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Which US States Will Move First to Legalize and Regulate Online Betting?

By Daisy Williams
Published on June 07, 2018
Sports Betting in the United States of America

The U.S. (Professional and Amateur Sports Protection Act) has prompted discussions and debates over which US punters will soon be able to submit betting slips legally.

The federal government has moved the matter into the hands of each state’s government, but there’s still state legislation that needs to be approved.

While we wouldn’t “bet” on anything as a sure thing yet, some states are positioned at the forefront of the movement to regulate online bookmaking based on their previous and current actions toward sports betting regulation.

The lift of the sports betting ban may not necessarily encompass online betting in some states, though. For example, in Mississippi, online betting is considered a separate matter.

While in-person wagering may be given the nod, that doesn’t automatically spill over into the virtual world. It will require separate legislation.

When you place a sports bet, you typically delve deeper and consider past performance and future indications. So, we’re going to do that with the state of the states and speculate on their next move regarding this hot topic.

Subsequent to this article being written, Delaware has moved quickly and already implemented legalized sports betting. On June 5th, Governor John Carney made history by .

PASPA and Its Reversal

In 1992, the Professional Amateur Sports Protection Act was passed to outlaw sports betting in land-based sportsbooks and casinos.

Original Exemptions

Nevada was the only state that was entirely exempt from the ruling and has provided full-scale legalized sports betting throughout the past decades.

Delaware, Montana, and Oregon were also grandfathered in with limited betting authorization.

Confusion

PASPA, also called the Bradley Act, has been highly contested over the years, as it didn’t explicitly ban nationwide sports betting.

What it did was say that individual states weren’t allowed to regulate or tax the activity.

For states looking to fill their coffers, the tax implications were quite significant.

Reversal Grounds

The argument from sports betting proponent and former New Jersey Governor Chris Christie, as well as government officials in states including California, Missouri, and Rhode Island, has been that of the US Constitution.

The 10th Amendment reads as “The powers not delegated to the United States by the Constitution, nor prohibited by it to the States, are reserved to the States respectively, or to the people.” Its purpose was to define the roles of the federal and state governments.

After years in the making, the U.S. Supreme Court finally concurred with the argument that PASPA was unconstitutional.

In mid-May 2018, the federal ban on sports betting in the United States was lifted.

Does that mean that everyone can go out and place a bet now? No.

We’re still quite a ways from the legal and regulated sports betting that punters in areas like the United Kingdom enjoy. What the overturn on PASPA does, though, is put the decision into the hands of the individual states.

Each state will now have the opportunity to move forward individually. You’ll see some, like New Jersey, make quick provisions to get the ball rolling.

Government officials in other states may take a few years to formulate a plan and put it to a vote.

Online betting, though, does not automatically go hand-in-hand with physically taking in bet slips at New Jersey casinos, racetracks, or bookmaker shops. In most cases, physical and virtual will require separate decrees.

The State of the States

As soon as the May 14th ruling came down, some states were already scrambling to get something on the books.

Sports betting is big business. The estimates that it’s a $150 billion a year industry.

The AGA also notes that, in the years of PASPA, 97% of that annual expenditure resulted from illegal bets taken through unsanctioned bookmakers or online sportsbooks and other sources.

Many states see those dollar signs and know that they could greatly benefit from the increased revenue.

There are currently five states that have already made legislative changes to allow for moving forward with legalized sports betting and/or online gambling.

  • Delaware
  • Mississippi
  • New Jersey
  • Pennsylvania
  • West Virginia

The following 14 states have recently introduced legislation that’s pending approval.

  • California
  • Connecticut
  • Illinois
  • Indiana
  • Kansas
  • Kentucky
  • Louisiana
  • Maryland
  • Michigan
  • Missouri
  • New York
  • Oklahoma
  • Rhode Island
  • South Carolina

Nevada doesn’t factor into any of these equations, as it has traditionally, and still does, offer legal sports betting.

Based on feedback and publicized intent, here’s a closer look at the individual state of the states specifically regarding online sports betting. The following are the five states that have already passed legislation, putting them in the lead-off position for widespread sports betting, including online participation.

New Jersey

As New Jersey officials prompted the changing tide of sports betting in the United States, they have their ducks in a row regarding state legislation.

Whereas the position of land-based versus online betting may be murky with some state officials, New Jersey has seen the positive economic effect of online gambling.

Since 2013, five licenses were issued to New Jersey’s state-based casinos to provide online gaming. The sites are limited to New Jersey residents only and are highly regulated by the .

The new New Jersey plan not only allows for brick-and-mortar-based betting acceptance but also includes provisions for bookmakers who have a physical presence to be able to apply for an online license as well.

We’ve mentioned the tax benefits that can boost a state budget, and in New Jersey, the proposed numbers are 8% and 12.5% of gross revenue for online providers. That’s in addition to the annual fees that need to be paid for license renewal.

New Jersey is an ideal model for other states, as it’s already gone through the online betting transition with casinos.

