Sports betting in the United States has a long and complicated history. While the US has put laws and regulations in place to prevent sports betting, other countries worldwide have embraced it. These countries have seen the benefits of legal sports betting to their economies. The future of sports betting in the United States is finally starting to look bright ever since the Supreme Court legalized it in May 2018.
Considering Illinois is now one of the legal states, it is essential to look back on the long road it took to get here. This article will reflect on the history of sports betting in the United States.
Horse racing in the 1800s
Horse racing is a sport that has a rich history in the US. It is recognized as one of the oldest sports individuals could wager on. Wagering on horse racing dates back to the 1600s, but the most common form of sports betting, pari-mutuel betting, began in the 1860s. This was the beginning of legal sports betting on thoroughbred horses in the United States.
In the late 1860s and early 1870s, horse racing took off in the US. The Belmont Stakes was run for the first time in 1867. This was followed by the first running of the Preakness Stakes in 1873. Finally, the Kentucky Derby held its debut race in 1875. Together, these events formed the Triple Crown, which is still running today. The Triple Crown is still one of the most honored events in the sports world today.
While other sports betting forms were outlawed over time, pari-mutuel betting remained legal in several states. In the 20th century, the Interstate Horse Racing Act of 1978 allowed tracks to broadcast races and take wagers from out-of-state bettors. This is something that is still honored today.
The “Black Sox” scandal of 1919
There were other popular sports in the United States during the late 19th and early 20th century. While most sports were illegal at first, they later gained credibility. Regardless of a sport’s legality, if it was happening, individuals were betting on it. Sports betting was rolling in the United States during these years. While the legality of sports betting was no concern at the time, it would soon become one.
Sports gained more credibility with time and became legalized, but baseball was the first sport ever to have a professional game. Unfortunately, it would also be the sport that would make a major case for outlawing sports betting.
In 1919 the Chicago White Sox were favored in the World Series against the Cincinnati Reds. The White Sox lost the best-of-nine series in eight games. It was speculated that the White Sox players accepted money from a mafia-betting syndicate in Chicago and threw the world series. While the eight players accused of accepting money were acquitted of the court’s charges, they received a lifetime ban from the MLB.
The “Black Sox” scandal showed the American people that even their favorite sport’s integrity was at risk because of sports betting. This event negatively marked sports betting and would be a major factor in outlawing sports betting in the country.
The rise of Las Vegas
After the “Black Sox” scandal in 1919, sports betting laws became more common in the US. Some states passed laws that outright banned sports betting and other forms of gambling. Other states made sports betting illegal, but enforcement of the law was not common. Then there was Nevada, which, in 1946, became the first state to legalize sports betting.
Nevada had already made waves for gambling when certain forms of gambling were legalized in 1931. Las Vegas was home to the gambling boom in Nevada. The Las Vegas strip took off in the 40s and 50s as organized crime was beginning to invest in gaming resorts. While the Vegas strip was growing, the legalization of sports betting made Las Vegas the main destination for gamblers.
Other states found loopholes in the laws and allowed non-specified versions of sports betting. While other states were working in this capacity, Nevada was growing its gambling haven in Las Vegas. Nevada was the only state from 1946 to 2018 where individuals could legally place a sports bet. Nevada and Las Vegas single-handedly kept legal sports betting alive for nearly 70 years.
The Federal Wire Act crack down
While illegal in every state other than Nevada, sports betting was still a booming business around the country. Illegal betting syndicates were run by organized crime groups. In 1961, the US Attorney General and Congress passed the Federal Wire Act. While the law was mainly designed to help shut down organized crime, it also had a major impact on sports betting.
The Federal Wire Act states that any individual who engages in sports betting for money or assists in information about sports betting could face up to a $10,000 fine, up to two years in prison, or both. Again, while this act was designed to disrupt organized crime operations, it also caused major issues for sports bettors. The law had a focus on stopping sports betting across state lines. While it worked, it is also the reason that interstate and offshore online sports betting would become illegal.
