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Interest in Online Sports Betting Is Rising. But Is It Legal?

Man making bets on phone

The pandemic prompted the closure of casinos across the United States, and gaming venues that are now reopening are generally required to follow strict protocols around physical distancing and sanitation. These changes may prompt more gamblers, including sports betters, to turn to online betting options. 

But is online sports betting legal in the US? Before 2018, the answer was generally “no.” The Professional and Amateur Sports Protection Act of 1992 (PASPA) outlawed sports betting nationwide, with the exception of a few states. In 2018, however, the US Supreme Court overturned PASPA for infringing on states rights, and opened the door for states to create their own regulations. 

As a result, sports betting laws have been in flux for the last couple of years as state legislatures work to draft and adopt their own regulations. As of the publishing of this blog post, more than 20 states and the District of Columbia allow some form of sports betting, but this doesn’t mean it’s open season for online or mobile betting platforms. Each state has particular rules around sports betting to which a merchant must adhere. We outline where many states currently stand below.

 

The following states legally offer online sports betting. Mobile bookies must hold a state-specific license. 

 

States listed below have passed legislation allowing online sports betting but do not yet have any live, licensed operators:

  • Delaware
  • Rhode Island
  • Michigan
  • Illinois
  • Tennessee

 

The jurisdictions below will only allow sports betting through their lotteries, but may allow for lottery-run mobile betting:

  • Oregon
  • Montana
  • Washington, DC
  • Rhode Island

 

Five states have legislation currently only allowing for in-person sports betting:

  • Mississippi
  • Arkansas
  • New York
  • New Mexico (only tribal casinos)
  • North Carolina (only tribal casinos)

 

Of the remaining states, several are considering legislation to legalize sports betting in some form.

 

What about online bookies claiming to operate offshore? 

Several sports betting websites claim that because they are located in and operate within the laws of another country, it is legal for US residents (or residents of other countries) to place bets through their platforms. While the US government may be unlikely to seek action against an individual user placing bets through one of these offshore websites — federal and state laws are focused on restricting the casinos rather than the players — these offshore operators are still considered illegal bookmakers because they are operating in states in which they do not hold a license. For players, this means there is no government oversight and these websites may be at a higher risk of engaging in shady practices, such as refusing to pay out winnings. The safest bet is to steer clear of these operators. 

 

Why are fantasy sports available in most states?

Daily fantasy sports and paid fantasy sports leagues both offer prizes for winners in exchange for an entrance fee, so what makes them different from sports betting? The argument over the legality of fantasy sports — and whether or not the states can regulate them — boils down to whether fantasy sports are a form of sports wagering under federal law. This question can be further broken down to whether or not fantasy sports are a game of skill or chance. When viewed as a game of skill, these contests are legal as long as a state has not prohibited them. When viewed as chance, they fall under the same restrictions as gambling. 

Few states have passed legislation dealing with the issue of daily and paid fantasy sports. Therefore determining the legality in most states relies on the opinions of attorneys general, court precedent, or statements by other public officials. Currently most big fantasy sports platforms operate in 43 states; the only states that expressly forbid fantasy sports are Arizona, Hawaii, Idaho, Louisiana, Montana, Nevada, and Washington. 

 

Regulations around sports betting are dynamic. Contact us to learn more about laws related to online gambling and how LegitScript can help keep you and your merchants in compliance with this and other high-risk industries.