Gambling in the United States is a very fluid landscape with more than its share of ebb and flow. The parameters change regularly, and now that state-regulated online gambling is allowed, everyone involved is taking a hard look at the laws and policies governing the various elements of the industry.

As a general rule, a form of gambling is illegal within the borders of Canada if it’s not licensed or managed by the government (either on a federal or provincial level). This certainly applies to major gaming operations such as land-based casinos, but it also applies to charitable options such as bingo and raffles. Gambling can be classified as either a misdemeanor offense or a felony, depending on the situation and state law. Anyone convicted of misdemeanor gambling faces up to a year in a county or local jail, though state laws differ widely. Some states impose small maximum jail sentences for misdemeanor gambling, such as 20 days in jail. The federal law on illegal gambling and gaming was passed in 1955, but the rise in online and sports gambling has implicated several other statutes of the U.S. Code and federal law. Illegal gambling could be prosecuted under several different criminal statutes, each with a different degree of punishment and potential outcome. (2) All gambling paraphernalia and lottery tickets as herein defined used in connection with a lottery, gambling, unlawful game of chance or hazard, in violation of the statutes and laws of this state, found by an officer in searching a vessel or vehicle used in the violation of the gambling laws shall be safely kept so long as it is necessary.

The definition of legal gambling usually requires a specific state’s reference. In Nevada, most forms of gambling are legal where all other states may consider the activity illegal. Most legal gambling throughout the entire United States occurs through state lotteries, scratch off stickers, bingo and similar forms of monetary exchanges.

Those opposed to gambling attempt to use the laws to support their position, while those who support responsible gambling work tenaciously to expand our options within compliance of existing US laws. The complexity of the legal status of gambling in the US in all its various forms can make it difficult to follow and understand specifically what is and is not considered legal betting.

Our objective in adding this information to our LegalBettingOnline.com resource guide is to provide valuable data that empowers players to make highly informed decisions regarding what types of gambling entertainment effectively meet their needs and preferences through legally sanctioned betting opportunities. We are not attorneys and are providing this guide for informational purposes only**.

Unlawful Internet Gambling Enforcement Act - UIGEA

This is one of the most misunderstood US gambling laws and is surrounded by layers of misinformation and misconception. Many players believe that this law prohibits USA residents from participating in online gambling. This is not true. In fact, the UIGEA law does not address player activity at all nor place any type of restrictions on players themselves. Instead, this law targets banks and financial institutions that knowingly process any transactions related to online gambling.

Our page explaining the Unlawful Internet Gambling Enforcement Act will provide an accurate and understandable explanation of what this law was created for, what specific aspects of online gambling it governs, and how its implementation affects players in the US.

Professional And Amateur Sports Protection Act – PASPA

Paspa (also known as the Bradley Act) was directed specifically at the sports betting industry and provided regulation concerning US-based sportsbook gambling. It has been the center of controversy in the industry recently, bringing into question the law's range of power and presence. This law essentially makes US-based sports betting illegal in all but 4 states.

However, in May of 2018, through a lawsuit initiated by the state of New Jersey, SCOTUS ruled that PASPA was unconstitutional and the law was struck down. This has dramatically changed the US sports gambling market and has given power back to the states to determine their own will to allow or prohibit sportsbooks from operating within their borders.

Our page explaining the Professional and Amateur Sports Protection Act discusses the law's intentions, reach, and parameters, as well as how state opposition coupled with state-regulated gambling initiatives challenged the law head-on and won.

Of all of the US federal gambling laws, The Federal Wire Act one probably has the most interesting origins of them all. Who doesn't love a 'good guys vs the mob 'story? The Federal Wire Act is also one of the most debated pieces of gambling-related legislation and has sparked a great deal of controversy after the DOJ determined that the law's restrictions do include US-based online gambling. Since that time, the DOJ has issued two contradicting legal opinions in 2011 and 2019 respectively that have each redefined the application of the Wire Act and its associated prohibitions.

2011 DOJ Formal Legal Opinion on Interpretation of the Wire Act

Interestingly enough, the DOJ issued a formal legal opinion in 2011 concerning the reach of the Wire Act, indicating that the law only applies to sports gambling, and does not prohibit other forms of state-based online gambling. This literally opened the door to individual states having the authority to license and regulated domestic online casinos and poker rooms, among other forms of gambling, without violating the Wire Act. Learn more from our page dedicated to explaining the Federal Wire Act and how it impacts legal online sports betting for American players.

