To say that online gambling is proliferating worldwide would be an understatement, as this sector has doubled in size over the past five years and is projected to keep expanding at 11.7% in the next five years. However, while countries around the globe are becoming super lax about legalizing gambling sites where their residents can enjoy games of chance online, the US still does not have a federal law regulating this sphere. Moreover, only seven US states have decided to allow this pastime to their citizens, starting with Delaware and New Jersey, which did this in 2013. Michigan, Pennsylvania, West Virginia, Rhode Island, and Connecticut are the others that have since joined the Trailblazing Garden and Blue Hen State.
While some may say this proves that the US does not discriminate against online casinos, only seven of its regions permit this activity. This is in stark contrast to the more than thirty American territories that have authorized mobile sports betting on their soil following the fall of PASPA in 2018. A federal ban implemented in 1992 stopped US states, not counting Nevada, from legalizing wagering on sports in any form.
Below, we discuss the historical and current obstacles to making online casinos universally legal on a federal level in the United States.
Also called the Federal Wire Act of 1961, this law prohibited betting operations stretching beyond state lines in the US. The 87th United States Congress enacted it, and it was enforced in mid-September of 1961. It got pushed into existence by Robert Kenedy, who was the country’s Attorney General at that time, who envisioned this piece of legislation as a tool to stop organized crime’s (the mob) most profitable venture – gambling. The Italian mob in the US was infamous for running bookkeeping and horse racing operations and accepting wagers by telephone. Hence, this law allowed authorities to prosecute anyone who facilitated telephone-based bets.
For decades, the standard interpretation of the Wire Act was that it applied to all forms of gambling conducted through telecommunication systems. Naturally, the Internet was classified as one of these and applied to it. In 2011, the US Department of Justice submitted a new interpretation of this law, which stated that it was only valid for sports betting and did not cover casino-style gaming. That opened the doors to Delaware and New Jersey to be the first to legalize non-sports online gambling, as the US Constitution gives each state the authority to regulate any non-federally prohibited activities within their borders. From this point onward, each state in the United States could regulate online casinos as they saw fit.
In 2006, the 109th United States Congress enacted the Unlawful Internet Gambling Enforcement Act, which is renowned in the gambling arena under its acronym – UIGEA. This was not a gambling law per se, but rather one that stopped businesses from accepting payments in connection with various forms of betting entertainment, not counting horse racing and fantasy sports.
UIGEA made it illegal for banks, credit card companies, and all other payment processors to process transactions involving gambling made with any method imaginable. It focused on operators, and not players, crippling them by taking out the financial intermediaries that facilitate payments. It went a long way toward stopping Americans from enjoying gambling over the World Wide Web, while curiously enough, it did not explicitly define illegal gambling. It left this up to state laws.
Offshore online casinos are legal in the jurisdiction where they have gotten licensed but should not allow people with IP addresses from regions that have not legalized this hobby to use their services. Nonetheless, many, like those listed at Online United States Casinos, a premium review and grading hub that deeply analyzes these platforms, do.
Some states have explicitly banned participation in offshore casinos for all residents, and these are primarily the parts of the US that have legalized this pastime, plus Washington, Utah, and Hawaii. That said, while the noted regions have defined punishments for those who engage in gambling at hubs regulated outside their borders or from other countries, it is extremely rare that these penalties ever get enforced. They are mostly classified as misdemeanors, and American laws look more to punish the countries and operators that allow their citizens to gamble on offshore platforms. However, it must be pointed out that gamblers using US credit cards will likely face issues when withdrawing money from internationally licensed casinos due to UIGEA.
It is vital to note that the land-based casino industry does not want online gaming sites to exist. They fear they will dramatically eat into their profits, so they have put massive lobbying pressures on them to stop them from popping up across the nation. State governments also worry about legalized online gambling potentially diverting revenue away from their lotteries, and the Internet gaming movement has also faced opposition from various religious groups that condemn this form of entertainment.
Ashley Grasse
Ashley Grasse is a research writer and casino entertainment expert. She's interested in game theory and strategy. Ashley writes online casino reviews and blogs about trending topics in the gambling industry. In the years she's been writing at OnlineUnitedStatesCasinos.org, she's earned a reputation for her deep dives and thorough research. You can also find very quirky and entertaining pieces authored by Ashley.
She loves to the outdoors hiking, kayaking, and a good slot experience in Las Vegas.
