Casino Gambling, Poker and Sports Betting in the USAUpdated in March 2019
Online gambling exists since more than 20 years. The government of the United States of America respectively the governments of its 50 states have done almost nothing yet about a regulation.
- Regulated online casino gambling, poker and sports betting: New Jersey
- Regulated online poker: Nevada and Delaware
- No regulations:Hawaii California, Idaho, Arizona, Alaska, Wyoming, Colorado, New Mexico, Texas, Oklahoma, Arkansas, Missouri, North Dakota, South Dakota, Nebraska, Kansas, Oklahoma, Iowa, Minnesota, Kentucky, Tennessee, Michigan, Alabama, Georgia, Florida, South Carolina, North Carolina, Virginia, West Virginia, Ohio, Vermont, New Hampshire, Maine, Massachusetts, Rhode Island, Connecticut Maryland
- Not legal: Washington, Oregon, Utah, Montana, Louisiana, Wisconsin, Illinois, Indiana, Pennsylvania, New York State
The following article was written in November 2014
US Online Gambling LegalitiesSince the US federal government has passed any law that criminalizes the act of gambling online, playing in an online casino and online poker games for real money cannot be said to be illegal. Catherine Hanaway, the US attorney, has even said at a House hearing of 2007 that those who play real money games online are not violating any federal law. So far, the US federal government has not arrested any individual for online gambling simply because it has not enacted any law banning it.
US Online Gambling LawsAlthough there is no federal online gambling law, individual US states have reserved the right to create their own online gambling laws. There are federal laws that specifically make it illegal for operators to accept sports bets from US residents, but no laws against US residents placing sports bets at online sports books. For several years, the Federal Wire Act of 1961 was interpreted as applicable to online poker and online casino games too, along with online sports betting. But in December 2011, the US Department of Justice published a re-interpretation of the Wire Act, specifically stating that it applies only to online sports betting, not online poker and online casino gaming. This re-interpretation opened floodgates of opportunities in individual US states, and Nevada, Delaware, and New Jersey seized this opportunity legalize online gambling within their jurisdictions. In 2006, the US federal government passed another law that still keeps several prominent online gambling operators away from the US market. Called the Unlawful Internet Gambling Enforcement Act of 2006, this law makes it illegal for banks and financial institutions to process funds related to online gambling, but not for individual gamblers to gamble online. The feds have heavily used the UIGEA to crack down on several US-facing operators.
States with Legalized Online GamblingAlthough Delaware was the first US state to legalize online gambling, it was the third to actually launch online gambling sites. The District of Columbia legalized online gambling earlier than Delaware, but repealed all its laws in Feb 2012. The third US state to enact online gambling laws was New Jersey, which legalized Internet gaming on February 2013 and launched its first gambling sites on November 25, 2013. The first US state that legalized online poker was Nevada, which launched its first online poker site on April 30. To this date, Nevada has preferred to remain a poker-only state and has not legalized any other forms of online game.
While there are several US states that are weighing the pros and cons of legalizing online poker within their jurisdictions, some US states are absolutely against online gambling. For example, playing online poker games is a felony in Washington. Anybody caught violating the state gambling laws will have to pay a fine of up to $10,000 and may given a five-year prison sentence. This leaves just two ways to play online in the US - play at any US facing offshore online gambling site or travel all the way to Nevada, Delaware or New Jersey.
AlabamaIn an election year special interest groups make their moves to get favorable commitments from the political establishment. In Alabama various gambling lobbies have become active ahead of the 2014 elections. Both Republicans and Democrats have also realized that gaming revenue could be a major source to help them balance the budget. Though they have not made any pro-gambling commitments yet, they also have not said no. Alabama, along with Utah, are the only American states that get no revenue from gaming.
Incumbent candidate Republican Governor Robert Bentley has indicated that all options are on the table to generate revenue. One of them is a pact with the Poarch Band of Creek Indians for permitting casino table games. This is the only recognized Indian tribe in Alabama. Another option is a state lottery. A spokesperson for Bentley said that the Governor has asked the state leadership to provide recommendations on ways to fund government services. He is waiting for these recommendations to be delivered.
Democratic gubernatorial candidate Parker Griffith is backing a statewide education lottery. The referendum on the lottery had failed the last time. Experts have opined that the proposal was not properly explained to the citizens who saw only the potential drawbacks. The voters are better educated now and it is expected that a referendum would now pass by at least 65 percent.