2019 DOJ Formal Legal Opinion Again Redefines the Reach of the Wire Act

The DOJ reversed their 2011 DOJ Opinion Memo on the Wire Act in 2019 to reflect a prohibition against all US-based interstate gambling. Casino, lottery, poker, sports betting, and information companies were given a 90 day period to meet new compliance standards or face violating Federal Law. This means servers, data, payment processors, etc. must be located individually within the state the business is operating gambling services in.

The reversal on the DOJ's position on the Wire Act will not dramatically impact those states that have already begun licensing and regulating online gambling within their borders, but it will impact those states that have entered into interstate gambling compacts and already share player pools across state lines. We would not be surprised to see lawsuits against the decision from those states, gambling operators and the software and technology companies providing services in the industry.

In 2014, senators Lindsey Graham of SC and Jason Chaffetz of Utah reintroduced legislation to congress that would restore the wire act. If implemented, RAWA would essentially rewrite and extend the Federal Wire Act of 1961 to make all types of gambling illegal, even if it were already legal on the state level. Marco Rubio of Florida has also recently joined the party and supports RAWA.

Federal Definition Of Gambling

What do these 3 senators have in common? They are thought to be in bed with Sheldon Adelson, a multi-billionaire gambling tycoon who operates brick and mortar casinos all over the world. Learn more by reading our page explaining RAWA - Restoration Of Americans Wire Act.

The Interstate Horse Racing Act of 1978, or IHRA, is the law that governs the horse betting industry’s off-track betting locations (OTBs) and interstate betting options in the US. This law, though enacted in 1978, also defines the rules and regulations of simulcast betting on an interstate basis, which was logically extended to domestic online betting with the advent of widespread Internet access in the late 1990s and 2000s.

Though the IHRA makes interstate horse betting legal at the federal level, individual states have the final say as to whether or not they wish to legalize horse racing or offer their residents access to interstate betting. To date, 41 out of 50 US states participate in interstate horseplaying under the auspices of the IHRA, with several other states considering legalizing the industry within their borders.

That said, the Interstate Horse Racing Act does not bar the use of overseas or international racebooks. US residents in most states (excepting WA and CT) can legally use offshore racebooks to bet on the ponies. Best of all, these books offer much greater access to international races, featuring tracks from the US, Canada, Mexico, England, Ireland, the Middle East, Japan, and Australia, among others.

The brick and mortar land-based and floating casinos and poker rooms that are found in various states through the US are all governed by state gambling laws. Each state determines its own laws concerning what type of casino, poker, pari-mutuel, bingo, lottery, and other gambling they will allow within their state borders.

US Federal gambling laws primarily target US-based online gambling and sports betting. The DOJ has determined that each state can also determine their own destiny concerning legal online poker and legal online casino gambling.

It depends on where you are placing your bets. There are no federal laws that prohibit US residents from participating at online casinos, poker sites, bingo sites and legal online sportsbooks that are licensed, regulated and located outside of the United States.

If you restrict your online gambling to these types of legally sanctioned gambling sites, then you will not be breaking the law. We do recommend however that you consider expert input regarding which sites are approved by professionals as providing a safe, high quality and rewarding online gambling experience.

One of the key elements that we examine during our review process is the security profile of each website. We don't provide our approval for gambling websites that simply meet licensing requirements or the lowest industry standards.

We require that a sophisticated security profile is in place that is comparable to world-class financial institutions. We want to see advanced encryption technology, firewall, and antivirus protection and fraud prevention systems, equipped with a technically trained staff to monitor these systems. These are tall requirements, and only those brands which can meet them are considered for inclusion in our guide.

If you limit your gambling entertainment to websites approved by professionals, then you can be certain that the security and level of protection you are looking for is in place. This is a trait of those sites that are legally licensed and subject to genuine regulatory oversight. Those sites operating outside of legal parameters don't typically take the time to invest in this type of security.

Because the vast majority of all US friendly gambling sites are located offshore, they must be located in a jurisdiction that already offers legal online gambling. They must also be regulated by a governing body under strict oversight. We have a detailed article explaining what a gaming commission is and which jurisdictions are the most reputable in the industry.

