While the explosive growth of sports betting in the United States post-2018, marked by the increasing number of legal sports betting states, is well-documented, the roots of betting in the country stretch back much further. This journey through time highlights the pivotal moments and milestones that shaped U.S. sports betting, ultimately paving the way for the popular Online Sportsbook platforms we see today.
19th Century: The Dawn of Sports Wagering
In America’s early days, sports betting was almost exclusively tied to horse racing. However, the landscape began to shift in the late 1800s with the rise of professional baseball. The National League, established in 1876, quickly became intertwined with wagering. From the Louisville Grays’ game-fixing scandal to the notorious manager Cap Anson’s bets on his own team, the early history of sports betting was as much about controversy as it was about the sport itself. These events underscore the long-standing, albeit sometimes troubled, relationship between sports and betting, setting the stage for future regulations and the eventual emergence of the online sportsbook.
Early 20th Century: The Shadow of the Black Sox Scandal
The 1919 Chicago White Sox scandal remains a dark chapter, not just for baseball, but for the integrity of sports wagering overall. Eight members of the White Sox were bribed by gamblers, allegedly connected to crime boss Arnold Rothstein, to intentionally lose the 1919 World Series against the Cincinnati Reds. This infamous “Black Sox” scandal led to lifetime bans for all eight players in 1921, including the legendary “Shoeless” Joe Jackson, though they avoided criminal convictions. This event profoundly impacted public perception of sports betting and highlighted the need for stricter oversight, factors that would influence the development of legal and, later, online sportsbook operations.
1940s: Legal Sports Betting Takes Its First Steps
Nevada’s Governor Fred Balzar’s 1931 Bill AB 98, which legalized gambling in the state, was a crucial precursor. Then, in 1941, notorious mobster Bugsy Siegel further cemented Nevada’s place in gambling history by establishing the first race wire service. Siegel’s service centralized odds and results for bookmakers, streamlining operations. By the end of the decade, Nevada officially legalized sports wagering. Initially, betting was confined to turf clubs, operating separately from casinos. This early legal framework in Nevada was the foundation upon which the modern sports betting industry, including the online sportsbook sector, would eventually be built.
1950s: The Excise Tax and Regulatory Response
As Las Vegas sportsbooks gained traction, the federal government’s intervention in the 1950s significantly altered the industry’s trajectory. The Revenue Act of 1951 imposed a hefty 10 percent excise tax on sports betting handle. This tax burden forced many legal operators to shut down or seek illicit means to circumvent the tax. The latter half of the decade saw a focus on regulation. Nevada established the Gaming Control Board in 1955 to oversee the burgeoning gaming industry. The Gaming Control Act of 1959 further empowered the Nevada Gaming Commission to manage gaming licensing. With illegal sports betting activity rampant elsewhere, particularly involving organized crime, more robust regulations were inevitable, shaping the future regulatory landscape for both land-based and, eventually, online sportsbook platforms.
1960s: Federal Crackdown and Casino Expansion
The U.S. government intensified its efforts against illegal sports betting in 1961 with the Interstate Wire Act, also known as the Federal Wire Act. This act, still in effect today, prohibited sports wagering across state lines, targeting the transmission of bets or wagering information using wire communication facilities. The Wire Act was intended to curb the influence of organized crime in sports betting, and it has had a lasting impact on the industry, particularly concerning online sportsbook operations that inherently cross state lines.
Despite federal pressures, Nevada’s gaming revenue continued to soar, exceeding $200 million annually at the start of the decade. This period also marked the start of a significant casino boom in Las Vegas. The 1966 opening of Caesars Palace was a landmark event, headlining a wave of new casinos including Harvey’s, the original Aladdin, Circus Circus, Landmark, International, and the Monte Carlo.
1970s: Tax Relief and Nascent Competition
The 1970s brought much-needed relief to Las Vegas sportsbooks. After persistent lobbying from Senator Howard Cannon, Congress finally reduced the excise tax from 10 percent to 2 percent in 1974. A year later, Nevada law allowed casinos to host sportsbooks, and Jimmy Gaughan of Union Plaza Hotel and Casino became the first to seize this opportunity. This tax reduction and increased accessibility within casinos helped solidify Nevada as the epicenter of legal sports betting, even as the concept of an online sportsbook was still decades away.
