Betting in the United States

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The United States of America is the largest market for gambling in the world. By some estimates, the industry generates over $80 billion in annual revenues. It is the source of some one million jobs and more than $5.2 billion in state and local tax revenue, as each of the 50 U.S. states have the power to determine their own laws regarding what betting activities are allowable within their borders.

Early in its history, some American colonies forbid gambling of any kind, making it illegal to own cards, dice or gaming tables. Other colonies adopted the British attitude, seeing gambling as little more than a harmless pastime.

During the mid-19th century, however, public sentiment turned against gambling. It was only after the Civil War that a few states in the devastated South introduced lotteries as a way of gaining funds for rebuilding. But from 1894 onward anti-gambling crusades spread nationwide. Even horseracing, which had been tolerated for centuries, came under fire. By 1910, only three states still allowed trackside wagering.

As a means of crawling out of the Great Depression in 1931, Nevada became the first state to got against the tide and legalise most forms of gambling. In stark contrast, all of the other states had abolished legal gaming, including lotteries, giving Nevada a virtual monopoly on betting and leading to the post-WWII rise of Las Vegas as the “gambling capital of the world.”

It was not until 1964 that New Hampshire voted to establish a state lottery, followed by New York in 1967 and New Jersey in 1971. Then New Jersey became America’s second state to legalise casino gambling in 1978. Today, 16 states and the U.S. province of Puerto Rico issue permits for commercial casinos and all but eight states have lotteries.

A major contributing factor to the renewal of America’s wagering activities in the late 20th century was the rise of “tribal gaming.” Native American Indian reservations are treated as sovereign nations under U.S. federal law, with the right to create their own tax systems and gaming laws. In the 1970s, many settlements began offering bingo games, which gradually led to the establishment of full-fledged casinos all across the country.

For many years, the largest casino in the world was operated by the Mashantucket Pequot Tribe—the Foxwoods Casino in Connecticut, with 340,000 square feet of gaming space. It was joined in 1996 by the neighboring Mohegan Tribe’s 295,000-square-foot Mohegan Sun Casino.

Oddly enough, sports betting has remained a major point of contention among U.S. lawmakers. Although New Jersey offers pari-mutuel wagering on horse races, and off-track betting facilities are allowed in 26 states, Nevada is still the only place where bookmakers may operate legally. At last count, there were roughly 150 licensed sportsbooks in the entire country, all of them located within Nevada casinos.

Another area in which the United States lags is online betting. The Federal Interstate Wire Act of 1961 made it illegal for wagers to be placed across state lines, effectively isolating Nevada and making it possible to prosecute those who use telephone or telegraph lines to take bets between states.

When attempts to apply the Wire Act to online gaming failed in courts, the U.S. Congress enacted new legislation called the “Unlawful Internet Gambling Enforcement Act” (UIGEA). Signed into law by President George W. Bush in 2006, UIGEA bans American financial institutions from processing transactions with online gambling operators. Exceptions were made for horseracing, state-run lotteries and fantasy sports, but it effectively closed all online casinos, sportsbooks and poker sites based in the United States.

What’s more, the threat of prosecution under UIGEA has stopped many gaming sites licensed in other jurisdictions from taking bets made by American players. As of late 2011, just 29% of all the world’s gaming web sites still accept players who have U.S. addresses. Among them are 291 sports betting sites, including Bodog, Intertops and Sportsbet. However, some sites limit play to those based in certain states with less restrictive local laws.