Is online gambling legal in the U.S.?by Michael Bluejay, Last Updated: October 2018
I'm not a lawyer. Do not rely on this article as legal advice. I also can't guarantee to have heard of every relevant case.
Short answer: Not illegal under federal law, possibly
illegal under state law, but even there penalties are typically low
and prosecution is rare.
There is no U.S. federal law against gambling online
There is no U.S. federal law against gambling online. At the federal level, gambling online is perfectly legal, because of the lack of a law against it. It's possible to run afoul of state law (especially in extremely conservative states), but even there prosecution is extremely rare, and penalties are usually slight.
U.S. Attorney Catherine Hanaway admitted in a House hearing that just placing wagers online doesn't violate federal law. No American has ever been arrested, indicted, or prosecuted by the feds for gambling online, because there's no law against it. If online gambling were illegal I wouldn't be running his website for eighteen years, as an American citizen, living in the U.S., using my real name. And I occasionally gamble online, too, and I admit that publicly, like I'm doing right now.
This might be confusing because other outlets erroneously reported that Congress banned online gambling in 2006. Those reports are simply wrong. The 2006 law makes it illegal for banks to move gambling money when the bets are already illegal (like from a state law), but doesn't make it illegal for players to make bets. The law simply does not create or extend any ban on gambling itself. In fact, the law says quite clearly, "No provision of this subchapter shall be construed as altering, limiting, or extending any Federal or State law or Tribal-State compact prohibiting, permitting, or regulating gambling within the United States." You can see for yourself by checking out the full text of the law.
While you don't break any federal laws from placing bets online, it's not legal to run a gambling operation (i.e., to take bets), except in those few states where it's explicitly legal and the operator is licensed. So don't think you can start an online casino or run Facebook raffles.
And yes, the FBI posted a scary
warning online in which they claimed that placing bets online is
against the law. In short, they lied, and the DoJ
eventually reversed that position anyway. (more
States where online gambling is explicitly legal
Very few states have specific laws against online gambling, though many have laws against gambling in general, which apply equally to online and offline gambling. A small handful of states have explicitly legalized online gambling, as long as you play at one of the handful of approved online casinos. In some states, only certain kinds of gambling might be legal (e.g., poker). The states which have legalized at least some form of online gambling are:
- Delaware became the first state to legalize online gambling, in June 2012, and the third to launch (Nov. 26, 2013). (USA Today, Delaware Online, Casino.org)
- Nevada became the first state to legalize online gambling (well, poker at least), on Feb. 21, 2013 (CBS) and launching on April 30. (LVRJ)
- New Jersey became the third state to legalize online gambling (poker + casino), signed into law in February 2013, and launching on Nov. 25th. (NJ Poker Online)
Note that Bovada won't accept players from these states, nor will they take players from Maryland or New York.
The District of Colmbia became the first jurisdiction to
legalize online gambling in the U.S., in April 2011. However,
the measure was repealed in February 2012 before it ever became
State violations of gambling are usually misdemeanors
Even when states don't allow players to gamble, the penalties are almost always light. The only states where simple gambling is a felony are the two Washingtons: Washington, DC, and Washington state. (source) In most states simple gambling is just a misdemeanor, and in Arkansas and Colorado it's a simple petty offense, like a traffic ticket. (source)
States with an online gambling prohibition
Even states that ban gambling in general usually don't have a specific ban on online gambling. If it's against the law to gamble in your state, that applies online and offline, even if the law doesn't mention online. But a few states do specifically outlaw online gambling. Those states are:
- Nevada (go figure)
- South Dakota
Players convicted of breaking State laws
- North Dakota.
Jeffrey Trauman paid a $500 fine on what was probably over
$100,000 in online sports bet winnings, in 2003. (Gambling
& the Law)
- Oklahoma. Online sports bettor Roland Benavides was charged in 2011 and in 2012 received a deferred sentence (which means that if he doesn't violate the terms of his probation, he will likely face no jail time). (News OK)
Kentucky seized domain names
A Kentucky judge agreed to allow Kentucky seize 141 gambling-related domain names, on the spurious grounds that a domain name constituted a "gambling device" under state law. But even if it were clear that gambling domains violated Kentucky law, the seizure was still absurd, because by that logic any country could seize any domain anywhere in the world if the website happened to violate its local law. In any event, as FlushDraw said, "Only a small number of US-based registrars complied, and the seizures themselves were rendered somewhat moot when most of the affected domains relocated to non-US registrar services and stopped using “.com” domains."
In May 2018, the Supreme Court overturned a law that prohibited sports betting in all states but Nevada. This allows individual states to legalize sports betting should they choose to do so. However, the court's ruling does not speak to the Wire Act, so online sportsbooks still violate federal law (for the operator, not the player). (Forbes)
- Is it illegal to run an online gambling website, or advertise for it?
- See our timeline of legal events re:
- Attorney I. Nelson Rose's columns on gambling & the law at Casino City