CEO Outlook Magazine

Online Casino and Sports Betting: How Did We Get Here?

By: Eric Weiss, President, North America – Odds On Compliance

The world of online gaming and sports betting has come a long way since its early days. As technology evolved and legislation changed, the landscape of gambling shifted dramatically. Let’s look at the journey that brought us to where we are today.

Back in 1991, when slot machines still used coins and the internet was in its infancy, the Federal Wire Act of 1961 was in effect. This act made it a crime to use wired communications for interstate sports betting, aiming to combat organized crime’s involvement in the gambling industry.

In 1992, the federal government recognized the growing problem of sports betting and enacted the Professional and Amateur Sports Protection Act (PASPA). This act effectively made sports wagering illegal, prohibiting new states from authorizing sports betting laws. At this time, Nevada essentially had the lock on legal sports betting in the United States.

While the legal landscape remained restrictive, technological advancements paved the way for introducing rudimentary online casino games. The internet continued to evolve, offering new possibilities for the gambling industry.

In 2003, poker experienced a significant surge in popularity after ESPN expanded its coverage of the World Series of Poker. This increased exposure led to a growing interest in both playing poker and the convenience of online platforms.

However, on October 13, 2006, the United States Congress passed the Unlawful Internet Gambling Enforcement Act of 2006 (UIGEA). This act made it a federal offense for gambling businesses to accept payments related to unlawful internet gambling, punishable by up to five years in prison. The UIGEA raised debates about the legality of online poker, as experts discussed whether it fell under the definition of gambling or skill.

The question surrounding online poker’s legality was partially answered on April 15, 2011, when the U.S. Department of Justice (DOJ) shut down several major online poker sites. This event sent shockwaves through the online gaming community and added to the confusion surrounding the legal status of online gambling.

By mid-2011, two historic events would shape the future of online gaming and sports betting. First, New Jersey decided to challenge PASPA, considering it unconstitutional. In a referendum held on November 9, 2011, New Jersey voters overwhelmingly supported the legalization of sports betting.

Secondly, in December of the same year, the DOJ reversed its position on online gambling. They issued an opinion stating that only sports betting should be prohibited under the 1961 Wire Act, opening the doors for potential regulation of online casino gaming.

These two issues followed separate paths in terms of legislation. On February 26, 2013, the New Jersey Legislature passed bill A2578 for internet casino gaming, legalizing online gambling within the state’s borders. This move was intended to boost Atlantic City’s struggling gaming industry.

On November 21, 2013, soft play began, and four days later, on November 25, 2013, full internet gaming commenced in New Jersey. This marked the start of a new era for online casinos, with seven license holders offering 253 games across 16 skins.

Regarding sports betting, then New Jersey Governor Chris Christie signed legislation on January 17, 2012, to legalize it at the state’s racetracks and casinos, defying PASPA on the basis of unconstitutionality. However, legal battles ensued as many professional sports leagues sued the State and certain government officials to prevent the implementation of sports betting in New Jersey.

The legal disputes continued, with a U.S. District Court judge upholding the federal law barring sports gambling in most states in February 2013. The Third Circuit Court of Appeals also upheld this ruling in September 2013. The case was appealed to the U.S. Supreme Court, but the Court failed to take the case, thus upholding the ban on sports betting.

On October 17, 2014, Governor Christie signed new legislation, attempting again to legalize sports betting at the state’s casinos and racetracks.  This time, by removing laws prohibiting sports betting to circumvent PASPA, which says states cannot ”sponsor, operate, advertise, promote, license, or authorize” sports betting.

The appellate court’s ruling noted that the federal law only prohibits state-regulated sports betting and did not prevent New Jersey from repealing state laws that banned such wagering. Thus, acting state Attorney General John Hoffman issued authorities a directive not to prosecute sports betting at casinos and racetracks.

The leagues again sued the State, setting off another two-year legal battle. However, the tide began to turn in favor of New Jersey’s efforts when, on June 27, 2014, the Supreme Court decided to hear the state’s second attempt to legalize sports betting. The legal battle persisted, but finally, on May 14, 2018, the Supreme Court struck down PASPA, lifting the federal ban on sports betting.

The impact was immediate. On June 7, 2018, the New Jersey Legislature passed legislation, and six days later, on June 14, 2018, regulations were published. Monmouth Park Racetrack and Borgata Casino became the first establishments to accept legal sports bets in the state on June 14, 2018.

Today, online casino gaming and sports betting have become increasingly accessible and popular across many states; however, iGaming has not launched as quickly throughout the U.S. as sports betting. While two-thirds of the country now have legalized sports betting, only a small handful of states currently offer online casino gambling. Industry experts are still unsure where the hesitation lies, but the news of Rhode Island’s recent iGaming legislation is a positive sign. Rhode Island will be the 8th state to legalize iGaming, with an anticipated launch in 2024. Additionally, as more states adopt online gambling, there is the possibility of a domino effect, wherein neighboring states are motivated to follow suit to capture tax revenue and prevent residents from gambling across state lines.

Overall, the journey from the early days of physical slot machines and restrictive legislation to the present-day digital platforms and evolving regulatory frameworks showcases the significant changes that have transformed the industry.

Eric Weiss dedicated three decades to the New Jersey Division of Gaming Enforcement, progressing from investigator to Lab Director in 2008 and Chief of Staff in 2016. Recognized for enhancing casino gaming technology oversight, he led industry groups drafting streamlined regulations and ensured gaming system integrity. In 2013, he played a pivotal role in introducing Internet gaming to New Jersey, overseeing policy research, technology approval, and regulation. As part of Director Rebuck’s Executive Staff, Weiss supervised Engineering, Quality Assurance, Casino Services, Cyber Security, and IT Investigations. His legacy spans influential contributions to the industry’s evolution and continues in his role as President, North America of Odds On Compliance

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