The sports betting craze has spread through the USA like wildfire and there are now close to 30 states that have or are planning to launch a regulated sports betting market. In fact, before long, sports betting should be available in practically every state with just a few exceptions.
With all the fervor surrounding the sports betting industry and the significant tax windfalls for state governments, many are now asking if online casino gaming could be the next logical step.
Sports betting is seen as the driver for legalized online casino gaming, but while it has certainly had a positive impact on how lawmakers view gambling, it’s not the only reason iGaming is currently a hot topic.
According to research carried out during the pandemic, lockdowns and the closure of gambling facilities resulted in increased online casino spending in the United States. This is despite the fact that in many states, online casinos are either prohibited or unregulated. And an unregulated market means no taxes for state governments.
To put it simply, sports betting has whet the appetites of lawmakers for tax dollars, and the obvious demand for iGaming products means that there’s a lot of money being left on the table right now.
The current state of affairs
As it stands, there are six states that have legalized online casino gaming. These are:
- New Jersey
- West Virginia
These states all have numerous online casino options and flourishing industries with potential for further growth.
The following states have also introduced iGaming legislation but have not yet signed their bills into law:
- New Hampshire
- New York
Kentucky is the most recent addition to the list with an online poker and sports betting bill passing through the House of Representatives. This is the furthest any legislative attempt to legalize online gambling has ever made it in Kentucky and there is genuine hope that by the end of the year Kentuckians could be backing their favorite sporting teams or playing a hand or two of online poker.
New York is another state that has people very excited over its online casino legislation. Following the resounding success of its mobile sports betting launch that saw over $1.6 billion wagered in the first month of operation, the general feeling is that casino gaming is coming sooner rather than later.
There are also quite a few gray states right now where the local gambling laws make no specific mention of online poker or casino gaming. This has been interpreted as a loophole by many providers who now operate in these states. But this may change in the near future as lawmakers assess the cost of untaxed online casino gaming.
What about federal laws?
Two laws were once used to prohibit online casinos in the United States. These were the Federal Wire Act of the Unlawful Internet Gambling Enforcement Act (UIGEA). While the UIGEA didn’t outlaw online casinos, it did make it illegal to transfer funds to and from online gambling companies. This law along with the Wire Act were used to great effect in 2013, when the U.S. Department of Justice unsealed a 52-page indictment that named executives of PokerStars, Full Tilt Poker, and Absolute Poker.
A civil complaint against the companies that sought $3 billion in assets from the sites was also included in the indictment. As you’d expect, this had a negative impact on the potential for regulated casino gaming. The fallout from this was extreme with iGaming companies pulling out of the USA in droves.
However, the DoJ published a revised opinion of the Federal Wire Act that suggested that the provisions within the act referred only to sports betting. This was supposed to open the floodgates for online casinos but lawmakers weren’t too keen to push the iGaming envelope too hard.
Once the US Supreme Court ruled in 2018 that the federal ban on sports betting was unconstitutional, things changed completely. Now, there is a clear legal opinion that the act once used to prohibit online casino gaming is ineffectual.
So to put it simply, there are no federal laws that could prevent a state from launching its own regulated online gambling market.
Will it happen?
As mentioned earlier, there is a very good chance that both Kentucky and New York will join the six legal markets currently in operation. Meanwhile Illinois, Massachusetts, New Hampshire, and Louisiana are very likely to follow suit.
Legislators have been slow to legalize poker too, with just five states offering regulated poker in the United States.
This will bring the total number of states with legal online casino markets to 12 and could be just the push that other states need to get the ball rolling. It may not happen this year or even next year, but at some point in the not too distant future, online casino gaming will surely follow in sports betting’s footsteps.