The Supreme Court struck down a federal law that prohibits sports gambling Monday in a landmark decision that gives states the go-ahead to legalize betting on sports.

The UIGEA prohibits 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.' Broadly speaking, gambling is not illegal in the US. There are no longer any federal laws banning gambling, as long as it does not take place across state lines or involve an online betting. In the United States, both the Federal government and individual state governments are responsible for regulating gaming within their jurisdiction. The Federal government has designated some forms of gambling as prohibited within the US and has created laws that are non-negotiable in the regulation of such prohibited activities.

The court ruled 6-3 to strike down the Professional and Amateur Sports Protection Act, a 1992 law that barred state-authorized sports gambling with some exceptions. It made Nevada the only state where a person could wager on the results of a single game.

States that want to offer legal sports betting may now do so, and New Jersey plans to be first. Delaware, Mississippi, New York, Pennsylvania and West Virginia are among the states expected to quickly get into the legal bookmaking game.

The court ruled in favor of New Jersey and against the NCAA, NFL, NBA, NHL and Major League Baseball, capping a nearly six-year legal battle and overturning a federal statute that the sports leagues had adamantly stood by for more than 20 years.

'Congress can regulate sports gambling directly, but if it elects not to do so, each State is free to act on its own,' the court wrote its opinion. 'Our job is to interpret the law Congress has enacted and decide whether it is consistent with the Constitution. PASPA is not.'

The leagues first sued former New Jersey Gov. Chris Christie in August 2012 and won every step of the way -- until June, when the Supreme Court decided to take the case. Oral arguments were heard Dec. 4, and the justices ruled five months later.

Christie tweeted after the ruling that it was a 'great day for the rights of states and their people to make their own decisions.'

New Jersey's current governor, Phil Murphy, also cheered the ruling, saying he was 'thrilled' to see the high court strike down the 'arbitrary ban.' He said in a statement that he looks forward to working with the legislature to 'enact a law authorizing and regulating sports betting in the very near future.'

The impact will be widespread. For nearly 26 years, Nevada has been the only state allowed to offer a full menu of sports betting options. A record $4.8 billion was wagered at Nevada sportsbooks in 2017.

New Jersey, with its much larger population, is expecting even bigger things. So are other states, with more than a dozen having introduced sports betting bills this year.

As the case played out over the past six years, the NBA and MLB pivoted their position on expanding legal sports betting and began lobbying on the issue in several states, including Connecticut, Illinois, Indiana, Kansas, Missouri, New York and West Virginia.

'We remain in favor of a federal framework that would provide a uniform approach to sports gambling in states that choose to permit it, but we will remain active in ongoing discussions with state legislatures,' NBA commissioner Adam Silver said in a statement. 'Regardless of the particulars of any future sports betting law, the integrity of our game remains our highest priority.'

MLB said in a statement that the ruling will have 'profound effects' and that it will 'continue to seek the proper protections for our sport, in partnership with other professional sports.'

'Our most important priority is protecting the integrity of our games,' MLB's statement said. 'We will continue to support legislation that creates air-tight coordination and partnerships between the state, the casino operators and the governing bodies in sports toward that goal.'

The NFL, NHL and NCAA, on the other hand, have sat on the sideline awaiting the ruling.

'The NFL's long-standing and unwavering commitment to protecting the integrity of our game remains absolute,' the league said. 'Congress has long-recognized the potential harms posed by sports betting to the integrity of sporting contests and the public confidence in these events. Given that history, we intend to call on Congress again, this time to enact a core regulatory framework for legalized sports betting. We also will work closely with our clubs to ensure that any state efforts that move forward in the meantime protect our fans and the integrity of our game.'

Tony Clark, the head of the Major League Baseball Players Association, called the ruling 'monumental, with far-reaching implications for baseball players and the games we love.' Clark said the topic must be addressed 'urgently and thoughtfully to avoid putting our sport's integrity at risk as states proceed with legislation.'

The U.S. joins other jurisdictions that allow legal sports betting, including Canada, the United Kingdom, Australia and France.

To start, it's likely that bets will have to be placed at brick-and-mortar establishments, but states are making plans to offer mobile sports betting in the future.

One research firm estimated before the ruling that if the Supreme Court were to strike down PASPA, 32 states would likely offer sports betting within five years. The American Gaming Association estimates that Americans illegally wager about $150 billion on sports each year.

Geoff Freeman, the president and CEO of the American Gaming Association, said in a statement that the court's decision is 'a victory for the millions of Americans who seek to bet on sports in a safe and regulated manner.'

'Today's ruling makes it possible for states and sovereign tribal nations to give Americans what they want: an open, transparent, and responsible market for sports betting,' Freeman said. 'Through smart, efficient regulation this new market will protect consumers, preserve the integrity of the games we love, empower law enforcement to fight illegal gambling, and generate new revenue for states, sporting bodies, broadcasters and many others.'

ESPN's Ryan Rodenberg and The Associated Press contributed to this report.

Gaming and gambling in the United States have undergone a great boom in recent years. During the past decade, most states have expanded legalized gaming, including regulated casino-style games, sports betting, and lotteries. There has also been an explosion in opening Native American casinos, and the popularity of online gambling in the US has increased exponentially.

Decades ago, gambling used to be illegal almost in every part of the continental US, except for Nevada and New Jersey. However, as time flew by, more and more states have made various types of gambling legal, ranging from Indian casinos, bingo and poker rooms, off-track horse race betting, and more. While some states have approved certain types of gambling, other types have remained “illegal”, so to speak, like online gambling. Almost all states have laws that ban at least some form of gambling.

Understanding US gambling laws is not only important for those involved in the industry, but also for average gamblers who want to know whether he or she can start a fantasy football league, a home poker game, or an NCAA tournament betting pool at the workplace.

