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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. 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.
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. 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.
This obligation was first limited to just banks. In , the United States Treasury Department extended the requirement to casinos through the adoption of regulations. 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. San Francisco became the new center of the American gambling industry as the State of California issued casino licenses to raise tax revenue.
Casinos and card rooms were frequented by miners, sailors, railway men, women and Chinese rail workers and merchants, many of whom operated card rooms of their own. Other western towns like Deadwood, Denver, Dodge City and Kansas City also became home to significant gambling operations, bringing in travelers and residents of surrounding areas.
Full of new settlements populated mostly by men, anti-gambling attitudes were not strong in the American West. The West is still associated with gambling in the popular consciousness. While blackjack tables and poker rooms flourished during this time, eventually the industry got too big for its own good. As the frontier became settled and permanent communities replaced mining camps and boomtowns, the public began to turn against casino operators.
The City of San Francisco banned gambling in , and in the State of California followed suit. But just as western states were taking aim at gambling houses, the age-old activity was enjoying a comeback in the South. Following the American Civil War the former members of the Confederacy were war-torn and desperate for money to finance their efforts at reconstruction. It came mostly in the form of horse racing and state-sponsored lotteries. The Louisiana Lottery became especially infamous.
One of the largest lotteries in the country, it was linked to numerous corruption and fraud scandals. In the state government issued a charter to a private company to sell lottery tickets. By , other states had abandoned their experiments and it was the only lottery remaining in the country. However, operators were repeatedly accused of corruption and bribery of public officials, and the federal government attempted to block the sale of tickets outside of state borders.
Under pressure from the growing Progressive movement the federal government banned the sale of lottery tickets through the mail in The lottery disbanded completely in That event marked the symbolic end of the Second Wave. The Progressives take aim at gambling The Second Wave was relatively short-lived due to a series of high-profile lottery and horse racing scandals and the growing tide of Progressivism in American politics.
The Progressive movement was driven largely by Victorian standards of morality which held no place for perceived vices like drinking and card playing. By all US states had banned casino gambling, and only three retained horse racing. Even Nevada, the symbolic home of the card-slinging frontiersman, put a stop to the activity in all forms. The territorial governments of Arizona and New Mexico even had to ban gambling in order to qualify for statehood.
Much to the dismay of anti-gambling crusaders, prohibition was an utter failure, just as prohibition of alcohol would prove to be a decade later. The activity simply began to operate outside of the law. Underground gambling dens were present anywhere interested parties could be found, which was almost everywhere. Many card room operators bribed public officials for the privilege of holding games in the open. The rise of the black market created an unholy alliance between gambling and organized crime.
Crime groups operating in cities like New York, Chicago and Kansas City used illegal gambling to increase their wealth and power. Increased crime coupled with the fading popularity of Progressivism led some politicians to rethink their stance on gambling during the s. However, it would take a drastic change in the social climate to get states to reverse course and overturn prohibition. That eventually happened, in the form of a major economic crisis which later came to be known as the Great Depression.
Gambling is revived in bankrupt states Just as a war-ravaged post-Civil War South turned to gambling to raise revenue, states thrown into economic crisis after the stock market crash and ensuing depression did the same. Massachusetts broke the threshold in by legalizing bingo to give churches and charities a way of raising money to care for their impoverished communities.
Horseracing made a huge comeback, which 21 states legalizing it during the s. While legal gambling made a comeback in the East, it remained heavily regulated. Casinos were still not allowed to operate legally. State governments increased their crackdown against mob-run operations.
A famous public service film from the time showed New York City Mayor Fiorello LaGuardia smashing slot machines with a hammer and pushing them into the ocean. Chicago Mayor Anton Cermak also took aim at illegal gambling operators, which may have been the motivation behind his assassination in The time period witnessed history repeating itself in another way. With the authorities in Eastern states going after illegal gambling, organized crime figures moved westward, just as gamblers had during the previous century.
While it had been prohibited for three decades during the Progressive Period, the government had never been able to get a handle on it. Underground card and dice games were held in basically every community in the state. Unable to stop it and in desperate need of tax revenue during the depths of the depression the state legislature decided to bring it back in legal form.
In California-born entrepreneur Bill Harrah opened a gambling hall in Reno. Siegel became unpopular with the East Coast mob figures who helped finance the operation. Over time, however, it became the preferred destination for celebrities and high-rollers from across the country. The connection between organized crime and Nevada casinos eventually became too obvious to ignore.
During the early s the national Kefauver Committee gave a series of hearings on the subject. It led to increased public scrutiny of the Nevadan casino industry. However, this time the authorities opted for increased oversight rather than outright prohibition.
Eventually the mob sold its interests in all Nevada casinos. However, mob influence in the casino industry left a lasting impression on the public. In California, Arizona, Montana and Massachusetts all held referendums on bringing gambling back in a legal, regulated form. Voters squashed the idea in all four cases.
