The Evolution of U.S. Gambling Laws

Throughout its history, the U.S. has had a rocky relationship with sports betting. A few years ago, wagering on sporting events such as NFL games, NBA matchups, etc., was illegal in most states.

However, after New Jersey's Supreme Court victory in May 2018, many other states have allowed sportsbooks to provide gambling to their citizens or are in the process of reviewing gambling laws.

The global health pandemic has seen a surge in U.S. states legalizing sports betting in an effort to generate much-needed taxes to support healthcare and other critical infrastructure. Currently, gambling on sports is legal in 23 states in the U.S.

Sports Betting in the U.S - Important Dates

1607 - Jamestown, Virginia - The First Settlers Arrive

The first American settlers brought gambling games from Britain to Jamestown, Virginia, in 1607. For more than a hundred years after establishing this colony, there were no laws to prohibit gambling. In fact, early settlers used lottery-style games to generate capital for community projects.

1769 - First Gambling Ban

Although many organizations had successfully used lotteries to fund universities and secondary schools -- including Harvard, Yale, Princeton, Columbia, and Dartmouth -- the British Crown made them illegal along with other forms of gambling in 1769.

1775-1783 - Lotteries Used to Fund the American Revolution

Despite the ban, American revolutionaries held lotteries to generate funds to finance an army to fight the British Crown and eventually gain independence from Britain.

1783 - Restrictions Lifted

After gaining independence, American settlers lifted all official restrictions on the lottery and gambling.

1860 - Most Sports Betting and Gambling Activities Banned

In 1860, the Federal Government banned many forms of legal gambling, including sports betting, to reflect public opinion at the time. Although this ban applied mainly to casino-style games, all forms of gambling were frowned upon by many Americans. However, wagering on horse races was still allowed.

1867 - First State-Regulated Horse Race Takes Place

On June 19, 1867, the legendary Belmont Stakes Thoroughbred horse race took place for the first time. As attending these races and wagering on them was reserved for the elites, many viewed it in more of a positive light than other gambling activities at the time.

1910 - Most Forms or Gambling Banned

In the early 1900s, most forms of gambling were illegal in the U.S. -- this included lotteries. This change in attitude was partly due to the Panic of 1910 -- a minor economic depression. During this era, people rejected any activities related to the super-rich -- specifically horse racing. Because of this prohibition, organized crime outfits started to run illegitimate gambling rings, culminating in various result-fixing scandals.

1919 - The Black Sox Scandal

In the 1919 World Series, eight Chicago White Sox players were charged with intentionally losing the series to the Cincinnati Reds. The trial found that an illegal gambling syndicate led by Arnold Rothstein had bribed each player with $10,000 to lose the baseball series. This news made sports betting enormously unpopular because many believed that the practice could compromise the integrity of sporting events.

Mid-20th Century - Nevada Legalizes Sports Betting

To improve its tourism industry, the state of Nevada legalized betting on sports in 1949. A few years later, in 1951, the Federal Government imposed a 10% tax on all sports wagers. Sportsbooks complained that this tax was too high. After many years of campaigning from sports betting providers, Congress reduced the tax to 2% in 1971.

1960s-1980s: Congress establishes new laws

Led by then U.S. Attorney General Robert F Kennedy, Congress passed bills to stop illegal sports betting. Despite the application of various laws, illegal bookmaking thrived during the 1970s and 1980s.

1992 - PASPA

In 1992, Congress passed the Professional and Amateur Sports Protection Act (PASPA). This new legislation banned states or governmental entities from legalizing sports wagering, except in Nevada.

2018 - The End of PASPA

On May 14, the Supreme Court of the United States ruled in favor of New Jersey in Murphy vs. National Collegiate Athletic Association (NCAA). A 6-3 decision struck down PASPA on 10th Amendment constitutional grounds. This ruling overturned the act, allowing individual states to determine if they wanted to legalize sports betting. Since 2018, many U.S. states have passed bills to allow this form of gambling.

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