As of this writing, a lot of things have changed in the US gambling laws. What was once considered illegal on a federal level is now being made legal by the individual US States, provided that casino operators, and in some cases online gambling operators, apply for the necessary permits and licenses within the jurisdiction in which they wish to operate. If gambling was only allowed in Vegas and Atlantic City before, now states like Colorado, West Virginia, Indiana, Iowa, and Pennsylvania are also coming around, with more and more US states following suit.

Federal Gambling Laws

Federal Statute Illegal Gambling Laws

Below you’ll find links to various U.S. Federal Gambling Laws.

• Unlawful Internet Gambling Enforcement Act. This law applies to online gambling operators accepting financial instruments to fund accounts for players. including online casinos.
• Wire Act of 1961 (See also: Wire Act Violation: Internet v. Phone)

Additional Federal Statutes

Transportation of Gambling Devices Act of 1951.

Federal Statute For Illegal Gambling

In 1951, Congress enacted the Transportation of Gambling Devices Act. [236] The Act, more commonly known as the Johnson Act, [237] which has been amended several times during the intervening years, makes it unlawful to knowingly transport a gambling device to a state where such a device is prohibited by law. [238] The manufacturers and distributors of gaming devices for interstate commerce must register each year with the United States Department of Justice, and the devices must be appropriately marked for shipment. [239]

(a) The term “gambling device” means–

(1) any so-called “slot machine” or any other machine or mechanical device an essential part of which is a drum or reel with insignia thereon, and

(A) which when operated may deliver, as the result of the application of an element of chance, any money or property, or

(B) by the operation of which a person may become entitled to receive, as the result of the application of an element of chance, any money or property; or

(2) any other machine or mechanical device (including, but not limited to, roulette wheels and similar devices) designed and manufactured primarily for use in connection with gambling, and

(A) which when operated may deliver, as the result of the application of an element of chance, any money or property, or

(B) by the operation of which a person may become entitled to receive, as the result of the application of an element of chance, any money or property; or

(3) any subassembly or essential part intended to be used in connection with any such machine or mechanical device, but which is not attached to any such machine or mechanical device as a constituent part. [240]

The interstate shipment of hardware or software for use in connection with an Internet or Interactive gaming system may trigger the Johnson Act, as well as the Interstate Transportation of Wagering Paraphernalia Act discussed above. [241]

Bank Records and Foreign Transaction Act of 1970.

In 1970, Congress passed the Bank Records and Foreign Transaction Act, [242] which is better known as the Bank Secrecy Act (BSA). [243] The BSA required “financial institutions” to report all currency transactions greater than $10,000 in effort to fight money laundering. This obligation was first limited to just banks. In 1985, the United States Treasury Department extended the requirement to casinos through the adoption of regulations. [244] Nevada casinos enjoy an exemption from the CTR reporting requirements of the BSA. [245]

Internet or interactive casinos will certainly be subject to some form of currency reporting requirement whether it is the BSA or Nevada Gaming Commission Regulation 6A, or both.

Money Laundering Control Act of 1986.

In 1986, Congress enacted the Money Laundering Control Act, [246] codified at 18 U.S.C. §§ 1956, 1957. Section 1956 applies to the knowing and intentional laundering of monetary instruments. [247] Section 1957 pertains to monetary transactions involving property that is “derived from specified unlawful activity,” which includes “racketeering activity” under RICO. [248]

Electronic Communications Privacy Act of 1986.

In 1986, Congress enacted the Electronic Communications Privacy Act (ECPA), [249] codified at 18 U.S.C. § 2510 et seq. The legislation amended Title 18 of the United States Code to extend the prohibition against the unauthorized interception of communications from wire and oral communications to “electronic communications,” which are defined as:

“electronic communication” means any transfer of signs, signals, writing, images, sounds, data, or intelligence of any nature transmitted in whole or in part by a wire, radio, electromagnetic, photoelectronic or photooptical system that affects interstate or foreign commerce, but does not include–

Federal Statute Illegal Gambling Rules

(A) any wire or oral communication;

(B) any communication made through a tone only paging device;

(C) any communication from a tracking device (as defined in section 3117 of this title); or

(D) electronic funds transfer information stored by a financial institution in a communications system used for the electronic storage and transfer of funds. [250]

The term “intercept” means “the aural or other acquisition of the contents of any wire, electronic, or oral communication through the use of any electronic, mechanical, or other device.” [251]

ECPA provides exceptions for the law enforcement to intercept communications where either (1) law enforcement is a party to the communication, or (2) where one of the parties to the communication has given prior consent to such interception. [252] The Nevada Gaming Control Board and Nevada Gaming Commission could take advantage of this exemption and be excluded from the reach of ECPA either through the promulgation of a regulatory provision (i.e., that licensees will permit the Board and Commission to monitor all electronic communications with patrons) or by imposing conditions on the licenses o f operators of Interactive gaming.

References

Federal

• Code of Federal Regulations: Title 25, Chapter 3: National Indian Gaming Commission, Department of the Interior
• Proposed Internet Gambling Prohibition Act of 1997 (not passed)

Federal Judicial Decisions

• AT&T Corporation v. Coeur d’Alene Tribe, 295 F.3d 899 (9th Cir. 2002)

Federal Statute Illegal Gambling Winnings

Other References

• Joel Michael Schwarz, The Internet Gambling Fallacy Craps Out, 14 Berkeley Tech. L.J. 1021 (1999).
• “14 Charged in Internet Betting” (Washington Post, March 5, 1998)
• General Accounting Office’s Overview of Internet Gambling Issues

Federal Statute Illegal Gambling Legislation