Sports betting laws tighten post-PASPA
For nearly two decades, the Federal Wire Act and other laws were the only things in the way of sports betting. Ever since the “Black Sox” scandal, there was a public fear of sports betting interfering with games. This fear reached a new level when Pete Rose was banned from the MLB in 1989 for wagering on games. At the time, Pete Rose was the manager of the Cincinnati Reds. While he was never convicted of throwing games or betting against his team, he had wagered on them to win. Regardless, to the public, this proved that sports betting could affect the integrity of sports.
A few years after this incident, in 1992, the government passed the Professional and Amateur Sports Protection Act (PASPA). PASPA was designed to protect the integrity of professional and amateur sports from sports betting. Essentially what it did, though, was put the final nail in the coffin for sports betting in the United States. Nevada, Oregon, Delaware, and Montana were grandfathered in and allowed to keep their sports betting laws. The rest of the country now had a concrete law that made sports betting illegal for everyone.
UIGEA and the crackdown on offshore betting
By the 90s, a majority of organized crime syndicates had dissolved. This made sports betting nearly impossible in the US outside of Nevada. The solution for this came when offshore websites began accepting deposits from individuals in the US. These offshore sites operated in a gray area of the law, as sports betting was illegal in the US, but legal in the host countries. This method of sports betting was a viable option for some time, but that would soon change.
Offshore gambling sites were booming in the 90s and early 2000s. The gray area in which these offshore sites operated was cleared up when the government passed the Unlawful Internet Gambling Enforcement Act of 2006 (UIGEA). This law was designed to make it illegal for any individual or entity to engage in betting by accepting any funds by any means. Essentially, the law made it completely illegal to place/accept wagers with offshore sites.
UIGEA made huge waves in the sports betting community. On April 15, 2011, the three biggest online poker sites stopped allowing American users to use their sites. This day is now known as Black Friday. Because of Black Friday, many offshore sportsbooks stopped serving American customers. This was to avoid legal action with the US Government.
Even with the passing of UIGEA, some offshore sportsbooks still accept wagers from American citizens. While the US government hasn’t taken legal action against these sportsbooks, the whole situation is controversial. While it was clear that UIGEA was passed to strike fear in offshore gambling sites, it was more clear the US government was still more concerned with sports betting operating within the country.
New Jersey fights and PASPA repealed
In 2010 New Jersey governor, Chris Christie, put the legalization of sports betting to a vote in the State Senate. This vote won in a landslide and began the long legal battle of legalizing sports betting in New Jersey. Christie then passed a law to legalize sports betting in New Jersey, which was promptly shut down by the federal government.
Soon after, the four major US sports leagues, as well as the NCAA, sued New Jersey for violating PASPA. The District Court ruled in their favor, and New Jersey appealed the verdict. New Jersey’s argument was that PASPA was unconstitutional as it hindered a state’s ability to make its own legal decisions about sports betting.
After years of legal battles, the case would make it to the Supreme Court. This led to the groundbreaking decision in May 2018 when the Supreme Court ruled in favor of New Jersey. This decision repealed PASPA and opened the door for states to decide on the legality of sports betting. Soon after, New Jersey began accepting sports bets, joining Nevada as the only other state.
Growing number of states legalizing sports betting
The 2018 Supreme Court decision paved the way for states to decide their own laws on sports betting. As of early 2021, 25 states and Washington DC have legalized sports betting. There are also several states that are currently working on legislation to legalize sports betting.
Illinois is one of the states that has taken advantage of the Supreme Court decision. Illinois legalized sports betting on June 28, 2019. The first legal sports bet in Illinois was accepted on March 9, 2020. Illinois also legalized online wagering on June 18, 2020.
The Supreme Court decision is considered a major win for sports bettors around the country. It is also a win for states, due to the economic benefits. States that have legalized sports betting have reported major revenues earned by the taxes collected. While the potential is high, there is still much more work to do in order for sports betting to become legal nationwide.