Meanwhile, the contest for the Attorney General has become more acrimonious. The incumbent Republican Attorney General Luther Strange has accused his Democratic challenger, Joe Hubbard of selling the interest of Alabama to the casino lobby. Hubbard received $750,000 last week from just two donors. The Poarch band of Creek Indians donated $500,000. Stan Pate, a Tuscaloosa real-estate developer and casino supporter, contributed USD 250,000. The total gambling contributions are said to be in excess of USD 1.5 million.
Strange has filed a law suit against the Poarch Creek Indians for using electronic bingo at their casinos. Hubbard has criticized Strange for doing this and has stated that he would not oppose electronic bingo in counties where it is authorized by a constitutional amendment. It is for this reason the Poarch Creek tribe has decided to back Hubbard. Should table games be permitted at their casinos then they would get more business not only from Alabama, but from neighboring states as well.
Business persons having connections with gambling have also commented on the issue. Matt Tortorici once operated Mr. T Lucky 7 Charity Bingo in Fairfield. It was shut down along with other such enterprises. Tortorici said that difficult economic times will force the reluctant politicians to consider the gaming revenue option. He pointed out that the closure of the bingo companies had resulted in a large tax paying workforce to come on the dole list. The elections are round the corner and we shall soon learn which way the citizens of Alabama lean.
NevadaOn June 10, 2011, Nevada became the first US state to legalize online poker, and in December 2011, Nevada created a regulatory framework for its newly legalized online poker industry. The federal Unlawful Internet Gambling Enforcement Act, which was enacted in 2006, made things very difficult for players as well as online gambling operators. But a federal re-interpretation of the Wire Act turned out to be a boon for individual US states. Even without the re-interpretation, federal law gave states the power to either legalize or criminalize online gambling within their jurisdiction. But before the re-interpretation, the Wire Act was held to apply to online poker, online casino gaming, as well as online sports betting. When the Department of Justice announced that the Wire Act no longer applies to online poker and online casino gaming, individual states grabbed the opportunity to legalize online gambling within their borders. The first to do so were Nevada, Delaware, and New Jersey.
According to Nevada gambling regulations, any gambling company that operated a hotel casino business in Nevada was eligible to apply for a license. Providers of software and games had to first partner with a Nevada-based gambling company to offer online poker services within the state.
The gambling laws require operators to implement all the required measures for consumer protection, including the provision of facilities for players to set deposit limits, to exclude themselves from the online poker site, to resolve disputes quickly and easily, and so on. A cap of 10% was set on rake. Online poker sites are required to maintain player funds separately from operational funds. The law also forbids operators from extending credit to their customers and from providing the option of player-to-player fund transfer. Nevada gambling laws require players to be located within the state to play real money poker at its licensed online poker rooms. However, players do not have to residents of Nevada. In February 2013, Nevada amended its laws to include a provision for liquidity sharing, enabling the state to sign liquidity-sharing pacts with other US states that had legalized online poker. Early in 2014, Nevada signed the first interstate online poker compact with neighbor Delaware.
Although online poker sites were slow to launch in Nevada, the industry is going to get crowded in the near future. Ultimate Poker was the first licensed online poker room to be launched in the US, and for a long time, it looked as if Ultimate Poker was going to be the only online poker room in Nevada. However, it was soon joined by WSOP.com and Real Gaming. Next year, three more online poker rooms will appear in the Nevada online poker market. In a few months, Treasure Island, 888 Poker, and WSOP.com could become skins on the All American Poker Network (AAPN) in Nevada. Another online poker room, called HDPoker, is also expected to launch soon. One may therefore find six online poker rooms in Nevada in 2015, each competing hard for the biggest share of the market.
Nevada's poker earnings slump to an all-year low
Nevada's Gaming Control Board has come out with a shocking revelation. According to the board's reports, the state's online poker market has suffered its worst monthly performance of the year in the month of September. In August of this year, the revenue from the state's various online poker operators amounted to around $742,000. The September total is even lower with an estimated $693,000 which is the year's lowest grossing month so far.
September's monthly total is almost half of the amount collected by poker operators in June, which was the peak month for online poker operators with an estimated $1 million in revenue. And there's more bad news in store. It's not just the poker revenues that have dropped; the state control board has also recorded an overall state-wide drop in gaming wins this year. In September, Nevada non-restricted gaming licenses posted a total gaming win of around $901.7 million. When compared to the revenue generated by the same licenses in the same period last year, the earnings this years how an approximate 6 percent drop.
