Sports Betting For Dummies
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The laws surrounding sports gambling are a knotted web. Gambling on sports is as ubiquitous as the law is gray, and many states have laws overlapping and sometimes contradicting federal laws.

Don’t break the law. If you read anything in this article that you’re construing as an encouragement to break local, state, federal, or international civil or criminal statues, you’ve misinterpreted it.

sports betting concept art ©Rob Wilson/

Federal laws

The good news for casual bettors is that state and federal laws have a host of anti-gambling statues, but they’re aimed at people and entities booking bets rather than those placing bets. If history is any guide, the chances of you, as a bettor, getting into legal hot water for placing a bet is virtually zero.

The federal government has effectively restricted sports betting through a series of statutes with a variety of purposes and side effects:

  • The Organized Crime Control Act of 1955 was based on fears of mafia-led bookmaking businesses. The Ike-era law said any entity that took in $2,000 in gambling revenue or more and involved five or more people was illegal. You’d be hard pressed to find a bookmaker that can survive on four clients or less.
  • Bobby Kennedy’s war on organized crime put more restrictions on sports betting with The Wire Act of 1961, a broadly worded law whose aim was to starve the Sicilian beast from its sports and horse-racing revenue, which were heavily reliant on (federally regulated) interstate and international telecommunications lines. Contrary to popular belief, the original intent wasn’t to make it illegal for the average Joe Kennedy to place a sports bet. In fact, its purpose was to give state and local authorities an easy excuse for them to pursue and disrupt betting outfits. Because making the act of placing a bet would run up against free speech issues, The Wire Act and other Kennedy-era laws criminalized activities that were related to running a bookmaking business, not on placing bets. (It’s as if Congress wanted to make fishing illegal by outlawing standing next to water for more than a few minutes at a time.)
  • The coup de grace for sports gambling was The Bradley Act, also known as The Professional and Amateur Sports Protection Act (PASPA) of 1992, which was passed in the wake of some unseemly sports scandals that saw college athletes shaving points and altering outcomes of games for a few six packs of beer. The PASPA explicitly prohibited any form of sports gambling operation, but in particular set out to take on states who wanted to turn sports betting into a source of tax revenue via lottery-like contests and sweepstakes. (If you’re wondering, Nevada got an exemption. Their legislators ensured the casinos could continue to book bets to their shareholders’ delight.)
  • If you remember the online poker craze of the early 21st century, you might remember how it died at the hands of The 2006 Unlawful Internet Gambling Enforcement Act, or Anti-gaming zealots in Congress stealthily attached a clumsily worded rider to an unrelated anti-terrorism bill that passed virtually unnoticed by most legislators. This law made it illegal for U.S. banks to transact with known offshore casinos and bookmakers. Millions of Americans had been quietly enjoying a peaceful activity in the privacy of their own homes, so the federal government did what came naturally: It passed a law that made it much harder to do. As was the case with earlier laws, the 2002 law did not make it illegal to play poker or place a wager online; it just made it much more difficult. Suddenly you couldn’t simply put a deposit in your PartyPoker account with your Discover card. This restriction was enforced in a blanket way, affecting the various offshore bookmakers that had popped up in the early days of the internet. Many offshore casinos stopped doing business with American citizens as a preventative measure, and the poker boom was over.

While federal laws have made running a sports betting business illegal and impossible in every state except Nevada, none of the above laws made it, or make it, a federal crime for an individual American citizen to place a wager on the outcome of a sporting event.

The Supreme Court to the rescue

In May of 2018, the Supreme Court of the United States voted 6 to 3 to overturn the PASPA. (Offer a quiet word of thanks in honor of your favorite Supreme Court Justice who voted in favor of this decision every time you place a bet.)

The effect of the decision was to let states decide for themselves whether, and in what form, to allow sports betting. And dozens of states have jumped at the chance. In anticipation of this outcome, there were over 40 bills making their way through various state legislatures as of the day the ruling came down from the high court!

State laws regarding sports betting

That brings us to 2020.

