In the United States, gambling is largely governed by state laws. So asking the question — is a specific activity legal? — can involve researching up to 50 answers, even if in many instances the laws of various states can be grouped into categories. Several federal laws also address gambling, sometimes governing activities that cross state lines, and in other cases adding penalties predicated on the violations of state laws.
For an entrepreneur or business owner who plans to offer their product online or across state lines, you must comply not only federal laws and the state where you or your servers are based, but also with the laws of all the states where your customers are located. What may be legal in many or most states will not necessarily be legal in every state.
While lotteries were used to fund colonial governments and even the construction of the Ivy League universities, beginning in the 19th century most states passed laws prohibiting lotteries and gambling. But during the Great Depression the pendulum gradually began to swing back with the legalization of horse race wagering and charity bingo. More recently, as public attitudes have shifted in favor of regulated gambling and the arguments for jobs and taxes have taken hold, there has been a broad resurgence of state lotteries and the growth of tribal casinos and commercial casinos. There are now 44 states with lotteries and all but two states have some form of legalized gambling. More than 20 states are now legalizing sports wagering.
But the laws even within a particular state often remain a patchwork of rules and exceptions, buttressed by court decisions and administrative opinions trying to interpret the laws, and swamped by technological changes that the laws and court decisions do not anticipate.
State gambling laws can hardly keep up with skill games, e sports, daily fantasy sports, social and “freemium” games. The legal framework for these games remains a confusing patchwork of state and federal laws and court decisions of uncertain application to new technology, mediums, facts or ideas.
As a result, obtaining a legal opinion that considers a particular product under the law of each state and territory can be prohibitively expensive and time consuming, and even then the opinion may have caveats and qualifications that keep the lawyers firmly on the fence.
That said, there are general principles which underlie the gambling laws of many states, which I will address in the succeeding blog posts.