New JerseyThe Senator of New Jersey blames credit card companies for the decrease in online gambling revenue. The legalization of online gambling in the United States has been one of the biggest topics for debate during the last 24 months. There are currently at least 10 states seriously considering the pros and cons of legalizing online gambling. Nevada, New Jersey were among the first states to lift the ban on online gambling and expected the industry to bring in a good revenue in the form of taxes for the state.
The garden state expected to earn as much as $1 billion each year from the online gambling industry. However, the online gambling market in New Jersey has not done as well as initial estimates suggested and online gambling companies have serious cause for concern. It has been nearly a year since New Jersey lifted the ban on online gambling and since then has made a little over a $100 million in revenue. Those numbers clearly reveal that there are a number of issues slowing down the online gambling market in New Jersey.
Raymond Lesniak, a New Jersey State Senator believes that the online gambling market can improve only if it receives more support from credit card companies and financial institutions. The Senator recently shared his views on Skype during the Mobile and Tablet Gambling Summit USA saying that credit card companies are one of the reasons why the online gambling market is stagnated in New Jersey. Credit card companies have not been very open to processing online gambling transactions citing security concerns and this in turn has resulted in lesser revenues and payments being generated.
However, many online gambling analysts and experts have criticized the initial estimates made on New Jersey online gambling revenue saying they were neither accurate nor reasonable. Lesniak believes that the market can improve and grow considerably if credit card companies decide to cooperate and help out online gambling providers. Lesniak said to not expect stellar results until the major credit card companies come on board. While online gambling is regulated and legalized in New Jersey, credit card companies are not very confident of the technology that is used to protect player financial information. Loopholes in the system can result in identity theft, fraudulent transactions and the possibility of having thousands of user's financial information stolen and then sold on the internet. Without the full cooperation of credit card companies, it is difficult to see how the online gambling industry in New Jersey can continue to expand.
Why US States are Slow to Legalize Online GamblingWhen Delaware, Nevada, and New Jersey legalized and regulated online poker and online casino gaming, people felt that other US states will also do so at the earliest possible, but this did not happen. Eleven states have already considered the legalization of online gambling as they are strapped for cash and eager to increase their tax revenue, but it is quite obvious that none of them will enact online gambling laws in the near future. According to Ray Lesniak, a staunch advocate of online gambling and New Jersey Senator, other states may take years to pass online gambling laws.
Opponents to Online Gambling LegalizationThings looked good for online gambling for a major part of 2013. Lawmakers who were against online gambling had either retired or no longer in office. Religious groups and social welfare organizations continued to protest, but just did not have the power and influence. But online poker biggest enemy stepped into the picture towards the end of 2013, in the form of Las Vegas Sands CEO Sheldon Adelson. Poker Players Alliance (PPA) Executive Director John Pappas calls him a pretty large voice and says that he is sure that Adelson is playing some role in slowing down the process of the states. Adelson not only launched a national-level campaign against online gambling, called Coalition to Stop Internet Gambling, but expressed willingness to spend any amount on it. He definitely has the power to kill online gambling in the US as he has contributed millions of dollars to political campaigns. He is also spending a lot of money on spreading the idea of online gambling as an evil that will destroy families and vulnerable groups. He is currently supporting a federal-level bill to ban all forms of online gambling, and his activities are having a major impact on various states and their attempts to legalize online gambling.
Decline in Online Gambling RevenueUS states would have fallen over one another in their haste to legalize online gambling if the newly regulated markets of Delaware, Nevada, and New Jersey had turned out to be a success. The sad truth is that online gambling is struggling for survival in these three states, which just did not meet their revenue targets. Pappas speaks of the need to remain realistic about online poker revenues, especially in case of state-level legalization. Nevada and Delaware are sparsely populated and online poker requires liquidity to thrive. Pappas says that interstate liquidity could solve the problem, and until states start sharing player pools, revenue figures cannot be expected to rise.
Legalization Takes TimeOnline gambling legalization cannot happen overnight. An online gambling bill can be passed only after first determining if it benefits residents as well as the state, meets the approval of all interested parties, and has the required political support. The only US state that has gotten anywhere closer to passing an online poker bill is California, and even in California, its powerful Native Indian Tribes took nearly four years to decide that they wanted online poker legalization.