U.S. legal sports betting history
While much of the focus in the U.S. has been on the growth of sports betting in the years following the repeal of the Professional and Amateur Sports Protection Act in 2018, the country’s betting history goes back much farther than that.
Here’s a look at the biggest moments and milestones in U.S. sports betting history:
19th Century: Sports Betting Begins
The earliest instances of sports betting in America centered exclusively around horse racing events – but that changed in the latter stages of the 19th Century with the introduction of professional baseball. The National League was founded in 1876, and sports betting soon followed. Between the Louisville Grays throwing games and legendary manager Cap Anson famously placing wagers on his own team, betting controversies soon made as much history as the actual sport.
Early 20th Century: Black Sox Scandal
You don’t need to be a betting regular to acknowledge that the actions of the 1919 Chicago White Sox not only cast a shadow over professional baseball, but over sports wagering as a whole. Eight members of that White Sox team accepted bribes from a gambling group (allegedly led by New York City crime boss Arnold Rothstein) to throw the 1919 World Series against the Cincinnati Reds; all eight, including star outfielder “Shoeless” Joe Jackson, were given lifetime bans in 1921 but avoided any criminal charges.
1940s: Legal Sports Betting is Born
A decade after Nevada Governor Fred Balzar signed Bill AB 98 into law – allowing for legal gambling within the state’s borders – noted mobster Bugsy Siegel made history in 1941 as the first race disseminator in the state. Siegel’s race wire service provided centralized odds and results for bookies. The end of the decade saw Nevada officially legalize sports wagering, though betting was limited to turf clubs, which operated independently of the casinos.
1950s: Excise Tax Sends Sportsbooks Running
Just as the popularity of Las Vegas sportsbooks was climbing, the federal government stepped in and turned the industry on its ear. A whopping 10 percent excise tax on sports betting handle – part of the Revenue Act of 1951 – effectively shuttled many legal sports betting operators, while others sought out less-than-legal ways around the tax.
Regulation was the focus of the latter part of the decade. The state legislature created the Gaming Control Board in 1955 to help regulate the ever-growing Nevada gaming industry, while the Gaming Control Act was passed four years later, putting the Nevada Gaming Commission in charge of all gaming licensing. With the mob engaging in heavy illegal sports betting activity elsewhere in the country, more stringent regulations were on the way.
1960s: Feds Crack Down on Mob Betting Activity
The U.S. government came down hard on illegal sports betting operations in 1961, implementing the Interstate Wire Act (also known as the Federal Wire Act). The act, which remains in effect today, prohibits sports wagering from crossing state lines:
Whoever being engaged in the business of betting or wagering knowingly uses a wire communication facility for the transmission in interstate or foreign commerce of bets or wagers or information assisting in the placing of bets or wagers on any sporting event or contest, or for the transmission of a wire communication which entitles the recipient to receive money or credit as a result of bets or wagers, or for information assisting in the placing of bets or wagers, shall be fined under this title or imprisoned not more than two years, or both.
Elsewhere, the beginning of the decade saw Nevada crack the $200 million mark in annual gross gaming revenue – and it also marked the beginning of an incredible casino expansion.
Caesars Palace’s opening in 1966 was the most notable addition to the Las Vegas casino scene, punctuating a stretch in which Harvey’s, the original Aladdin, Circus Circus, Landmark, International, and the Monte Carlo all made their debuts.
1970s: Welcome Tax Relief for Sportsbooks
As more casinos popped up along the suddenly-expanding Las Vegas Strip in the 1970s, Congress finally made things right after nearly a quarter-century of exorbitant sports betting handle tax.
After much urging from Senator Howard Cannon, Congress finally decided in 1974 to lower the excise tax from 10 percent all the way down to two percent. One year later, following the state passing of a law allowing casinos to host sportsbooks, Union Plaza Hotel and Casino owner Jimmy Gaughan made history as the first man to do so.
