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Gaming Law in the USA

by Syeda Fauzia
September 2, 2022
in Layman Litigation
Reading Time: 7 mins read
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The regulations and precedents set in the United States of America, repeatedly so defines gaming in various distinct definitions. In addition to this, there are for the same, certain legal repercussions, supervisory obligations, and penalties for non-compliance. On one end of the spectrum are traditional gambling games such as lotteries, table games and sports betting. Gambling games vary widely but, with few exceptions,[1] “share three fundamental characteristic cs: consideration, prize and chance. These are among the most highly regulated forms of gaming in the United States and are detailed below:

  1. Lotteries, bingo, and other house-banked games are the quintessential gambling games. All involve payment of consideration and award prizes based in whole or in part on chance. Lotteries, roulette, most slots, and similar games typically depend entirely on chance. Other games, such as blackjack and craps, include elements of skill but still incorporate sufficient amounts of chance to warrant treatment as gambling.
  2. Poker and other peer-to-peer games, where the players compete against one another and not the casino operator or ‘house’, are a second type of gambling game. As these games are viewed as involving chance, they too are considered to be gambling.
  3. Sports betting and horse-race wagering involve – as their names imply – wagering on the outcome of live sporting and horse-racing events. Horse racing (and, in a few states, dog racing) is treated differently from other sports betting; as a result, the legal strictures involving each will vary.

On the other end of the spectrum are games whose legal status is unclear. These games (or their earlier forebears) were not traditionally considered gambling, but their meteoric rise in popularity (made possible by the internet) and the substantial revenues they generate have led regulators – and zealous plaintiffs’ attorneys – to question whether they belong under the rubric of gambling laws.”[2]

Gaming law per se, does not just apply to the gaming industry but as well as gambling industry. Gaming law is not a branch of law in the traditional sense but rather is a collection of several areas of law that include criminal law, regulatory law, constitutional law, administrative law, company law, contract law, and in some jurisdictions, competition law.[3] At common law, gambling requires consideration, chance and prize, legal terms that must be analyzed by gaming lawyers within the context of any gaming operation.[4]

Gaming law is immensely complicated. In the United States, it involves federal and state law considerations.[5] In Canada, it involves federal and provincial law considerations, in a variety of legal disciplines.[6]

In the United States of America, wagering of any kind is considered illegal almost in all places. However, the exception to this, is that the same is not illegal in states of Las Vegas, Atlantic City, and in New Jersey.  “If you do not know this and unwittingly participated in a gambling scheme that turned out to be illegal, you can still be charged with a gambling crime and may be slapped with significant penalties that may result in some serious repercussions. In these kinds of scenarios, knowing your rights and the gambling laws of your state can spell the difference between a safe trip home and a one-way ticket to prison.

State gambling laws prohibit games, wagers, or bets that have outcomes that rely at least partially upon some element of chance. However, if a competition or game rewards prizes to winners based on skill, such as in shooting competitions or car racing, then it is not considered gambling. (Some other restrictions in the law may still apply in order for these activities to be considered legal).

How you differentiate a game of chance from a game of skill depends on which of the two elements has the biggest impact on the game’s outcome. If chance is the bigger factor, then it will be referred to as a game of chance and wagering on games like these will be considered gambling.”[7]

Although certain methods of gambling are now accounted as legal, it is still strictly regulated. “Therefore, those private betting clubs, though already in wide proliferation, are often still deemed illegal.  For example, betting pools, small-time poker clubs, and fantasy football leagues are likely to be seen as technically illegal in a lot of jurisdictions, though enforcement is rather difficult and a bit lax. Some of these small ventures though will go against gambling laws such as the UIGEA should they decide to take their business online, normally because the operators either fail to recognize what constitutes illegal gambling or because they are simply not aware of the legal restrictions when it comes to online gambling.

The excerpts generally include state constitutional provisions specifically about gambling, “aiding and abetting” provisions of the state’s criminal laws, the basic criminal gambling laws, and some references to the legalized gaming laws in a few of the states.”[8]

Ever – Changing Gaming Laws “As circumstances change, gaming activities can change quickly in the United States. The laws that govern gaming can change quickly too. For example, Nevada legalized casinos in order to spur economic activity in the Great Depression. As other states grew more restrictive in their gaming activities, gambling grew in Nevada. Some states allow some types of activities but not others. For example, Illinois allows riverboat casinos and horse betting, but they prohibit most other types of gambling.

Similarly, Native American gaming activities didn’t occur in significant numbers before 1979. The Seminoles first began running bingo games in 1979. By 2006, more than 300 tribes offered gaming activities. In addition to federal and state laws that may regulate gaming, each tribe decides whether to offer gaming, what to offer and under what regulations and conditions they can operate.”[9]

 

[1] Overview of US Federal Gaming Law - Lexology

[2] Ibid.

[3] Gaming law - Wikipedia

[4] Rose, I. Nelson; Owens, Martin D., Jr. (2009). Internet Gaming Law (PDF) (2 ed.). Mary Ann Leibert, Inc. Publishers. pp. 11–13. ISBN 9781934854129. 

[5] For federal law, see, e.g., "18 U.S. Code § 1955 - Prohibition of illegal gambling businesses". Legal Information Institute. Cornell Law School. 

[6] Hincer, Illkim (1 November 2016). "Gaming in Canada: overview". Practical Law. Thomson Reuters.

[7] US Gambling Laws - What's Legal in Every State (letsgambleusa.com)

[8] Ibid.

[9] What is Gaming Law? | Becoming a Gaming Lawyer (legalcareerpath.com)
Tags: Gambling LawsGaming LawsLas Vegas Laws
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