Federal Sports Betting Laws

Until very recently, there were three primary federal sports betting laws that affected the way West Virginia gambling destinations could do business. The Wire Act of 1961 prohibits sports betting across state lines, nominally to curb mafia-related interstate numbers games.

The Professional and Amateur Sports Protection Act of 1992 (PASPA) was the most restrictive federal law, effectively banning sports betting in all states but Nevada (and which was finally overturned by the Supreme Court in 2018).

Finally, the Unlawful Internet Gambling Enforcement Act of 2006 (UIGEA) was put in place to disrupt the financial stream between Internet-based gambling and sports betting sites and their US-based customers.

Unfortunately, while PASPA is gone, the first and last of these laws remain in place and likely aren’t going to be repealed or overturned anytime soon.

Previous Federal Sports Betting Law

There is one previous federal sports betting law that, until very recently, was still the law of the land: the Professional and Amateur Sports Protection Act (PASPA, 1992). However, on May 14, 2018, the Supreme Court voted 6-3 that the law was unconstitutional, and it was rendered null and void. This is a huge boon for the US economy, but you’ll definitely need to understand what exactly PASPA did before you can appreciate what it means for the law to be expunged from US books.

The Professional And Amateur Sports Protection Act of 1992 (PASPA)

The Professional and Amateur Sports Protection Act of 1992 (PASPA) was a law designed – originally – as a gambit to grant New Jersey (and thus Atlantic City) a sort of eastern US sports betting monopoly, just as Las Vegas, NV, was considered the western US monopoly. However, while NV quickly met the terms for exemption from the law, NJ did not establish local sports betting regulations in time, and PASPA went into full effect, barring every state in America except Nevada from offering comprehensive sports betting to their residents.

Unfortunately, the outcome of the law (which would have been the same over the long term regardless of whether or not NJ had exempted itself appropriately) was that legal online sportsbooks (Bovada, SportsBetting, BetOnline, 5Dimes, BetDSI, etc.) popped up overseas, where US residents were free to place wagers with bookies unbound by US laws. And, since betting online is far more convenient than huffing it to Vegas every time you want to spend a few dollars on the home team, the dramatic majority of Americans – tens of millions of them! – simply took their business to these books (or kept in under the table using a local black market bookie).

In either case, it is estimated that PASPA has cost the US federal and state governments access to between $300 billion and $500 billion of taxable spending and economic impact per year since the law went into effect 25 years ago. Now, hopefully, much of that spending will come back to America.

Current Federal Sports Betting Laws

There are two current federal sports betting laws that exist, and neither one is substantially meaningful now that PASPA has been overturned. That said, the laws do impart some restrictions on how individual states will be allowed to operate their sports betting industries.

These two laws – the Wire Act and the UIGEA – are somewhat similar in effect, though they are predicated on two different technologies from two different eras.

The Interstate Wire Act of 1961

The first of the federal sports betting laws was the Interstate Wire Act of 1961, which was “suggested” to congress by US Attorney General Robert F. Kennedy, quickly passed, and signed into law by his brother John F. Kennedy. On paper, the purpose of this law was to stop the NY-area mafia families from running numbers and hosting “illegal” gambling across state lines (as, by that time, the underworld gambling operations had spread to just about every state in America). In reality, however, this was a protectionist move by the federal government to preserve the profit margins and popularity of the country’s many state lotteries.

Essentially, the Wire Act made it unlawful for anyone to accept a wager or facilitate a bet via wire communications (telephone, telegram, etc.). This extends to contemporary Internet usage, barring interstate wagering in the online world as well. However, in a recent federal ruling, the Interstate Wire Act was found to be limited to sports betting. For comprehensive, Internet-based casino gambling bans, another law – the UIGEA – was introduced.

The Unlawful Internet Gambling Enforcement Act of 2006 (UIGEA)

The Unlawful Internet Gambling Enforcement Act of 2006 (UIGEA) was passed into law as a means to forbid banking and financial institutions from knowingly processing payments related to unlicensed online gambling.

