For US residents, there are several federal laws in place that pertain to US-based sports betting. These laws do not make domestic sports betting impossible, but each law limits the options available to most residents.
There are three major US federal laws and how each one impacts the sports betting industry in the United States. Informing yourself on the legal situation surrounding domestic sports betting is the best way to ensure you are remaining within your legal rights when it comes to placing bets on sports.
Know that despite the restrictions imposed by these laws, there are legal avenues for sports betting. Regardless, knowing how these laws work will help you better understand the US sports betting climate. There is also a corresponding FAQ section with supplementary information regarding sports-related gambling.
Professional And Amateur Sports Protection Act – PASPA
The Professional and Amateur Sports Protection Act (PASPA) was a federal ban on sports betting in the US. PASPA prohibited any type of state-regulated sports betting in 46 states with Oregon, Delaware, Montana, and Nevada being exempt due to having a form of sports betting in place. Out of these 4 states, Nevada was the only one to offer single-game sports betting in brick-and-mortar sportsbooks.
PASPA was passed in 1992 and gave states the option of implementing some form of sports betting into their economy for a brief period of time after, but no states went through with it. Some states have tried passing legislation that would allow for a sports betting market, like New Jersey, but the attempts were shut down.
In May 2018, the Supreme Court repealed PASPA, and states have begun the process of introducing bills to allow domestic sports betting. While only a few states have implemented legal sports betting, many more are expected to enact sports betting laws in the near future.
The Federal Wire Act
The Federal Wire Act is the oldest of the three laws in place regarding sports betting, and it restricts US-based online sportsbooks from accepting any bets from residents across state lines.
This law was passed in 1961 under the JFK Administration, and at the time, organized crime was rampant and sports betting was a lucrative industry for the mob. The Federal Wire Act restricted all types of wagers from being placed through any sort of “wire transmission,” which only extended to telephones and actual wire transmissions when the law was originally passed.
As time went on, innovations in technology brought the introduction of the Internet to America. Some politicians began to argue the loose wording of “wire transmissions” extended to the Internet and pushed to make all online gambling illegal.
After much debate, the US Department of Justice stepped in, ruling that the Federal Wire Act only applies to online sports betting. In addition, the DOJ also deemed states to have the right to decide if they want to implement a regulated online casino and poker market.
The Unlawful Internet Gambling Enforcement Act – UIGEA
The Unlawful Internet Gambling Enforcement Act (UIGEA) was passed under President George W. Bush in 2006 and is aimed at restricting financial institutions from processing online gambling transactions.
UIGEA was passed amidst the presence of several large online gambling providers conducting unethical practices, and its passing forced out the illegitimate online providers, creating a framework for reputable online gambling brands to flourish.
The law does not target individual bettors, but rather the financial institutions backing online gambling transactions. UIGEA does not make it illegal for US residents to place bets online, but it does limit their available transaction methods. For example, US residents are usually not able to receive payouts on their credit/debit card from an offshore sportsbook. To make up for this, licensed offshore brands have alternative transaction methods available.
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FAQs
Is Sports Betting Legal In The US?
Sports betting at a licensed online sportsbook located outside the country is legal. Domestically, sportsbooks can only operate in states that have passed legislation and have legalized sports betting.
Does the Federal Wire Act and UIGEA Make Online Sports Betting Illegal?
No. These laws strictly mitigate US-based sports betting. US residents are perfectly within their legal rights betting with an offshore sportsbook provider. The only circumstance to be sure of is that the sportsbook is legally licensed and regulated by a government.
Is There A Chance For Nationwide Sports Betting To Be Legalized In The US?
Yes, since PASPA was repealed several states have opted to enact domestic sports betting laws. While there is still no indication of federal regulation, if enough states elect to enact sports betting laws it is possible that the federal government decides to regulate the industry. More than likely it will be up to individual states to decide if they want to allow domestic sports betting.
What Happened With The New Jersey Sports Betting Case?
New Jersey won their case against the major sporting leagues in the country. The U.S. Supreme Court ruled PASPA unconstitutional, allowing states to decide if they want to enact sports betting laws. The monumental decision paved the way for legal sports betting in the United States.
What is the Stance of the Major Sports Leagues On Sports Betting?
Historically, the NFL, MLB, NBA, NHL, and NCAA have all been against sports betting. Some of the major sports leagues are beginning to warm up to the idea of a legal and regulated sports betting network.
The NBA has been the most outspoken against PASPA and Commissioner Adam Silver penned an op-ed in the New York Times on the need for PASPA’s repeal.
MLB Commissioner Rob Manfred has hinted at the possibility of supporting a legal market.
The NFL and NHL have been relatively quiet, but both leagues are bringing franchises to Las Vegas, the sports betting capital of the US.
The NCAA is still very much against the industry and shows no signs of changing its mind.
Now that PASPA has been repealed, the majority of the professional and amateur sports leagues want a piece of legal sports betting. The NBA was seeking integrity fees and the NFL is currently looking for licensing fees, it is unclear how things will turn out for the leagues but most states are not including licensing or integrity fees in their sports betting legislation.
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