History of Sports Gambling in the USA

In this country, few principles of sports betting remain unchanged, but one thing is undeniable: whenever a game is being played, people will inevitably engage in gambling activities. This fact has been evident throughout the history of professional sports in the United States. Betting, whether legal or not, has always been a prominent aspect, but it truly came into the spotlight in the 21st century with the legalization of sports gambling in 2018.

Let’s take a retrospective glance at the vibrant history of the sports betting industry in the United States over the past 101 years.

On August 3, 1921, Baseball Commissioner Kenesaw Mountain Landis issued a permanent ban on eight players from the Chicago White Sox. These players were accused of conspiring with sports gamblers to intentionally lose the 1919 World Series. It is worth noting that the previous day, a Chicago jury had acquitted seven of the players on charges of conspiracy to defraud. The events surrounding this scandal were later depicted in the 1988 film “Eight Men Out.” It is important to highlight that baseball’s strict prohibition on gambling by its players continues to be enforced to this day.

In 1931, the state of Nevada made a significant move by legalizing gambling, which included the legalization of sports betting. This decision meant that for many decades, Nevada’s casinos were the sole establishments in the United States where individuals could legally place bets on sports.

In 1951, a significant scandal emerged involving thirty-two college basketball players from seven different schools. These players admitted to accepting bribes to manipulate the outcomes of 86 games that took place across 17 states between 1947 and 1950. Notably, seven of the players involved in this scandal were from the City College of New York team, which achieved the remarkable feat of winning both the NCAA and NIT titles in the same season in 1950.

To deter the expansion of legal sports gambling beyond Nevada, the federal government implemented a 10 percent tax on the revenue generated from legal sports gambling in the state. This tax imposition resulted in a significant decrease in the growth and profitability of Nevada’s betting industry.

On September 13, 1961, President John F. Kennedy took action to combat bookmaking activities conducted by organized crime syndicates. He signed the Federal Wire Act into law, which specifically prohibited the use of wire communications for interstate sports gambling. This legislation continues to be in effect today and is considered the primary reason why the regulation of sports gambling falls under the jurisdiction of individual states rather than the federal government. For instance, individuals in Pennsylvania are permitted to place bets on sports using companies authorized by the state, but they are not allowed to engage in online betting through sportsbooks regulated in states such as New Jersey or any other state.

In 1974, the federal government made a significant adjustment by reducing the tax rate on sports betting in Nevada from 10 percent to 2 percent. This change had a notable impact as casino operators began contemplating the possibility of introducing new venues where Americans could legally engage in sports betting.

In 1975, the Union Plaza in Las Vegas made history by opening the first sportsbook within a casino. This marked a significant milestone in the development of sportsbooks in the city. The following year, renowned bookmaker Frank “Lefty” Rosenthal established a sportsbook at the Stardust, which would serve as a prototype for future sportsbooks. Rosenthal’s sportsbook boasted six large television screens and had a seating capacity for 300 individuals. Notably, Rosenthal’s character would later be portrayed by Robert De Niro in the 1995 film “Casino.”

In 1976, Jimmy “The Greek” Snyder, a well-known oddsmaker, became a part of CBS’s “NFL Today” pregame show. Despite the NFL’s prohibition on discussing point spreads, Snyder provided predictions on the outcomes of the day’s games. However, due to the league’s restrictions, he could only offer his thoughts on the final scores of the games. Snyder continued to contribute to the show until 1988 when he was dismissed following the emergence of racist remarks he made during a television interview.

In 1983, the federal government made another significant adjustment by further reducing the tax on legal sports bets in Nevada to 0.25 percent, a rate that remains in effect to this day. This tax reduction, coupled with the advancements in satellite television technology, played a pivotal role in the proliferation of sportsbooks throughout the state. These advancements enabled sportsbooks to showcase sporting events from various locations across the country and around the globe, further fueling their growth and popularity.

On August 24, 1989, Pete Rose, the all-time hits leader in Major League Baseball (MLB), received a permanent ban from the sport. This action was taken following an investigation that revealed Rose had placed bets on baseball games, including those involving the Cincinnati Reds, the team he was managing, during the period from 1985 to 1987. By engaging in such betting activities, Rose violated an MLB rule that strictly prohibits players and managers from wagering on baseball games. It is important to note that this rule continues to be enforced in the present day.

On October 28, 1992, President George H.W. Bush enacted the Professional and Amateur Sports Protection Act (PASPA). This legislation prohibited sports gambling in states that did not already have existing laws permitting it. As a result, Nevada emerged as the sole state where sports gambling remained legal.

