David Morey 
Unlike many countries that have a unified approach to gambling regulation, the United States takes a decentralized approach. Each state sets its own laws concerning iGaming, which leads to a complex patchwork of regulations. Some states make money through online gambling, while others outright ban it. States like New Jersey, Pennsylvania, and Michigan have legalized most forms of iGaming, including online casinos, poker, and sports betting. Other states such as Utah and Hawaii have taken a zero-tolerance approach to all forms of gambling. Nevada, well-known for its gambling culture, has focused more narrowly on sports betting and online poker but has yet to fully legalize online casinos.
This decentralized approach can make it confusing for gamers who travel frequently between states. What is legal in one state may be illegal just across the border.
The Federal Government’s Role
While states are the primary regulators of iGaming, the federal government has provided some broad guidelines that shape the industry, including the Unlawful Internet Gambling Enforcement Act (UIGEA). This act prohibits financial institutions from processing payments related to illegal online gambling activities. UIGEA shifted the focus onto the flow of money rather than the act of gambling itself.
Another key piece of federal legislation is the Wire Act of 1961, often called the Federal Wire Act. Initially aimed at curbing organized crime, the Wire Act prohibits the use of wire communication to place bets across state lines. The Wire Act was interpreted as applying to all forms of online gambling before a 2011 Department of Justice ruling limited its application to sports betting. This opened the door for states to legalize other forms of iGaming, such as online poker and casinos.
The Professional and Amateur Sports Protection Act (PASPA), which had prohibited most states from legalizing sports betting, was overturned in 2018. This allowed individual states to legalize and regulate sports betting within their borders, leading to an expansion of both retail and online sports betting markets across the US.
Native American Casinos
It’s important to be aware that Native American casinos, sometimes called tribal casinos, operate under different laws. Under the Indian Gaming Regulatory Act (IGRA) of 1988, Native American tribes are permitted to operate casinos on tribal land. The IGRA established a regulatory framework that categorizes gambling into three classes:
- Class I: Traditional tribal gaming with low stakes
- Class II: Bingo and non-banked card games
- Class III: Full-scale casinos, including slot machines and table games
Class III gaming requires a compact between the tribe and the state government, but even in states where gambling is restricted or illegal, Native American tribes are often able to offer these games through their casinos, thanks to their sovereign status.
In many cases, tribes operate under their own set of rules that may allow for broader gaming options than those available in non-tribal establishments. Native American casinos are still subject to federal oversight through the National Indian Gaming Commission (NIGC), which ensures that gaming is conducted in compliance with the law.
When it comes to iGaming, operating an independent online casino can be tricky due to the restrictions on cross-border gambling imposed by the Federal Wire Act. Some tribes have opted to offer online gambling services only to players located on tribal lands to avoid legal complications.
Licensing and Regulatory Bodies
Each state that legalizes iGaming establishes its own licensing and regulatory bodies to oversee operations and ensure compliance with the law. Regulatory bodies are responsible for issuing licences to operators, monitoring activities, and protecting consumers. For example, the New Jersey Division of Gaming Enforcement (NJDGE) regulates all online gambling in New Jersey, and the Michigan Gaming Control Board oversees iGaming in Michigan.
These agencies also ensure that operators meet standards for fairness and transparency. All licensed iGaming operators are required to use certified random number generators (RNGs) to guarantee fair play in games like slots and poker. Platforms must also implement anti-money laundering (AML) policies and measures to protect against fraud.
Regulators are also concerned about responsible gaming. Some states require operators to offer tools that help players set limits on their spending and time spent on the platform. This is designed to mitigate the risk of problem gambling and ensure a safer environment for players.
Challenges in regulation
The fast-paced evolution of the iGaming industry presents several regulatory challenges. One issue is geolocation technology, which ensures that players are physically located within the state where online gambling is legal. While geolocation services are generally effective, some players manage to bypass these restrictions through virtual private networks (VPNs).
Another challenge is the rise of cryptocurrency gambling. While some states have embraced cryptocurrency payments, others have expressed concerns over the potential for money laundering and lack of transparency.
As cryptocurrencies grow, regulators will need to address how these digital assets fit into existing legal frameworks.
iGaming’s Future in The US
As more of the US moves toward legalizing gambling, states will need to continue refining their laws to keep up with technological advancements and evolving player demands. With billions of dollars at stake and players seeking new gaming experiences, regulators and operators will need to navigate this complex with care and foresight.
