Is Online Gambling Legal in the US? Find Out Now!

Is Online Gambling Legal in the United States?

There is no simple answer to the question of whether online gambling is legal in the U.S. There are 8 states which allow some form of gambling, but only 4 (New Jersey, Pennsylvania, Delaware, and West Virginia) that allow online casino, poker, and sportsbooks. The issue is complicated by betting over fantasy leagues, which is a gray area for several states. Additionally, there is the issue of offshore casinos.

By the end of this article, you'll have a clear sense of the recent history and present reality of online casino gambling in the U.S. 

History of Casino Gambling in the U.S. 

The love of gambling and the controversy surrounding it were present here even before the United States of America was a country. Early European settlers brought their card and dice games with them, as well as the religious philosophies that preached against them. Christian theologies that condemned gambling were a very powerful voice, and this fueled anti-gambling laws that were out of touch with the daily reality of recreational gambling. 

If you think about the history of the United States, it seems a bit strange that it has been such a steep uphill climb for gambling...and even worse for online gambling. Saloons and gambling houses were in use throughout the 16-20th centuries in the U.S., though operating under the law. The casinos were first legally established in - you guessed it - Nevada in 1931. Again, it's not a surprise that Atlantic City, New Jersey, saw the next legalization of casinos in 1976. This was over 40 years after Nevada and in the same year as a major Supreme Court ruling that would have an enormous impact on legal casino gambling in the U.S. 

 A 1976 Supreme Court ruling, Bryan v. Itasca County, declared first that Native Americans could not be charged property tax by a state if they lived on a reservation. But, importantly, the court went on to add that states were not allowed to regulate such activities on Native American reservations. As might be expected, other inhabitants of reservations were quick to get in on the action. As of today, there are around 460 Indian/Native American Casinos in the U.S., making casino gambling legal even in states that generally have strict anti-gambling laws. 

History of Legal Online Casinos in the U.S.

While online casinos have been operating outside of the U.S. basically as long as the internet has existed (and we'll look at these off-shore casinos later), online casinos have only been legal in the U.S. since 2013. The first online casino was hit the internet in 1994, and it was based in 1994, Antigua and Barbuda.

In the U.S. there was significant resistance to online casinos by the usual suspects, but it is also thought that physical casino owners were among the primary obstacles to legalizing online casinos. They viewed the online market as competing with brick-and-mortar casinos. In a way, they were right, but the success of online casinos has only been helpful for physical casinos, many of which are struggling financially.

Federal Opposition to Legal Online Casinos

Individual states have long been recognized as able to legalize gambling within their own state. And so long as someone has to be physically present in order to bet, that is not an issue. The problem comes with the advent of the internet, which allows you to be several places at once (digitally, at least). 

The Interstate Wire Act of 1961 - also called the Federal Wire Act - was established in an attempt to keep organized crime running casinos from conducting transactions across state lines (including internationally). Obviously the internet did not exist at the time of this legislation, however the act had potential relevance for online gambling.

The Department of Justice (DOJ) released its re-modification of the Federal Wire Act in 2011. It was decided that interstate transmission of wire communications that was not related to sports would not be subject to this law. So the Federal Wire Act would not pertain to online casino gambling, including online poker.

Between these two versions of the Federal Wire Act, The Unlawful Internet Gambling Enforcement Act of 2006 (UIGEA) was introduced. Specifically, it was intended to 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." So what does this mean, and what is the specific ruling of the UIGEA?

Online Gambling Only Permitted within a State

That is a difficult question to answer, but the effect of the Act is clear. It meant that reputable online casinos, including all listed on the London Stock Exchange, immediately pulled out of the U.S. market. The Act is interpreted to mean that only states where online casino gambling was legal could take bets within that state.

This means that online casinos had to find a means to guarantee any transactions conducted with a casino would only take place in that state (for example, a New Jersey-based online casino has to guarantee that no one would place bets outside of New Jersey). 

Geolocation technology comes to the rescue! By using GPS devices or IP addresses to confirm your location, online casinos are able to prove that any bets are made within the host state. 

More importantly, the UIGEA made it illegal for non-U.S. casinos to take money from U.S. banks. This has serious implications for so-called off-shore casinos. 

"Black Friday" and UIGEA

The Department of Justice came out with a hard attack on 3 offshore companies - PokerStars, Full Tilt Poker, and Absolute Poker. They demanded $3 billion in compensation and up to 65 years of jail time for some of the defendants, according to a New York Times article. UIGEA changed the face of online casinos - and poker in particular - in the U.S. 

It also set up a strict line between legal online casinos and illegal casinos that are very important for you.

Legal Casinos versus Illegal Off-shore Casinos

In the United States, the only legal casinos are those which are approved by a state. As of now, legal online casinos are available in New Jersey, Pennsylvania, and Delaware, with poker available in Nevada. All of the casinos listed here on are legal. This means that, if you have a dispute with a casino, you have state and federal legal protection.

With illegal, off-shore casinos, however, you have no such protection. In fact, these off-shore casinos are operating in known violation of U.S. law. And because they are not recognized by the U.S. or European stock exchange, they are in some ways beyond legal reach. This leads to an important question.

Are you willing to give you personal and financial information to a company that acts in knowing violation of U.S. laws? Do you have any recourse if they decide not to pay up?

Every casino game in the books has a house edge, but you need to know that the house is going to honor your wins. Off-shore casinos are a bad bet, period. 

 Legal Requirements for Betting in Online Casinos

Today, casinos need two important pieces of information: proof of 1) identity and 2) location. As we have already seen, the federal mandate is that individual bettors be physically located within the state where the online casino is hosted. Interstate betting is currently illegal (although negotiation is underway regarding whether such bets should be allowed between states where online gambling is legal). 

Additionally, the casinos must adhere to state-mandated laws. They must not allow anyone to register who is less than 21 years old or who has self-excluded from gambling. These are the requirements, but a casino also has the right to refuse anyone they wish. For example, if you were found to be using a VPN while outside of New Jersey to try to play at a New Jersey-based online casino, that casino would likely ban you. 

Frequently Asked Questions

Is online gambling legal in West Virginia?

West Virginia legislature has approved online casino games within the state. As the safeguards for online gambling take some time, however, it is likely that it will not be until 2021 that West Virginia residents will actually be able to play online. 

How old do I have to be to play in an online casino?

All states where online betting is legal require that individuals be 21 or older. Casinos have different ways of verifying your identity, but most will ask for the last 4 digits of your social security number (in addition to other information). Falsely representing your identity, including your age, can result in your being banned from a casino for life. 

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29 October 2019

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