal in the U.S. and most of Europe as well as many other countries. This remained so until well after World War II. In the 1960s casinos and lotteries began to re-appear throughout the world as a means for governments to raise revenue without raising taxes.

Lotteries come in many formats. For example, the prize can be a fixed amount of cash or goods. In this format, there is a risk to the organizer if not enough tickets are sold. More commonly the prize fund will be a fixed percentage of the receipts. A popular form of this is the "50–50" draw where the organizers promise that the prize will be 50% of the revenue. Many recent lotteries allow purchasers to select the numbers on the lottery ticket, resulting in the possibility of multiple winners.

Commercial Gambling in the US

Commercial gambling is what most of us consider “regular casino gambling”. This is the type of gambling where the is a commercial purpose on the side of the game provider – that is to say, the gambling venue is a business trying to make money.

A casino is historically a gambling house, with the precise origin of gambling being unknown. The precise origin of gambling is unknown. It is generally believed that gambling in some form or another has been seen in almost every society in history. From the Ancient Greeks and Romans to Napoleon's France and Elizabethan England, much of history is filled with stories of entertainment based on games of chance. You can, therefore, assume that gambling connects with a more primal part of the human brain, that is aroused by the unknowable outcome of gambling, the uncertainty, and the dopamine release they get when they win.

The first known European gambling house, not called a casino although meeting the modern definition, was the Ridotto, established in Venice, Italy, in 1638 by the Great Council of Venice to provide controlled gambling during the carnival season, but was closed again in 1774. In US history, early gambling businesses were known as saloons. The creation and importance of saloons were greatly influenced by four major cities: New Orleans, St. Louis, Chicago, and San Francisco. It was in the saloons that travelers could find people to talk to, drink with, and often gamble with. During the early 20th century in America, gambling was outlawed by state legislation. However, in 1931, gambling was legalized throughout the state of Nevada, where America's first legalized casinos were set up. In 1976 New Jersey allowed gambling in Atlantic City, now America's second-largest gambling city.

Tribal Gambling in the US

Tribal gambling, also sometimes called Native American Gaming, comprises casinos, bingo halls, and various other gambling operations run on Indian reservations or other tribal lands in the US. Because these areas have tribal sovereignty, states have limited ability to forbid gambling there, as codified by the Indian Gaming Regulatory Act of 1988. As of 2011, there were 460 gambling operations run by 240 tribes, with total annual revenue of $27 billion.

The individual laws on tribal gambling in the US again vary by state – California, Oklahoma, Connecticut, Idaho, New York, and Indiana all have different laws regarding all forms of Native American gaming, as well as history.

Some particularly large and famous Native American casinos include the Pechanga Resort and Casino in California, the Foxwoods Resort Casino in Connecticut, and the Akwesasne Mohawk Casino in New York.

Statistics provided by the National Indian Gaming Commission, indicate that there are 460 Native gaming establishments in the US. These casinos are operated by 240 federally recognized tribes and offer Class I, Class II, and Class III gaming. Gaming is divided into 3 classes. Class I and Class II are traditional Native gaming such as bingo halls, poker halls, and lotteries, and requires no license. Class III gambling has high jackpots and high-stake games such as casinos, jai alai, and racetracks, and states feared that organized crime would infiltrate the Class III gaming on these reservations. 

The revenue generated in these businesses was close to $27.1 billion in 2011 up from $12.8 billion in 2001. The regions with the largest revenues in 2011 were Sacramento ($6.9 billion) and Washington State ($6.7 billion). The Native American gaming industry has been described as "recession-resistant", although tribes in many states (including Arizona, California, Connecticut, and New Mexico) saw revenues fall at a similar rate to commercial casinos during the Great Recession of 2007-2009.

Racetrack Gambling in the US

Racetrack gambling is the types of gambling involving racetracks, in all it’s forms. It can be horse race gambling, greyhound races, and so forth.

