Online betting in the U.S. is a multi-billion dollar industry that is on the rise due to regularly changing legislation that allows operators to run state-licensed betting sites and apps.
Online sports betting is the most popular and widely permitted U.S. online betting market. This followed the Supreme Court’s 2018 decision to legalize the market following it being limited to Nevada.
State autonomy grants individual U.S. states the power to decide on regulatory frameworks for betting markets, leading to an often confusing and restrictive betting industry.
Current U.S. Legislative Framework for Online Casinos
All gambling activities are prohibited in the U.S. unless specifically licensed by the states they operate in. The 1961 Wire Act prohibits betting activities taking place across state lines and impacts the online betting industry.
The 2006 UIGEA (Unlawful Internet Gambling Enforcement Act) prohibits businesses from accepting payments from unlicensed online gambling.
Because businesses are prohibited from operating within state lines, offshore betting operators have been able to exploit a loophole that allows players to legally access their sites.
Sports betting and casino gambling expert Jonathan Askew takes California as a case study when describing this. According to Techopedia, this legal gray area allows bettors to enjoy the top online casino games as well as benefits like tax-free winnings and sites that accept cryptocurrencies. The same goes for most other states that haven’t yet legalized their own online casinos: many players safely enjoy overseas options every day.
The States Where Online Casinos Are Legal
While there are tens of states that allow online sports betting books to operate, only a handful currently allow online casinos. The states that have legal online casino operations are:
- Connecticut
- Delaware
- New Jersey
- Michigan
- Pennsylvania
- Rhode Island
- West Virginia
Delaware was one of the first states to legalize online casinos back in 2013. Pennsylvania, Michigan, and West Virginia all legalized online casino gambling in 2019 alongside sports betting operations. Connecticut joined them two years later in 2021 when Mohegan Sun and DraftKings were granted licenses for online casino operations in the state.
This year, Rhode Island joined these states by passing legislation that would allow Daily Fantasy Sports and online casino betting. Bally’s Casino was rolled out in March and enjoyed revenue of over $1.2 million.
Concerns that these online operations could impact land-based casinos proved to be unfounded with Rhode Island casinos posting record revenues.
The Future of Online Casinos in the U.S.
We are now halfway through 2024 and some states have already updated different betting legislation and rejected others, but who is likely to allow online casino betting in the future?
The continued success of existing operations serves as inspiration for campaigners working to bring legislation into the 21st century.
As well as revenue streams being used to improve local infrastructure, it is argued that the legalization of online casinos can help protect citizens with stricter regulations. Millions of U.S. consumers are spending millions of dollars every year on offshore sites, legislation would redirect a significant percentage of this.
Consumer trends have also begun to change, with many looking to enjoy the latest technologies and gamification of traditional betting markets available online.
There are many states that have been identified as having the potential to legalize online casinos in 2024 or 2025. New York, Kentucky, New Hampshire, and Maryland included.
New Hampshire passed legislation in 2019 that allowed online sports betting, and came close to allowing online casino gaming in 2023.
Senator Timothy Lang introduced Senate Bill 104 to regulate online casinos, with funds raised being directed to a community college fund for New Hampshire residents.
The bill made it through the New Hampshire Senate where amendments were made to remove online slots. However, the bill failed at the next stage over fears it could harm the retail casino industry in the state.
While this was a disappointment, it provides campaigners with valuable feedback about the concerns that need to be overcome for future bills to pass.
New York is a huge market for the betting industry, and decisions here could influence other states. Operators are currently battling it out for three retail casino licenses in downstate NY, but online casinos could also be on the horizon.
A controversial new congestion tax bill that is being introduced is estimated to have an economic fallout that could be as high as $1 billion. The additional revenue generated by online casino operations could make up for this shortfall and display an opportunity for the industry to make its move.
Attempts to create 20 online casino licenses us under consideration through SB815. A stumbling point for this bill could, once again, be the threat to retail operations. However, evidence from other states that there is room for both operations to run could work in its favor.
Offshore and crypto gambling alternatives to state-licensed operations provide consumers with an easy way to enjoy online casinos. This makes many arguments about legislative changes moot, with retail casinos already facing competition.
Arguments that legislation would afford states greater industry control and access to lucrative revenue streams could see more online casino operations permitted across America in the coming years.