Elsewhere, Nevada briefly had company in the sports betting sphere. Delaware introduced its sports lottery in 1976, then shuttered it just three weeks later (and voiding all active tickets in the process) after incurring more than $376,000 in debt.
1980s: Vegas Sportsbooks Rejoice
The 1980s brought more good news for Nevada, as Congress lowered the tax rate on licensed books to 0.25 percent. This, combined with a 6.75 percent state tax on gross gaming revenue and one percent licensing fees, put operators in a position to compete with – and ultimately outdo – illegal sportsbooks.
Meanwhile, two other states tried their hand at a less polished form of sports betting. The Montana Lottery was created in 1986 and offered limited sports pools and fantasy sports wagering, while Oregon’s Sports Action parlay offering was introduced three years later. These new ventures raised concerns in Congress, setting the stage for a bombshell that would stun the sports betting world.
1992: PASPA Limits the Playing Field
In response to a growing number of states interested in implementing some form of sports betting, Congress enacted the Professional and Amateur Sports Protection Act (PASPA), which banned sports wagering in all states except for the four (Nevada, Oregon, Montana, Delaware) which had already put sports betting options in place.
All states that had operated licensed casino games for the 10-year period prior to PASPA’s enactment were eligible to add sports betting to their gaming offering but were given just 12 months in which to do so. New Jersey was the one state expected to take advantage of this window but failed to do so.
2000s: Nevada Rebounds From 9/11
Nevada’s continued growth explosion finally came to a sobering halt after the terror attacks of September 11, 2001. Tourist activity dried up significantly, resulting in mass layoffs and shutdowns; it would take until 2005 for things to return to normal.
Even with a massive slowdown earlier in the decade, Las Vegas returned as one of the world’s most popular tourist destinations when people started to feel safe traveling again. Revenue passed the $10 billion mark annually in 2004, and more casino-hotel combos popped up, including Wynn Las Vegas, Encore Las Vegas, and The Palazzo.
2011-13: NJ legislation passes; leagues fight back
A New Jersey sports-betting referendum held in November 2011 was overwhelmingly approved, leading to the Sports Wagering Act of 2012 that allowed for “wagering at casinos and racetracks on certain professional and collegiate sports or betting events.”
Alas, it wasn’t that simple. The biggest sports organizations in North America (NFL, MLB, NHL, and the NCAA) blocked legislation, successfully arguing that New Jersey’s bill violated PASPA. New Jersey followed up with an appeal, but it was also unsuccessful.
Meanwhile, the early 2010s proved to be the most challenging period for Las Vegas in decades. Early during that period, a deep recession significantly curtailed tourism and spending, resulting in widespread layoffs and major delays to casino construction, expansion, or refurbishment projects.
2014-17: NJ Wins Audience With SCOTUS
New Jersey Governor Chris Christie, who had unsuccessfully tried to push through the first sports betting bill, had another trick up his sleeve. In October 2014, he signed off on legislation that would allow casinos and racetracks to offer sports betting by repealing state law that bans the practice.
The leagues wasted no time responding – and this time, the NBA was involved as well. The organizations suggested that Christie was simply trying to find another way around PASPA. After an injunction was granted, the U.S. Third District Court of Appeals upheld the decision 2-1 in the summer of 2015.
Frustrated but undaunted, New Jersey lawmakers sought to take their case to the highest court in the United States. But even before they got the opportunity, the Supreme Court asked U.S. Solicitor General Jeffrey Wall to weigh in – and he recommended in May 2017 that SCOTUS not even bother with a hearing.
Just over a month later, SCOTUS stunned just about everyone by agreeing to grant New Jersey’s petition for a hearing. While the path to this moment had been largely a solo journey for the Garden State, a whopping 20 states filed amicus briefs with the court (along with the highly respected American Gaming Association) in support of New Jersey’s quest to legalize sports betting.
2018: PASPA Vanishes, Sports Betting Launches
After a wait of five-plus months, the Supreme Court finally ruled – and by a 6-3 count, SCOTUS declared that the federal ban on sports wagering is unconstitutional. That set in motion a frenzy of activity across the country – most significantly in New Jersey, which was expected to become Ground Zero for the new era of U.S. sports betting.