Delaware briefly entered the sports betting arena in 1976 with a sports lottery, but it was short-lived, closing after just three weeks due to significant debt, highlighting the challenges of launching and sustaining sports betting operations outside of Nevada’s established framework.
1980s: Vegas Sportsbooks Thrive and New Entrants Emerge
The 1980s brought further positive developments for Nevada sportsbooks as Congress further lowered the tax rate on licensed books to a mere 0.25 percent. Combined with Nevada’s state tax and licensing fees, this favorable tax environment allowed legal operators to effectively compete with, and ultimately outperform, illegal bookmakers. This era of growth in Nevada underscored the potential profitability of legal sports betting, setting the stage for broader legalization and the eventual rise of the online sportsbook market.
Montana and Oregon also experimented with limited forms of sports betting. The Montana Lottery, created in 1986, offered sports pools and fantasy sports wagering. Oregon’s Sports Action parlay offering followed in 1989. These ventures, while limited, indicated a growing interest in expanding sports betting beyond Nevada, raising concerns in Congress and foreshadowing federal action to control its spread.
1992: PASPA Establishes a Near-Monopoly
In response to the increasing number of states exploring sports betting, Congress enacted the Professional and Amateur Sports Protection Act (PASPA) in 1992. PASPA effectively banned sports wagering nationwide, except for the four states that already had some form of sports betting in place: Nevada, Oregon, Montana, and Delaware. PASPA aimed to protect the integrity of sports and prevent the expansion of sports betting, but it also stifled the growth of a legal, regulated market and inadvertently paved the way for a massive illegal betting industry, including offshore online sportsbook operations.
PASPA included a provision allowing states with licensed casino games for the preceding decade to legalize sports betting within a year. New Jersey was expected to take advantage of this window but ultimately did not, a decision that would have significant repercussions in the decades to come.
2000s: Nevada Recovers and Re-emerges
The terrorist attacks of September 11, 2001, brought Nevada’s continuous growth to an abrupt halt. Tourism plummeted, leading to layoffs and closures. It took until 2005 for the state’s tourism and gaming industry to recover. Despite this setback, Las Vegas rebounded to become one of the world’s most popular tourist destinations. Revenue surpassed $10 billion annually in 2004, with new casino-hotel complexes like Wynn Las Vegas, Encore Las Vegas, and The Palazzo adding to the city’s allure. This recovery and continued growth demonstrated the resilience of the Nevada gaming market, even in the face of national crises, and its enduring appeal as a gambling and entertainment destination.
2011-13: New Jersey Challenges PASPA
New Jersey voters overwhelmingly approved a sports betting referendum in November 2011, leading to the Sports Wagering Act of 2012, which aimed to legalize sports betting at casinos and racetracks. However, major sports leagues (NFL, MLB, NHL, and NCAA) swiftly challenged the legislation, arguing it violated PASPA. They were successful in blocking the bill, and New Jersey’s appeal was also unsuccessful. This marked the beginning of a protracted legal battle that would ultimately reshape the sports betting landscape in the US and open the door for the widespread legalization of online sportsbook platforms.
Simultaneously, Las Vegas faced another challenge in the early 2010s with a deep recession severely impacting tourism and spending, leading to layoffs and delays in casino projects.
2014-17: New Jersey Takes on SCOTUS
Undeterred, New Jersey Governor Chris Christie pursued another strategy. In 2014, he signed legislation attempting to legalize sports betting by repealing state laws prohibiting it. The leagues, now including the NBA, again sued, arguing this was another attempt to circumvent PASPA. Initially, an injunction was granted, and the Third District Court of Appeals upheld the decision.
However, New Jersey appealed to the Supreme Court. Even before hearing the case, the Supreme Court requested the U.S. Solicitor General’s opinion, who initially recommended against a hearing. In a surprise move, SCOTUS agreed to hear New Jersey’s petition. This decision was a turning point, signaling a potential shift in the legal landscape surrounding sports betting and raising hopes for states eager to legalize and regulate online sportsbook operations. Twenty states and the American Gaming Association filed amicus briefs supporting New Jersey’s case.
2018: PASPA Overturned, Online Sportsbooks Emerge
In a landmark 6-3 decision in 2018, the Supreme Court declared PASPA unconstitutional. This ruling eliminated the federal ban on sports wagering, unleashing a wave of activity across the nation, with New Jersey poised to lead the way. The PASPA repeal was the pivotal moment that legalized sports betting expansion and paved the way for the rapid growth of the online sportsbook industry.