Additional Gambling Laws By Country

**We do not hold legal degrees or training and provide this information based on personal experience and research, not as experts in interpreting the law. If you seek professional legal advice or services, we recommend you contact an attorney familiar with gambling laws.

Many businesses look to hold sweepstakes, raffles, poker tournaments and other contests for marketing purposes. They don’t realize that these activities can amount to illegal gambling.

“Gambling” generally means risking something of value for a chance to win a prize. With only limited exceptions, it is against the law for an Arizona business to benefit from gambling. Businesses that turn a blind eye can quickly find themselves faced with serious legal consequences.

Sweepstakes

Businesses of all sizes and types hold sweepstakes. They are so popular that entire websites exist to disseminate information on the hundreds of available contests. Done carefully, sweepstakes can be a legal means to promote a business.

Decades ago, sweepstakes were simply ill-disguised lotteries. Players would have to give some form of consideration, such as buying a product, in order to gain entry into the sweepstakes. This format caused the sweepstakes to fall within the broad definition of gambling, where the participant had to risk something of value for a chance to win a prize.

Eventually, federal regulators enacted sweepstakes regulations requiring a viable means to enter the contest without compelling a payment or a purchase of products or services. Regulations also now require a conspicuous disclosure indicating that a payment or purchase will not increase the chances of winning. Additionally, sweepstakes must be operated fairly with no misleading advertising related to them.

The material terms of the sweepstakes must be completely and clearly disclosed to potential players, and the contests ultimately conducted as announced. Although the material terms of the sweepstakes will vary depending on the contest, the following topics should be covered: (1) sponsoring business contact information; (2) the estimated odds of winning a prize; (3) an accurate description of prizes, including their value and costs or conditions to receive them; (4) how to enter and the deadline for doing so; (5) who is eligible to enter; and (6) when and how winners are selected, notified and can claim their prizes.

Gambling Laws By State

Businesses must pay close attention to risk when holding sweepstakes. Running afoul of the law usually happens when the business makes money directly from the sweepstakes. The purpose of a legitimate sweepstakes or other contest is to generate buzz, not squeeze money from participants.

Raffles

Raffles involve selling entries, usually in the form of tickets, to win prizes. They are a form of gambling and generally illegal in Arizona, except when operated by certain tax-exempt charitable organizations. Businesses may not hold raffles for profitable gain, so it’s best to consider an alternative form of promotion such as a sweepstakes.

Some for-profit businesses do support or sponsor charities. There is nothing wrong with a business gaining some exposure by helping to sell raffle tickets or providing a raffle prize, so long as the raffle is operated pursuant to Arizona law for charitable purposes.

Poker Tournaments

Poker involving betting and prizes falls within the definition of illegal gambling unless players are engaged in “social gambling.” Social gambling is a term used to define gambling that is not conducted as a business. It involves players who are at least 21 years old who compete on equal terms with each other, and where no other person stands to gain, directly or indirectly, from the gambling. It is not unlawful to engage in social gambling in Arizona.

Businesses sometimes look to host poker tournaments for marketing purposes. For this to be legal, participation by a potential player cannot be contingent on any payment to the business no matter how small and no matter what it is called, including a cover charge, chair rental, ante or rake. Additionally, there cannot be even an indirect benefit to the business, such as profiting from refreshment sales or table rentals. Once there is any benefit to a non-player, the poker game will not qualify as legal social gambling and will put the hosting business at risk.

Note that there are no special rules in place for Internet poker. Beware of engaging or operating any poker site where there is any payment, betting or prize awarded. The site will most likely turn out to be illegal in Arizona.

Deliver on Promises

Promotions help build brand awareness and often result in more traffic, buyers and sales. Businesses just need to remember to determine if the activity is legal, follow the rules, pay close attention to risk and deliver the prize per their promise.

Federal Law Definition Of Gambling Addiction

James Stipe is an AV-rated AV® Preeminent 5.0 out of 5 peer review-rated attorney in Martindale-Hubbell who joined Burch & Cracchiolo, P.A. in 1992. He practices in the areas of Commercial Litigation, Insurance Defense/Personal Injury Litigation and Indian Gaming Law. In the gaming arena, Stipe represents regulators in litigation and negotiations relating to Tribal/State Gaming compacts, and has counseled gaming vendors and tribal governments. He is the past Chair of the Indian Law Section of the State Bar of Arizona.

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