The following month, Governor Phil Murphy signed Assembly Bill 4111, allowing for the introduction of legal sports betting at casinos and racetracks. Less than two months after that, DraftKings Sportsbook became the first online sportsbook operator to go live in New Jersey – and the first to operate anywhere outside Nevada.
NJ wasn’t the only state to jump on board the sports betting train in Year 1 post-PASPA. Delaware was actually the first state outside NV to provide legal sports betting (via a retail location), while New Mexico, Mississippi, Pennsylvania, Rhode Island and West Virginia also took their first wagers in 2018.
2019: NJ Dominates Sports Betting Landscape
Having done much of the legwork ahead of time, New Jersey was miles ahead of the rest of the country at rolling out legal sports betting – and it showed. Serving as a test case for the other states, New Jersey saw immediate success, putting together five straight months of $300+ million in handle to open 2019.
From there, the NFL and NCAA football seasons took center stage – and New Jersey saw truly eye-popping numbers in terms of handle, bringing in nearly $2.6 billion from September 2019 to January 2020 while finishing the calendar year at $4.6 billion.
The industry also saw a significant number of new states enter the fray. Arkansas, Indiana, Iowa, New Hampshire, and Oregon all took their first legal sports wagers in 2019.
2020: COVID-19 Halts Momentum
Just as an ever-increasing number of legislated states set their collective sights on another set of monthly records, the COVID-19 pandemic sent the entire North American sports calendar into flux. Sportsbooks, casinos, and tax collectors all took a major hit over the four-month period from March to June 2020 (though the state still pulled in $520 million in handle over that span).
As sports gradually returned over the summer and both the NFL and NCAA football rolled out full schedules (or close to them), bettors came back in droves. New Jersey set monthly handle records in three straight months before ending 2020 in style with a $996 million showing in December (the topper to a $6-billion year). Several other states smashed their monthly handle marks, as well.
COVID-19 also did little to slow down the implementation of sports betting legislation in a handful of other states. Colorado, Illinois, Michigan, Montana, Tennessee, Washington and DC all entered the market in 2020, though many of those states saw modest early handles due to the coronavirus.
2021: Records Fall Everywhere
The U.S. sports betting phenomenon reached a whole new level in 2021 – and as usual, New Jersey was at the epicenter. On the heels of a $959-million handle for January, the state regularly shattered monthly records post-NFL – then saved its best for the 2021 season, posting the first billion-dollar handles in each of the final four months of the season. The final tally: $10.93 billion in handle.
This trend hardly belonged to New Jersey, with every state operating legal sports betting having enjoyed record numbers in 2021. As expected, even more states became part of the U.S. betting landscape, with Arizona, Connecticut, Nebraska, North Carolina, South Dakota, Virginia, Wisconsin, and Wyoming accepting legal wagers for the first time.
2022: No Stopping New York
Despite massive growth in the U.S. sports betting industry, none of the Big Four states offered legal sports wagering going into 2022. That all changed in the second week of January, when New York (No. 4 in the country in terms of population) joined the club – and promptly raked in the dollars.
Empire State sportsbooks brought in an unbelievable $1.69 billion for the month despite not launching until Jan. 8 – and that momentum carried through the first half of the year, with New York bringing in more than $10.6 billion in handle through its first eight months of operation.
It was otherwise a much slower year in terms of new state legislation, with only Louisiana joining NY as of October 2022.
Sports Betting Regulatory Bodies
While repealing PASPA was the decision of the U.S. Supreme Court, each state is responsible for determining its own set of sports betting regulations and restrictions. Here are the main governing bodies for the most notable states with legal sports wagering in place.
New York State Gaming Commission
New Jersey Division of Gaming Enforcement
Nevada Gaming Control Board
Pennsylvania Gaming Control Board
Illinois Gaming Board