Gambling in the United States
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Gambling in the United States is legally restricted. In 2008, gambling activities generated gross revenues (the difference between the total amounts wagered minus the funds or "winnings" returned to the players) of $92.27 billion in the United States.
The American Gaming Association, an industry trade group, states that gaming in the U.S. is a $240 billion industry, employing 1.7 million people in 40 states. In 2016, gaming taxes contributed $8.85 billion in state and local tax revenues.
Critics of gambling[who?] argue it leads to increased political corruption, compulsive gambling, and higher crime rates. Others argue[who?] that gambling is a type of regressive tax on the individuals in local economies where gambling venues are located.
According to the Center for Gaming Research University Libraries, legal gambling revenues for 2017 were as follows:
- Commercial casinos: $41.2 billion
- Tribal casinos: $31.945 billion
- Card rooms: $1.9 billion
- Lotteries: $80.55 billion
- Legal bookmaking: $248 million
- Pari-mutuel wagering: $295 million
- Charitable games and bingo: $2.15 billion
Grand total: $158.54 billion
Many levels of government have authorized multiple forms of gambling in an effort to raise money for needed services without raising direct taxes. These include everything from bingo games in church basements, to multimillion-dollar poker tournaments. Sometimes states advertise revenues from certain games to be devoted to particular needs, such as education.
When New Hampshire authorized a state lottery in 1963, it represented a major shift in social policy. No state governments had previously directly run gambling operations to raise money. Other states followed suit, and now the majority of the states run some type of lottery to raise funds for state operations. Some states restrict this revenue to specific forms of expenditures, usually oriented toward education, while others allow lottery revenues to be spent on general government. This has brought about morally questionable issues, such as states' using marketing firms to increase their market share, or to develop new programs when old forms of gambling do not raise as much money.
- Card rooms, both public and private
- Commercial casinos
- Charitable games and Bingo
- Tribal casinos
- Legal bookmaking
- Parimutuel wagering
- Advance-deposit wagering
While gambling is legal under U.S. federal law, there are significant restrictions pertaining to interstate and online gambling, as each state is free to regulate or prohibit the practice within its borders.
The Professional and Amateur Sports Protection Act of 1992 effectively outlawed sports betting nationwide, excluding a few states: however, on May 14, 2018, the United States Supreme Court declared the entire law unconstitutional (Murphy v. National Collegiate Athletic Association).
If state-run lotteries are included, then 48 states allow some form of gambling (the exceptions are Hawaii, where gambling was outlawed prior to statehood, and Utah, which has a Mormon majority population and also bans gambling in the State Constitution).
However, casino-style gambling is much less widespread. Federal law provides leeway for Native American Trust Land to be used for games of chance if an agreement is put in place between the State and the Tribal Government (e.g. A 'Compact' or 'Agreement') under the Indian Gaming Regulatory Act of 1988.
As of 2020, Nevada and Louisiana are the only two states in which casino-style gambling is legal statewide, with both state and local governments imposing licensing and zoning restrictions. All other states that allow casino-style gambling restrict it to small geographic areas (e.g., Atlantic City, New Jersey or Tunica, Mississippi), or to American Indian reservations, some of which are located in or near large cities.
As domestic dependent nations, American Indian tribes have used legal protection to open casinos, which has been a contentious political issue in California and other states. In some states, casinos are restricted to "riverboats", large multi-story barges that are permanently moored in a body of water.
Online gambling has been more strictly regulated: the Federal Wire Act of 1961 outlawed interstate wagering on sports, but did not address other forms of gambling; it has been the subject of court cases. The Unlawful Internet Gambling Enforcement Act of 2006 (UIGEA) did not specifically prohibit online gambling; instead, it outlawed financial transactions involving online gambling service providers - some offshore gambling providers reacted by shutting down their services for US customers.
Other operators, however, have continued to circumvent UIGEA and have continued to service US customers. For this reason, UIGEA has received criticism from notable figures within the gambling industry.
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On July 1, 2000, a new law took effect in the state of South Carolina, whereby the ownership, possession, or operation of a video poker machine, for either commercial or personal use, became illegal. Violators are subject to prosecution and substantial fines. Through at least 2007, the only type of legalized gambling in that state is the South Carolina Education Lottery.
Commercial casinos are founded and run by private companies on non-Native American land. There are 23 states (and two U.S. territories) that allow commercial casinos in some form: Arkansas, Colorado, Delaware, Illinois, Indiana, Iowa, Louisiana, Maine, Maryland, Massachusetts, Michigan, Mississippi, Missouri, Montana, Nevada, New Jersey, New York, Ohio, Pennsylvania, Puerto Rico, Rhode Island, South Dakota, U.S. Virgin Islands, Washington, and West Virginia.
The approximately 450 commercial casinos in total produced a gross gambling revenue of $34.11 billion in 2006.
Native American gaming
The history of native American commercial gambling began in 1979, when the Seminoles began running bingo games. Prior to this, the native Americans had no previous experience with large-scale commercial gambling. Native Americans were familiar with the concept of small-scale gambling, such as placing bets on sporting contests. For example, the Iroquois, Ojibways, and Menominees would place bets on games of snow snake. Within six years after commercial gambling among native Americans developed, seventy-five to eighty of the three hundred federally recognized tribes became involved. By 2006, about three hundred native American groups hosted some sort of gaming.