Governor Phil Murphy quickly signed Assembly Bill 4111, legalizing sports betting at casinos and racetracks. Within two months, DraftKings Sportsbook launched in New Jersey, becoming the first online sportsbook operator outside Nevada. New Jersey was not alone; Delaware, New Mexico, Mississippi, Pennsylvania, Rhode Island, and West Virginia also launched legal sports betting in 2018, marking the dawn of a new era for the industry.
2019: New Jersey Leads the Charge
Having laid the groundwork, New Jersey quickly became the leading sports betting market. Serving as a model for other states, New Jersey saw immediate success, consistently exceeding $300 million in monthly handle in early 2019. The NFL and college football seasons further fueled growth, with New Jersey generating nearly $2.6 billion in handle from September 2019 to January 2020, and $4.6 billion for the entire year. The success of New Jersey’s online sportsbook market demonstrated the immense potential of legal and regulated online betting.
Arkansas, Indiana, Iowa, New Hampshire, and Oregon also launched legal sports betting in 2019, further expanding the legal market across the country.
2020: COVID-19 and Continued Growth
The COVID-19 pandemic briefly disrupted the sports world in 2020, impacting sportsbooks, casinos, and tax revenues from March to June. However, even during this period, New Jersey still generated $520 million in handle. As sports gradually resumed, bettors returned in force. New Jersey set monthly handle records multiple times, culminating in a $996 million handle in December and a $6 billion year overall. Other states also saw record numbers. The pandemic highlighted the resilience of the online sportsbook market, as bettors shifted from physical locations to online platforms.
Despite the pandemic, Colorado, Illinois, Michigan, Montana, Tennessee, Washington, and DC entered the sports betting market in 2020, though initial handles were modest due to the ongoing health crisis.
2021: Record-Breaking Year
2021 marked an unprecedented year for U.S. sports betting. New Jersey again led the way, consistently breaking monthly records and achieving the first billion-dollar handles in the final four months of the year, reaching a total of $10.93 billion for the year. Every state with legal sports betting experienced record growth. Arizona, Connecticut, Nebraska, North Carolina, South Dakota, Virginia, Wisconsin, and Wyoming joined the legal sports betting landscape, further solidifying the industry’s nationwide expansion. The increasing accessibility of online sportsbook platforms was a major driver of this growth.
2022: New York Joins the Fray
Despite significant growth, none of the most populous states had legalized sports betting until 2022. This changed when New York, the fourth-most populous state, launched legal sports betting in January and quickly dominated the market. New York sportsbooks generated an astonishing $1.69 billion in handle in their first month and over $10.6 billion in the first eight months of operation. New York’s entry into the online sportsbook market demonstrated the massive untapped potential in large states and further validated the industry’s growth trajectory.
Louisiana joined New York as a new legal sports betting state in 2022, though the pace of new state legalization slowed compared to previous years.
2023: Further Expansion Across States
2023 saw continued expansion with Ohio, Massachusetts, Kentucky, and Vermont legalizing sports betting, bringing the total number of legal sports betting states to over 30. This widespread legalization underscored the increasing acceptance of sports betting as a mainstream form of entertainment and a significant source of state revenue, further fueling the growth of the online sportsbook sector.
2024: North Carolina and DC Expand Access
North Carolina launched legal sports betting in March 2024, welcoming several major online sportsbook operators. Washington, DC, expanded its online sports betting legislation, allowing residents to use online betting apps throughout the District, removing previous geographic restrictions. These developments highlight the ongoing trend of increasing accessibility and convenience in the sports betting market, with online platforms playing a central role.
2025: Looking Ahead
Predicting the next states to legalize sports betting remains challenging. Texas and California, two of the largest states, remain resistant to gambling expansion. However, Georgia is reportedly considering legalizing online gaming, and Hawaii is progressing towards legalizing online sports betting. Missouri voters narrowly approved a constitutional amendment to legalize sports betting, with launch expected in summer 2025. The future of online sportsbook availability hinges on these legislative battles and evolving public and political attitudes towards gambling.
Sports Betting Regulatory Bodies
While the Supreme Court repealed PASPA, individual states retain the authority to regulate sports betting within their borders. Key regulatory bodies in prominent sports betting states include:
New York State Gaming Commission
New Jersey Division of Gaming Enforcement