Unlike the Wire Act, the UIGEA applies to transactions related not only to sports betting, but to all forms of Internet-based gambling, including pastimes like online poker (which is skill-based and not chance-based, which should have made the game exempt), blackjack (ditto), slots, lotteries, and so on. Of course, this law only pushed domestic service providers overseas, meaning that online sportsbooks and casinos like Bovada, SportsBetting, BetOnline, and other top sites opened up shop outside of US jurisdiction and established partnerships with non-US-based banking institutions.

In other words, the UIGEA – while catastrophic to the online poker industry at first – simply ended up strengthening and globalizing the online gambling industry as a whole.

The financial impact of this law hasn’t been nearly as disastrous as that of PASPA, and now with individual sports betting coming to any US state that wants it, the law will likely be enforced (along with the Wire Act) to keep Internet-based, state-sanctioned betting and gaming neatly limited within the borders of said sanctioning states (which is something that most states would do anyways, as it makes financial sense for their newfound sports betting business models).

Federal Sports Betting Law Loophole

Above, a federal sports betting law loophole was alluded to: overseas sportsbooks and gambling sites. Businesses like Bovada, et al., are able to operate primarily because none of the federal sports betting laws actually criminalize individuals who place bets. Instead, these laws only go after bookmakers and service providers who accept bets.

The result is that it is perfectly legal for you to place a bet with an unlicensed bookie, but it is illegal for that bookie to accept your bet if he or she is physically located on US soil. Since online, offshore sportsbooks and betting shops are located overseas, however, they are immune from that restriction, as they are completely outside of US legal jurisdiction.

So, since you can freely place bets and they can freely accept them, sports betting via online sportsbooks has actually been legal since the practice’s inception. PASPA’s overturn merely legitimizes in-state bookmakers (once licensed by the state) so you can place your wagers locally and keep more American currency stateside instead of sending it to foreign countries.

There is as yet no indication that the elimination of PASPA will lead to congress (or any state legislature) banning access to these overseas books with whom they are now in direct competition, but such a contingency sometime in the future would not be a surprise.

Federal Sports Betting Laws FAQs

Will I be arrested for using an online, offshore sportsbook?

No, you will not be arrested for using an online, offshore sportsbook, even in states with legalized local sports betting. Until such time as legislation is passed making this activity explicitly against the law, you can continue using sites like Bovada, SportsBetting, and others with impunity.

Can I be charged with a federal crime for placing a sports bet?

You will never be charged with a federal crime for placing a sports bet, as there is no federal law that prohibits this activity. The Wire Act and the UIGEA (and even PASPA when it was in effect) only criminalize US-based bookmakers who accept sports bets, not those who place them.

Is it illegal to use a local unlicensed bookie?

While it is not illegal to use a local unlicensed bookie to place your sports wagers, it is highly unadvisable, as there is no guarantee that your winnings will be paid out (and there is no legal recourse if your bookie takes and keeps your money unjustly). It is, unfortunately, quite common for black market bookies to abscond with their customers’ money whenever a large enough payout threatens their bottom line.

What are the best offshore sportsbooks to avoid federal sports betting laws?

While there are thousands of Internet betting shops, the best offshore sportsbooks to avoid federal sports betting laws are the industry’s most classic, long-lasting go-tos: Bovada, SportsBetting, BetOnline, BetDSI, 5Dimes, and BookMaker. These sites all have several decades in the business, and their tens of millions of US customers are always treated with courtesy, fairness, and receive prompt payouts. Don’t trust anyone else.

What is the best way to fund my sports betting account to avoid federal attention?

Your online sports wagering activities will not garner the interest of US authorities, so there is no best way to fund your online sports betting account to avoid federal attention. Remember, betting on sports is 100% legal. However, the best overall method to use for maximum privacy, data security, and peace of mind is going to be Bitcoin or another cryptocurrency. Additionally, crypto payments and payouts process faster than any other common method, allowing you access to your deposits and withdrawals the same day you initiate these transfers.

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