Note that it doesn’t allow for a free-for-all. There are a limited number of licenses and strict oversight that accompanies the privilege.

The New Jersey bill is expected to go to vote in the summer, just in time for NFL-season betting. It mandates that customers be 21 or older. It also prohibits betting on collegiate sports in New Jersey.

While this is the state to watch regarding opening the sports betting doors, it will still take time to get all of the parts and pieces in place. It’s not a flip of a switch. But online bookmakers could be open for business by 2019 if all goes as planned.

Delaware

New Jersey may be at the forefront of the movement, but Delaware is the odds-on favorite to be first to launch a full-scale betting program.

If you recall, Delaware was one of the three states grandfathered in during the years of PASPA and has already been allowing parlay bets on NFL games.

The state was already positioned for widespread sports betting and had previously passed a law even before PASPA was reversed.

Delaware is positioned to expand its parlay betting to unrestrained sports wagers as early as June 2018. The focus, for the time being anyway, is on the three casinos that reside within the state limits.

However, local convenience stores, bars, and restaurants are publicly opposing the move, as they feel it will negatively impact their businesses.

They’ve been a part of the parlay business over the years and think that, when given an option, punters will choose the new betting options that will soon be open to them.

Until the first phase of unveiling the new program is complete, it appears that online betting may be put on the back burner.

Pennsylvania

Whereas Delaware is focused on the brick-and-mortar operations, Pennsylvanians may experience the opposite in their home state.

The gambling package that has passed in the Keystone State not only legalizes daily fantasy sports but provides the 12 state-housed casinos to set up their own dedicated gambling sites. When completed, sports punters will be able to bet online and through mobile devices within the state limits.

While the intent is to have a new betting program set up by the 2018 NFL season, Pennsylvania casinos have yet to build the sportsbook facilities.

That delay could prompt a shift in focus to online bookmaking as a priority.

This all sounds nice and neat with a plan B in place. But it could be the exorbitant fees that the state is planning to charge that may result in further delays.

The current licensee package includes a $10 million licensing fee and a 34% tax rate on gross gaming revenue. This pricing structure may be begrudgingly accepted by the big guys, but smaller operators may be left out in the cold.

Mississippi

The state of Mississippi is a location that has drawn a distinct line in the sand between land-based and online gambling, at least within its regulatory process.

On the one hand, sports betting was included in a more expansive bill that legalized fantasy wagering. It gave the state’s gaming commission the authority to oversee both.

But on the other hand, online gambling is still on the table. New legislation will need to be passed to allow for sportsbook websites.

So, priority one in the Magnolia State is for casinos to get their sportsbooks built and at the ready. In fact, the original plan was for a September opening.

But it looks like Mississippi-based casinos have kicked things into high gear and may be ready to unveil their betting windows early in the summer.

West Virginia

Before the May ruling by the Supreme Court, West Virginia was already poised for legal sports betting. It passed state legislation in March (the ) that would allow for sports betting at the five existing brick-and-mortar casinos.

Mobile betting was also covered in the bill. Provisions were made to use mobile apps, as long as they’re approved by the West Virginia Lottery Commission.

Compared to the 34% tax on gross receipts, West Virginia’s more conservative 10% may prompt faster action on the part of the gambling providers. West Virginia is planning to have its betting windows open by September, and that could easily include the virtual windows.

Other Possibilities

The five states we’ve already outlined have had some statewide legislation already passed regarding sports betting, but others won’t be far behind.

The Northeast states appear to be the most motivated, with leaders like New Jersey, Delaware, and Pennsylvania. Discussions have started in New York, but it’s not a hot topic like it is in some nearby vicinities.

Montana and Oregon already had limited sports betting privileges grandfathered in via PASPA but could make moves to expand to a broader selection for punters.

States like California are interested in adding sportsbooks but are working on the specifics. California has several tribal casinos as well as racetracks and card clubs interested in expanding into bookmaking.

Discussions are primarily revolving around the in-person opportunities, though, and online operations are secondary.

Conclusion

The reversal of PASPA is going to open the doors, both physical and virtual, to a legal and regulated sports betting industry.

But gambling is a highly debated topic, and for states that haven’t dipped their toes into the betting waters before, it will take some time to figure out logistics.

Even the local governments that have been preparing for the go-ahead are still finalizing their plans. But it seems evident that the focus is first on getting actual betting windows open and operational, and then the online services will follow.

One thing is for sure, though – even when online bookmakers start to surface, the state lines will keep things in check. New Jersey’s state-regulated online casinos can’t be accessed once you cross into another location.

Whatever happens in New Jersey stays in New Jersey (or Nevada, or Pennsylvania, or Delaware…)!

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Which US States Will Move First to Legalize and Regulate Online Betting?
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Which US States Will Move First to Legalize and Regulate Online Betting?
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The US Supreme Court’s decision to overturn PASPA will lead to legalized and regulated online betting in some American states. But which states will move first? Here, look at the most likely options.
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