There are very many different kinds of horse races in the world, with the most common one being what is called “flat racing”. Flat racing tracks are the typical ones seen, being oval in their shape and generally level ground. While European countries tend to be different, horserace tracks in the US tend to be covered in dirt, though there are also more modern versions with the tracks covered in synthetic surfaces, such as Polytrack or Tapeta.

There are many other types of horseraces, such as jump racing, harness racing, endurance racing, and harness racing. Breeding the horses has also evolved into its own industry, with different kinds of horse breeds being incredibly valuable.

But apart from horseracing, greyhound races are also a typical and popular form of racetrack gambling. There are two forms of greyhound racing, track racing, and coursing. Track racing uses an artificial lure that travels ahead of the dogs on a rail until the greyhounds cross the finish line. As with horse racing, greyhound races often allow the public to bet on the outcome.

Animal rights and animal welfare groups are critical of the welfare of greyhounds in the commercial racing industry. A greyhound adoption movement spearheaded by kennel owners has arisen to assist retired racing dogs in finding homes as pets, with an estimated adoption rate of over 95% in the US.

Modern greyhound racing has its origins in coursing. The first recorded attempt at racing greyhounds on a straight track was made beside the Welsh Harp reservoir in England, in 1876, but this experiment did not develop. The industry emerged in its recognizable modern form, featuring circular or oval tracks, with the invention of the mechanical hare in 1912 by the American Owen Patrick Smith. Smith had altruistic aims for the industry to stop the killing of the jackrabbits and see "greyhound racing as we see horse racing". In 1919, Smith opened the first professional dog-racing track with stands in Emeryville, California.

Roughly half of the states in the U.S. allow racetrack gambling.

Online Gambling in the US

A relatively small amount, only 10, U.S. states allow online casinos and gambling. These are California, Delaware, Illinois, Iowa, Nevada, New Hampshire, New Jersey, Pennsylvania, Rhode Island, and West Virginia.

Online gambling and online casinos generally fall under the same rules and regulations as regular commercial casinos and gambling – however, since online casinos are much easier to access, many states have chosen to ban them, fearing high rates of gambling addiction and overspending from gamblers.

There are however still incredibly many quality casinos online, many of which we have reviewed here on the site.

To function as an online casino in the different states, you need to apply for a license from the state, as well as a different license to promote these businesses.

Sports Betting in the US

In the United States, it was previously illegal under the Professional and Amateur Sports Protection Act of 1992 for states to authorize legal sports betting, hence making it effectively illegal. The states of Delaware, Montana, Nevada, and Oregon—which had pre-existing sports lotteries and sports betting frameworks, were grandfathered in and exempted from the effects of the Act.

In a national poll released in December 2011, voters were asked whether they “support or oppose changing the federal law to allow sports betting” in their respective states. Just as many voters approved (42%) as opposed (42%) allowing sports betting. However, voters who already live in households where family members engage in sports betting had a strongly favored legalization of sports betting (71%–23%), while voters in households where sports betting is not an activity, opposed legalization (46%–36%). Peter J. Woolley, professor of political science and director of the poll commented on the findings, “Gambling has become, for good or ill, a national industry, and you can bet that politicians and casinos all over the country are closely following New Jersey’s plans.”

In a different study released by FDU's PublicMind in October 2011, results showed that New Jersey voters thought legalizing sports betting in New Jersey was a good idea. Half of New Jersey voters (52%) said that they approved the idea of legalizing sports betting at Atlantic City casinos and racetracks, 31% opposed it.

Currently, in 2020, 19 different U.S. states allow sports betting.

Gambling and Casinos in the US in 2020

As you can see, it all depends on the details! What type of gambling are we talking about? Casinos have one set of laws, and sports betting have a completely separate set of laws. Is it an online casino? Well, now it’s again a different kind of law, and each of these laws changes depending on the state that you live in.

You should always check with your local sources before you start any form of gambling, as the penalties can be rather high.

In the meantime, we hope that when you need a new online casino to have some fun at, you check them out here on Ekstrapoint, and grab some of our super cool casino game offers and bonuses, to get a little extra spending power, or check out our free spin slot competitions!

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