The state you’re in (as in “Iowa” or “New Jersey,” not as in “shock” or “nonplussed”) defines the availability of sports bets to its residents and guests. We’d need a lot more pages to describe the ins and outs of every state’s attitude toward gambling. Some don’t bother with any laws at all. Others, like Washington (the state, not the district) actually has a law that forbids people from placing bets online.

The laws are manifold and variegated, but they can be summed up in the following table.

State Laws on Sports Betting
Alabama No significant legislative action in progress
Arizona DFS = Illegal
Arkansas Operational Unclear
Colorado Awaiting governor action
Connecticut Almost there!
Delaware Operational Approved
District of Columbia Lottery parlays only Not approved
Florida No significant action
Georgia No significant action
Hawaii DFS = Illegal
Idaho DFS = Illegal
Illinois Approved Approved Trial period only; no betting on Illinois collegiate teams
Indiana Approved Approved
Iowa Approved Approved
Louisiana No significant action
Maine Governor’s veto was recently overridden; sports betting is on the way!
Mississippi Operational Not approved
Montana Approved Approved Run by state lottery; DFS = Illegal
Nevada Operational Operational
New Hampshire Approved Approved
New Jersey Operational Operational
New Mexico Tribal casinos Not approved
New York Operational Under consideration
North Carolina Tribal casinos Not Approved
Oregon Operational Available via state-lottery-sponsored app No betting on college sports
Pennsylvania Operational Operational
Rhode Island Operational Approved
Tennessee Not approved Approved No college prop bets
Vermont Legislative commission created
Washington DFS = Illegal
West Virginia Operational Approved
Wyoming No significant action Charitable pari-mutuel wagering allowed

Sports betting and organized crime

Most people remember the basic contours of the Black Sox scandal, and a few know the names Art Schlichter or Tim Donaghy, both of whom used their position in their sport (Schlichter as an NFL quarterback; Donaghy as an NBA referee) to change the outcome of games on behalf of gamblers. You might also remember the Tulane point-shaving scandal from the late 20th century.

There is a natural fear that sports betting invites the nefarious influence of organized crime into the pristine territory of professional and amateur sports. After all, people like to gamble, and it is inarguable that organized crime finds its way into society where human wants and needs fall on the wrong the law and/or what society deems acceptable.

But if the Prohibition era offers any lessons, it’s that passing laws against things that people want doesn’t make people want that thing any less. Americans’ demand for alcohol did not change by passage of the Volstead Act. Nor did Americans’ taste for gambling disappear with various state and federal statutes.

The reality is that illegal bookmakers, whether small and independent or large and connected with friends of Tony Soprano, operate to make money. And while a quick buck can be made by influencing the outcome of games, in the long run, bookmakers prefer the consistent, reliable income provided by the vig.

I already mentioned the 4 to 5-percent commission charged by the bookmakers. It has a cooler name than "commission": It’s called the vig, or vigorish. Sometimes it’s known as juice, and it’s effectively a service charge collected by bookmakers.

When gray-market betting standards began to stabilize between the World Wars, bookmakers quickly came to understand that game-fixing and scandal would keep bettors at home. It’s that simple: If betting customers suspect that games are fixed, they won’t bet.

In this way, perhaps counterintuitively, sports betting, even if associated with criminal organizations, drives demand for games that are at least perceived to be fair by the betting public. There are other factors at work as well:

  • Athletes are paid well and are thus harder to influence.
  • Athletes and games are under greater scrutiny for odd behavior and outcomes.
  • Technology makes it easier to spot iffy betting patterns.
  • Betting houses limit wagering amounts on sports at risk for corruption.
Probably not every contest is on the up-and-up, but if you think the fix is always in, you’re mistaken.

About This Article

This article is from the book:

About the book author:

Kevin Blackwood is a highly successful blackjack and poker player. He has written for several gaming magazines and is the author of four gambling books.

Swain Scheps is a games enthusiast, numbers guru, sports betting expert and the author of Business Intelligence For Dummies and Sports Betting For Dummies.

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