The Third Wave finally hits After sixty-years of relative prohibition everywhere except Nevada, the Third Wave of American gambling finally began in the s. In New Hampshire became the first state since to operate a lottery.
The move was motivated by, unsurprisingly, the desire to raise revenue without increasing tax rates the state has never had an income or sales tax. It was followed by New York in and New Jersey in The New Jersey lottery was the most successful in history because it opted for a low price, high volume model with a large number of small prizes.
Virgin Islands have state lotteries. The failed rebirth of Atlantic City As lotteries came back into fashion, New Jersey officials and businessmen became interested in reviving decaying Atlantic City by transforming into a destination for casino gamblers. However, it never recovered from the Great Depression and the increasing affordability of vacations in Florida and the Bahamas. By the s, it was popular only for those unable to afford vacations in more exotic locations.
By the s it was obvious that something needed to done to save Atlantic City from total decay. With the backing of the state governor, legislature and business groups, Farley got a referendum approved in to bring casino gambling to Atlantic City. The first casino, Resorts International, opened in and instantly became a hit. Its success showed the pent-up demand that Americans had for the casino experience.
Several Nevada casino operators became hungry for a piece of the action. They brought in tax revenue, but the municipal population declined after and unemployment remained stubbornly high. Businesses surrounding the casinos continued to go under. Today, Atlantic City is a city in rapid decline.
The current trend continues to build In Florida became the first US to state to host tribal gambling when the Seminoles opened a casino on Indian reservation land. Broward County police made arrests following the opening, but the tribe successfully sued the county on grounds that tribes have sovereignty rights which cannot be interfered with by state or local governments.
This was due to the fact that they lie on federal, not state, land. Many tribes quickly followed suit. Today 28 states have legal tribal casinos. This form of gambling is more acceptable to the public because the facilities are generally located in isolated rural areas.
However, in the federal government passed the Indian Gaming Regulatory Act, which required that tribes must reach a legal agreement with the states in which they are located before a casino can be built. While tribal gambling is a relatively new phenomenon, commercial casinos have made a comeback in recent years as well. The trend is driven largely by historically familiar desire for states to raise revenue without increasing tax rates. Since the late s a wave of states have legalized land-based commercial casinos, including Iowa , Colorado , Mississippi , Louisiana , West Virginia , Michigan , Maine , Pennsylvania , Kansas , Maryland , Ohio and South Dakota New York and Massachusetts also have plans to issue commercial casino licenses in the immediate future.
Many states also have race track casinos, riverboat casinos, card rooms and electronic gaming terminals. In fact, only ten states have a complete ban on gambling, and one of them, Massachusetts, will legalize commercial casinos in the near future. Legal casino gambling is bigger than ever before in the US. However, every action brings a reaction, and the history of gambling in America shows that each period of liberalization is eventually followed by a puritan pushback.
History of Online Gambling in the US Just as land-based casino gambling was making comeback, the coming of the internet during the early s brought a flood of online gambling sites to American web surfers. At the time the US had no laws in place to license or regulate them. Anyone with a credit or debit card could play online freely. Casino and sports betting sites came first, with the first online poker rooms launching in As more people gained internet access and more websites popped up every day, the amount of money wagered online by Americans increased significantly.
Under pressure from concerned citizens groups the federal government soon began exploring ways to curb the activity. The bill failed to pass due in large part to successful lobbying by Jack Abramoff, who was later convicted of corruption for shady dealings with American politicians.
Thus online gambling continued to move forward in the US. Foreign-licensed online casinos and sportsbooks as well as poker sites made huge amounts of revenue serving American customers. Seeking to ban rather than regulate online gambling the DOJ chose to interpret the Wire Act, a bill originally designed to restrict interstate sports betting via telephone, as providing legal grounds to ban all forms of internet betting.
In it granted the country to right to suspend US intellectual property rights, meaning that Antiguan companies could sell US-made music, films and TV shows without paying royalties to US companies. Unlawful Internet Gambling Act Despite internet gambling being illegal, Americans continued to do it in large numbers because there was little framework in place to prevent the activity.
The bill put some teeth into existing internet gambling prohibition by allowing the DOJ to prosecute companies and executives found to be in violation. However, individual customers of gambling sites remained free from punishment. In United States v. All three sites were forced to vacate their dotcom internet addresses and an undisclosed amount of player funds were seized but eventually returned.
At the time, at least 1. PokerStars co-founder Brent Beckley as well as payment processors Ira Rubin and John Campos were each sentences to prison sentences ranging between three months and three years. It now argued that the Wire Act only applied to sports betting, so that states creating their own self-contained internet casino and poker markets were free to do so under US law. Desperate for tax revenue in a harsh economic climate, New Jersey and Delaware legalized online gambling that same year, launching their first regulated online casino sites in Nevada legalized online poker.
These represent the first licensed online gambling sites in US history.