U.S. Gambling Regulations in 2023
Gambling in the U.S. is worth millions of dollars every year, but things aren't always so cut and dry. Each state has autonomy over its own gambling regulations and can decide which in-person and online betting markets are permitted.
With regular changes to bills taking place, it can be challenging to know which states permit what gambling activities (sports betting, poker, online casinos). Even those states that only allow sports wagering, the rules vary. Illinois, Virginia, New York do not allow betting on in-state schools, Oregon does not allow any mobile gambling on college sports. States like Iowa and Massachusetts prohibit use of a credit card for opening a betting account. And then there's Nevada. The Silver State requires individuals to register in-person (not remotely).
The legality of online gambling markets in the U.S. is determined by individual states, most of which must amend their current state laws. There are some exceptions such as New Mexico. The Land of Enchantment allowed a few retail sportsbooks to operate on tribal lands without any type of legislative considerations.
The federal government has not immersed itself in gambling regulations in America since the U.S. Supreme Court struck down the Professional and Amateur Sports Protection Act in May of 2018. Instead, the sausage making all occurs at the state level (just not New Mexico) where lawmakers must find a way to get a final version of a bill through both the state house and senate. Once legislation passes through both chambers, it's up to the governor to sign off or veto. In 2020, Maine Gov. Janet Mills opted to veto a sports gambling bill that landed on her desk. The Maine senate would go on to override Mills veto. Only now is that state in the process of approving operators, three years later. It's not always a pretty process.
All states apply tax rates on betting activities with taxes typically varying between 10% and 20%, but much higher in some states. Case in point, Pennsylvania is over 30%. New York flirts with the 50% mark. License applications and renewals are another way that states benefit financially from gambling operations.
Online gambling has enjoyed a surge in popularity due to the popularity of mobile devices such as smartphones and tablets. This provides users with a convenient way to place bets from the comfort of their own home or on the move.
Online gambling is typically split into a variety of markets that include online casinos, sports betting, horse racing, fantasy sports betting, lottery, and poker.
At present, online sports betting is legal in Arizona, Colorado, Delaware, Illinois, Iowa, Louisiana, Maryland, Michigan, Nevada, New Hampshire, New Jersey, Oregon, Pennsylvania, Rhode Island, Virginia, Washington DC, and West Virginia. It is estimated that over $180 billion has been wagered legally on sports betting in the U.S. and many states are interested in the possibility of tapping into this revenue stream.
This week, the Supreme Court rejected a challenge to Florida Governor Ron DeSantis’ multi billion agreement with the Seminoles to offer online sports betting in Florida. And while it may appear the sky is the limit for the Seminoles to launch their Hard Rock sportsbook, various court challenges remain. Clarity is not anticipated before the next Super Bowl. Florida makes up the top three most populous U.S. states, none of which currently offer sports wagering. Texas and California are the other two. on October 27 it was announced that the most populated state, California, will once again feature two ballot initiatives asking voters to determine the fate of sports betting in 2024. The last effort failed miserably.
Even in states that have yet to regulate sports gambling, there are ways for consumers to legally place wagers. Offshore betting is not covered by regulations, meaning citizens can sign up and play with operators from based outside the U.S. Some offshore sportsbooks have opted not to accept new customers from New Jersey and Nevada.
Because offshore books are not regulated by any state, players are not afforded the same protection as those granted a license. Offshore sportsbooks do tend to be far more established however. That's resulted in a stellar reputation built over time. Some of the best options for 2023 provide players with great incentives, state-of-the-art software, and high-security levels, and are licensed by reputable authorities overseas, like the Curaçao Gaming Control Board.
When it comes to state regulated sports betting, the tribes do have significant influence over gaming in several states including Connecticut, California, Florida, Wisconsin, Minnesota and New Mexico. This is both a blessing and a curse.
Native American tribes are permitted to operate casinos on tribal land. These permissions are based on the 1988 Indian Gaming Regulatory Act, which created a framework based on set conditions.
Conditions include gaming compacts with the state and a license being granted by the NIGC (National Indian Gaming Commission). But conflicts are common. We're seeing this in Florida where the Seminoles are influential but not the only game in town, so to speak. Connecticut's Mohegan and Mashantucket Pequot tribes, on the other hand, were met with little resistance in their quest to oversee the mobile and retail sports betting market. California can't get over the finish line as a result of in-fighting among tribes. For the better part of a decade efforts to legalize online poker fell apart courtesy of differing tribal agendas.
During 2023, there were bills either newly proposed or rehashed across the country looking to regulate sports wagering. Lawmakers in Kentucky and North Carolina were ultimately able to take a victory lap. Georgia? Better luck next time.
Until now, there's been little effort to push for online gaming and/or poker legislation. That seems to be changing.
Indiana launched an attempt to legalize iGaming under HB1536 with a proposed 20% tax rate that would see money going directly to services to support gamblers. This attempt failed in February and will have to wait until 2024 for another attempt.
Iowa's HSB227 to legalize online casinos isn't being considered while Illinois' HB2239, SB1656, and HB2320 to create an internet gaming act saw proposals of 12% and 15% tax rates, but there has been little movement. Illinois is relatively unique in offering biennial legislative sessions, which means the proposal will stay active until 2024.
There were high hopes for New York's attempts to legalize online casinos in 2023 under bills A1380 and A3634. The state has the potential to be one of the highest-grossing gambling states because of its population (4th largest in the nation), but support appears to have slowed down after the legalization of sports betting on the NFL, NBA and others bringing in massive revenues since 2022. New York is also considering retail casino applications at present. With this in mind, iGaming will have to take a back seat for now. There is a real possibility in 2025 following the election year.
Rhode Island surprised a lot of people by agreeing to SB948, which will legalize online casino gaming. Regulatory framework and licensing are still to be decided, but this is just a formality.
Maryland missed the 2023 deadline to pass iGaming legislation to compliment the already approved sports betting market. Bill number SB267 will face a referendum so campaigners will be pushing for support if it gets the nod for 2024.
Maine's LD1777 proposal to legalize online casinos based on the current tribal agreement over online sports betting hasn't moved quickly (we mentioned the three year lag period for sports betting above).
Betting laws in the U.S. will continue to change to accommodate different betting markets. States are seeing significant revenue streams from allowing legalized betting, and many others are eager to explore these options.
Assurances that a percentage of gaming revenues will go towards programs to help problem gamblers along with other social programs will appease some detractors for sure.
States that have zero forms of gambling like Utah and Hawaii may never see mobile sports betting or iGaming in our lifetimes. Georgia, South Carolina and Texas are not the most gambling-friendly states in the nation but, nevertheless, there are those at least trying to make an effort. Anything is possible. Just look at Tennessee. This is a state that has no casinos yet embraced mobile sports betting with open arms not too long after the 2018 SCOTUS decision.
- Payton O'Brien, Gambling911.com
