Online Casino Laws and Regulations in the United States

Last updated: 01/31/2024

Online Casino Regulation in the USA

In the United States, online casinos are subject to regulation at the state level. This creates a complex and ever-changing landscape, with laws that constantly evolve in different regions. In the past, the government relied on outdated federal regulations in an attempt to control the market. However, in the last decade, there has been a shift. States are now focusing on developing a legal framework to license and regulate local online casinos, providing players with safe and secure gambling options. This gradual transformation aims to ensure a more cohesive and efficient system for the industry.

Federal Online Casino Legislation

Over the past 50 years, the federal government has crafted numerous pivotal pieces of legislation. However, many of these rules have become outdated and necessitate ongoing amendments by lawmakers. Among the most significant developments is the decision by the Department of Justice (DOJ) to grant states the authority to establish their own frameworks. This move has been instrumental in fostering the growth of legal online casinos in the USA.

Federal Wire Act:

The Federal Wire Act (1961) is a significant federal law that carries substantial implications for online gambling companies. Introduced by Attorney General Robert Kennedy in 1961, this legislation imposes fines and even imprisonment on operators who utilize wire communication facilities to offer gambling services in unregulated markets. Although initially targeting telephone systems and sports betting, the broad language of the law extends its coverage to internet facilities for online gaming services, including USA online casinos.

Under the Wire Act, businesses operating in legal gambling states can provide services to customers without scrutiny. At the federal level, the Department of Justice (DOJ) maintains that internet gambling remains illegal nationwide. However, in 2002, a court ruling highlighted an important distinction, stating that the act only pertains to sports and does not specifically mention casino or poker gaming. Subsequently, in 2011, the DOJ revised its position, allowing states to legalize and regulate these services.

PASPA:

The online gambling sector was significantly influenced by the Professional and Amateur Sports Protection Act (PASPA), a federal law introduced in 1992. This act granted Nevada a monopoly on sports betting, causing frustration among other states.

However, the landscape changed in 2018 when the act was abolished. States swiftly embraced regulated sports wagering, leading to a booming industry. Not only has this generated billions in tax revenue, but it has also provided a secure betting environment for sports enthusiasts. The success of this market has played a pivotal role in many states' decisions to expand legislation, offering legal online casinos for gamers across the USA.

UIGEA:

In 2006, after much confusion, the US Congress passed the Unlawful Internet Gambling Enforcement Act (UIGEA). This comprehensive legislation addressed the shortcomings of the outdated Wire Act, making it illegal for businesses to accept payments for unlawful online gambling. It is crucial to note that these regulations did not outlaw internet gaming but instead targeted the payment processing capabilities of operators.

The UIGEA introduced a framework that empowered the Federal Reserve to prohibit these payments at financial institutions, including major banks and credit card providers in the USA. Consequently, many operators withdrew from the US market due to the fear of severe fines and imprisonment.

By enacting the UIGEA, Congress aimed to regulate and deter unlawful online gambling activities, safeguarding consumers and preserving the integrity of the industry.

Other Online Casino Legislation:

Following this, House Representatives introduced several bills to clarify distinctions and facilitate the emergence of legitimate local businesses offering online casinos in USA-regulated states. Among the most notable were the Internet Gambling Regulation and Enforcement Act, the Skill Game Protection Act (2007), and the Internet Gambling Regulation and Tax Enforcement Act (2013). These bills seek to regulate and tax licensed internet gambling businesses while differentiating skill-based games like poker from games of chance such as online slots.

State Online Casino Legislation

Understanding US online casino regulations can be challenging due to the variations in rules across different states. With 50 states, each having its own laws and regulations, it becomes difficult for regular players to navigate the dos and don'ts of online gambling in America.

The autonomy granted to states in creating their own rules has resulted in widespread confusion and significant disparities within this burgeoning market. For instance, gambling remains prohibited in Hawaii and Utah, while more progressive states like New Jersey and Pennsylvania have embraced online gambling in all its forms, including poker, sports wagering, and online casinos.

By streamlining regulations and fostering a cohesive approach, we can promote clarity and consistency in the US online casino industry, ensuring a smoother experience for players nationwide.

Sports betting has emerged as the fastest-growing sector in the gambling industry, surpassing online poker and casino gaming in availability across US states. With the convenience of online services, state lawmakers have approached the issue cautiously, taking the time to assess the impact of legal betting within their communities. Despite nearly a decade since the inception of legitimate US online casinos, only seven states currently offer locally regulated and secure online casino options on USA sites.