On October 13, 2006, President George W. Bush approved the Unlawful Internet Gambling Enforcement Act. This legislation prohibited companies from knowingly accepting payments related to online bets or wagers that violated federal or state laws. The law was primarily enacted in response to the rapid growth of online poker and casino games. However, it included an exception for fantasy sports, recognizing them as skill-based games rather than games of chance. This exception paved the way for the emergence and subsequent surge in popularity of the daily fantasy industry.

On August 15, 2007, Tim Donaghy, a former NBA referee, admitted guilt to two felonies related to gambling. This followed an investigation conducted by the FBI, which revealed that Donaghy had placed bets on NBA games, including those he officiated, and shared insider information with other gamblers. The information he provided included details about referee assignments, relationships between referees and players, and player health. As a consequence, Donaghy was sentenced to serve a 15-month prison term.

In March 2009, the state of New Jersey initiated its first federal lawsuit to overturn the Professional and Amateur Sports Protection Act (PASPA). The state argued that PASPA infringed upon the 10th Amendment’s protection against federal anti-commandeering laws. Despite facing opposition from the four major U.S. sports leagues and the NCAA, New Jersey’s legal efforts to legalize sports gambling progressed to the Supreme Court. The case, known as Murphy v. National Collegiate Athletic Association, was granted a hearing by the Supreme Court in June 2017.

On January 30, 2018, the American Gaming Association projected that Americans would place bets totaling around $4.76 billion on Super Bowl LII, which featured a matchup between the New England Patriots and the Philadelphia Eagles. Shockingly, an estimated $4.6 billion of that total amount, accounting for approximately 97 percent, was expected to be wagered illegally.

On May 14, 2018, the Supreme Court made a landmark decision by invalidating the Professional and Amateur Sports Protection Act (PASPA). The court ruled that PASPA was not in line with the Constitution and declared that states had the autonomy to enact their laws regarding sports gambling in the absence of a federally regulated system. This decision opened the door for individual states to legalize and regulate sports gambling according to their preferences and regulations.

On June 5, 2018, Delaware made history by becoming the first state to accept single-game sports wagers following the repeal of PASPA. This marked a significant turning point in the landscape of sports gambling. By the end of 2018, several other states including New Jersey, Rhode Island, Mississippi, West Virginia, New Mexico, Arkansas, and Pennsylvania either began accepting sports bets or passed legislation to allow it. As of today, a total of 30 states and the District of Columbia have legalized sports gambling, with five more states expected to join them shortly.

On August 6, 2018, DraftKings made history by becoming the first online sportsbook to operate outside of Nevada. It began accepting bets over the Internet in New Jersey, marking a significant milestone in the expansion of online sports gambling. Following this breakthrough, numerous other sports gambling operators swiftly followed suit, establishing their online presence in New Jersey and other states.

In April 2021, the NFL, after years of opposing legalized sports gambling, made a significant shift by announcing its first marketing agreements with three sports gambling providers. This marked a notable change in the league’s stance on sports gambling. The NFL anticipated generating approximately $270 million in revenue during the initial year of these agreements. It is worth mentioning that the other three major U.S. sports leagues have also entered into similar deals with legal bookmakers.

On May 26, 2021, a significant milestone was achieved in the world of sports gambling as the first sportsbook inside a U.S. stadium opened its doors at Capital One Arena in Washington. This marked a new era in the integration of sports betting within the live sports experience, providing fans with the opportunity to place bets conveniently and enjoy the excitement of the game all in one location.

On March 7, 2022, the NFL decided to suspend Atlanta Falcons wide receiver Calvin Ridley indefinitely. The suspension was a result of Ridley’s involvement in betting on NFL games while he was on leave from the team to prioritize his mental health. The NFL investigation revealed that Ridley had placed parlay bets through a sportsbook mobile app while he was in Florida, with some of the parlay legs involving the Falcons winning. It is important to note that despite the increasing legalization of sports betting, NFL players and personnel are strictly prohibited from engaging in any form of gambling on sporting events.

On April 20, 2022, Charlie Blackmon, an outfielder for the Colorado Rockies, made history by becoming the first Major League Baseball (MLB) player to sign a partnership agreement with a legal sports gambling operator. This milestone was made possible due to the league’s newly approved Collective Bargaining Agreement (CBA), which now permits such partnerships for the first time. It is worth noting that despite this development, Pete Rose, a former MLB player, remains banned from baseball due to his involvement in gambling activities.

On July 8, 2022, a poll conducted by The Washington Post in collaboration with the University of Maryland revealed that 66 percent of Americans support the legalization of sports gambling. This marks a significant increase from 55 percent in 2017 and 41 percent in 1993. The findings indicate a growing acceptance and approval of legal sports gambling among the American population.