Some native American tribes operate casinos on tribal land to provide employment and revenue for their government and their tribe members. Tribal gaming is regulated on the tribal, state, and federal level. Native American tribes are required to use gambling revenue to provide for governmental operations, economic development, and the welfare of their members. Federal regulation of native American gaming was established under the Indian Gaming Regulatory Act of 1988. Under the provisions of that law, games are divided into three distinct categories:
- Class I games are "traditional" games that involve little or no wagering.
- Class II games include bingo, pull-tabs, and certain non-banked card games (poker, cribbage, contract bridge, whist, etc.).
- Class III games include all casino games (craps, roulette, blackjack, baccarat, slot machines, and other games where the player bets against the house) and games that do not properly fall into classes I or II.
Of the 562 federally recognized tribes in 1988, 201 participated in class two or class III gaming by 2001. Tribal gambling had revenues of $14.5 billion in 2002 from 354 casinos. Approximately forty percent of the 562 federally recognized tribes operate gaming establishments.
Like other Americans, many indigenous Americans have dissension over the issue of casino gambling. Some tribes are too isolated geographically to make a casino successful, while some do not want non-native Americans on their land. Though casino gambling is controversial, it has proven economically successful for most tribes, and the impact of American Indian gambling has proven to be far-reaching.
Gaming creates many jobs, not only for native Americans, but also for non-native Americans, and in this way can positively affect relations with the non-native American community. On some reservations, the number of non-native American workers is larger than the number of Native American workers because of the scale of the casino resorts. Also, some tribes contribute a share of casino revenues to the state in which they are located, or to charitable and non-profit causes. For example, the San Manuel Band of Mission Indians of California gave 4 million dollars to the UCLA Law School to establish a center for American Indian Studies. The same tribe also gave $1 million to the state for disaster relief when the area was ravaged by wildfires in 2003.
Although casinos have proven successful for both the tribes and the surrounding regions, state residents may oppose construction of native American casinos, especially if they have competing projects. For example, in November 2003, the state of Maine voted against a $650 million casino project proposed by the Penobscots and Passamaquoddies. The project's objective was to create jobs for the tribes' young people. The same day the state voted against the Indian casino project, Maine voters approved a plan to add slot machines to the state's harness racing tracks.
The National Indian Gaming Commission oversees Native American gaming for the federal government. The National Indian Gaming Commission (NIGC) was established under the Indian Gaming Regulatory Act in 1988. Under the NIGC, Class I gaming is under the sole jurisdiction of the tribe. Class II gaming is governed by the tribe, but it is also subject to NIGC regulation. Class III gaming is under the jurisdiction of the states. For instance, in order for a tribe to build and operate a casino, the tribe must work and negotiate with the state in which it is located. These Tribal-State compacts determine how much revenue the states will obtain from the Indian casinos.
The Indian Gaming Regulatory Act requires that gaming revenues be used only for governmental or charitable purposes. The tribal governments determine specifically how gaming revenues are spent. Revenues have been used to build houses, schools, and roads; to fund health care and education; and to support community and economic development initiatives. Indian gaming is the first and essentially the only economic development tool available on Indian reservations. The National Gaming Impact Study Commission has stated that "no...economic development other than gaming has been found". Tribal governments, though, use gaming revenues to develop other economic enterprises such as museums, malls, and cultural centers.
There are currently 30 states that have native American gaming: Alabama, Alaska, Arizona, California, Colorado, Connecticut, Florida, Idaho, Iowa, Kansas, Louisiana, Massachusetts, Michigan, Minnesota, Mississippi, Missouri, Montana, Nebraska, Nevada, New Mexico, New York, North Carolina, North Dakota, Oklahoma, Oregon, South Dakota, Texas, Washington, Wisconsin, and Wyoming.
The classic lottery is a drawing in which each contestant buys a combination of numbers. Each combination of numbers, or "play", is usually priced at $1. Plays are usually non-exclusive, meaning that two or more ticket holders may buy the same combination. The lottery organization then draws the winning combination of 5-8 numbers, usually from 1 to 50, using a randomized, automatic ball tumbler machine.
To win, contestants match their combinations of numbers with the drawn combination. The combination may be in any order, except in some "mega ball" lotteries, where the "mega" number for the combination must match the ball designated as the "mega ball" in the winning combination. If there are multiple winners, they split the winnings, also known as the "Jackpot". Winnings are currently subject to federal income taxes as ordinary income. Winnings can be awarded as a yearly annuity or as a lump sum, depending on lottery rules.
Most states have state-sponsored and multi-state lotteries. There are only five states that do not sell lottery tickets: Alabama, Alaska, Hawaii, Nevada, and Utah. In some states, revenues from lotteries are designated for a specific budgetary purpose, such as education. Other states put lottery revenue into the general fund.
Multi-jurisdictional lotteries generally have larger jackpots due to the greater number of tickets sold. The Mega Millions and Powerball games are the biggest of such lotteries in terms of numbers of participating states.
Some state lotteries run games other than the lotteries. Usually, these are in the scratchcard format, although some states use pull-tab games. In either format, cards are sold that have opaque areas. In some games, all of the opaque material is removed to see if the contestant has won, and how much. In other scratchcard games, a contestant must pick which parts of a card to scratch, to match amounts or play another form of game. These games are prone to forgeries both from card dealers (who can sell fake cards) and players (who can fake winning cards).
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