USA Legal Online Casino States and their Regulations:

Connecticut: In 2021, online casinos in the USA were legalized in Connecticut when the governor signed the HB6451 bill. This bill not only covered sports betting, poker, and daily fantasy sports (DFS), but also paved the way for safe gambling experiences for players aged 21 and above. These experiences can be enjoyed on two legal casino sites that are licensed and regulated by the Connecticut Department of Consumer Protection (DCP).
Delaware: Delaware made history in 2013 by becoming one of the first states in the USA to legalize online casino gaming. This significant milestone was achieved through the passing of House Bill 333, which granted the Delaware State Lottery the authority to offer gaming services to residents aged 21 and above. This progressive move opened up new opportunities for customers to enjoy the thrill of online gambling in a safe and regulated environment.
Michigan: In 2019, the Lawful Internet Gambling Act (Act 152) bill for online gaming was approved by lawmakers. After a two-year wait, the first online casinos in Michigan were launched in 2021, in compliance with the regulations set by the Michigan Gaming Control Board (MGCB). Presently, there are over 15 legal casinos in the state, catering to residents who are 21 years old and above.
New Jersey: In 2013, the A2578 online gambling bill was passed, which granted legal operation of poker rooms and USA online casinos within the USA. These establishments were required to obtain local state licenses, with the implementation commencing later that year. Currently, there are over 20 NJ online casinos that are licensed and regulated by the New Jersey Division of Gaming Enforcement (DGE).
Pennsylvania: In 2019, Pennsylvania took a significant step forward in its gambling laws. With the signing of House Bill 271 by the governor in 2018, the state opened its doors to legal poker and online casino sites. Now, residents over the age of 21 have the opportunity to choose from a selection of 20 reputable casinos that are licensed by the Pennsylvania Gaming Control Board. This expansion of options ensures a safe and enjoyable experience for those looking to engage in online gambling activities.
Rhode Island: In June 2023, Governor Dan McKee of Rhode Island approved the SB948 bill, which grants legal online casino services to residents over the age of 18 through the state lottery.
West Virginia: In 2019, a bill was passed to expand the Interactive Wagering Act, allowing online casinos to obtain state licensing under the oversight of the West Virginia Lottery. The year 2020 saw the launch of the first platforms, and currently, players over the age of 21 have the option to select from four reputable online casinos within the United States.

States Working on Passing Online Casino Legislation:

A number of states are changing their position and progressing towards permitting legitimate online casinos to operate in the USA. While progress has been slow, with several bills stalled in 2023, forward-thinking lawmakers have initiated the process. These five states are leading the way and are poised to offer services for customers to safely enjoy online casinos in the USA.

New York: Numerous New York lawmakers are fervently advocating for the state to embrace reputable online casinos, with a particular focus on the passage of Senate Bill S4856. Nevertheless, while online sports betting has commenced in 2022, opponents remain hesitant to swiftly approve other forms of gambling. Consequently, residents are hopeful that legal online casinos will be authorized in the USA in 2024 and beyond.
Illinois: In 2023, two Internet Gaming Act bills were introduced, namely SB1656. The goal of these bills was to legalize online casino gaming for state-licensed racetracks and retail casinos in Illinois. The proposed legislation included a 12%-15% tax and a lengthy six-month registration process. Unfortunately, these bills did not gain traction during the year, leaving Illinois players eagerly waiting for 2024 to see if new laws will be passed to open up the market.
Indiana: In 2022, Republican Ethan Manning introduced House Bill 1536, proposing a higher tax rate of 20% to support addiction services. However, the bill faced significant opposition in the Senate in 2023. As we enter 2024, the local community eagerly awaits the progress and outcome of this legislation.
Maryland: Maryland is eagerly looking forward to the opening of legal online casinos in the USA. Senators have introduced the SB267 bill, aiming to legalize casino gaming. As per state policies, this topic will be included in the 2024 general election referendum, potentially paving the way for online casino gaming in the state.
New Hampshire: New Hampshire Senator Timothy Lang presented Senate Bill 104 in 2023, which lacked specific information regarding licensing costs and tax procedures. Although the bill was approved by the local Senate, it faced opposition from 20 members of the Ways and Means Committee. Despite these initial challenges, it is anticipated that New Hampshire legislators will persist in their efforts to legalize online casinos in the state.