Online betting and gambling in the USA used to be totally legal but has since been clamped down on by the government.
Everything you need to know about the current situation, along with the key facts, is detailed in our guide below. There’s also a list of betting sites which accept American customers.
Legal USA Online Betting Sites:
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New customers only, 18+, T&C’s apply
Federal law makes gambling illegal but state can decide to legalise.
Many states have already legalised some forms of gambling.
Not technically illegal for the player to gamble online.
Illegal for gambling sites to accept payments for purpose of gambling.
Some state online gambling is happening and punters are using overseas sites.
Gambling Laws and Legislation Timeline
Creating a timeline of all of the gambling legislation passed at every level of US government is almost impossible and would be incredibly difficult to understand. Instead, then, what this timeline will include are the most major pieces of nationwide legislation, especially if they relate to online or remote gambling specifically:
1961 – The Federal Wire Act
Whilst pre-dating online gambling considerably, the 1961 Federal Wire Act remains one of the most important pieces of legislation when it comes to the activity. This is because the act outlawed interstate wagering on sports and whilst it referred specifically to ‘wire communications’, it has still been taken to be relevant to online betting, too.
1988 – Indian Gaming Regulatory Act
One of the main reasons why casino gambling has been legalised in many locations across the USA, the 1988 Indian Gaming Regulatory Act allowed for Native American Trust Land to be used for games of chance if an agreement is put in place between the State and the Tribal Government.
1992 – The Professional & Amateur Sports Protection Act (PASPA)
A little known piece of legislation, the PASPA as passed in 1992 went one step farther than the Federal Wire Act and specifically declared sports betting illegal. What’s more one particular section of the act has long been considered by many as prohibiting states from allowing bets on amateur or professional sport.
2006 – The Unlawful Internet Gambling Enforcement Act
Undoubtedly now the most important piece of online gambling related legislation, the Unlawful Internet Gambling Enforcement Act was passed in 2006. The act did not prohibit online gambling but it did prohibit ‘gambling businesses from knowingly accepting payments in connection with the participation of another person in a bet or wager that involves the use of the Internet and that is unlawful under any federal or state law’.
The law, therefore, is far from all-encompassing but it has done a good job in making the operation and use of online gambling sites extremely difficult in the USA. There is clearly leeway within the act, however, for some states to introduce their own legislation related to online gambling.
Since 2006 – State Legislation
The states of Nevada, Delaware and New Jersey have all created exactly such legislation to legalise online gambling within their borders. In each case, however, this has been in a pared down and tightly regulated fashion.
2011 – Department of Justice Ruling
In 2011, the US Department of Justice reversed a long-held stance as regards the 1961 Federal Wire Act. This allowed for states to provide intrastate online sports betting and fully legal and regulated sites have now been established in Nevada, Delaware and New Jersey.
Do Players Get Taxed On Winnings?
Our whistle-stop tour of the complex situation regarding gambling law in the USA has covered all manner of angles when it comes to the legality of different forms of gambling. What we have yet to mention, however, is how gambling winnings are taxed in the USA and we will rectify that now.
Any winnings earnt through legal gambling by US citizens are fully taxable according to the Inland Revenue Service (IRS) and must be declared on an individual’s tax return. Gambling losses, meanwhile, can also be include on tax returns as itemised deductions. Their value, however, cannot exceed that of the gambling winnings declared.
There are of course no legal mechanisms in place for collection of tax related to illegal gambling winnings.
Online Deposit Options & Methods
Today, there are far more legal online gambling options available to US citizens than there have been in the past but these are still seriously limited – especially when it comes to online sports betting.
Most punters who do bet sports online from the USA, therefore, do so through the sites of overseas based providers which are not technically licensed or legal in the USA. As such, depositing is quite difficult. Some will accept credit cards and bank transfers but the majoirty of transactions are done via cheque. Bitcoins are becoming increasingly popular based on the anonymity granted through their transactions.