A Guide to Online Gambling History

Despite the USA having a storied past in land-based gambling, the major advancements in online gambling history have only taken place in the last decade. Now as legalization continues to expand across the nation, we’ve taken this chance to provide a complete overview of the history of online gaming.

Our guide to the history of online gambling also discusses the current state of the industry, including legal online gambling. We’ve then taken a dive into the nation’s internet gambling history, including the Wild West years when the market existed in a legal gray area.

We’ve then broken down the legalization efforts for each major gambling activity, including online casinos and poker, sports and horse race betting, and lottery and DFS. To round out the guide, we’ve discussed the future of online gambling and iGaming around the world and made some comparisons between other countries and the USA.

• Overview of Internet Gambling History
• The USA’s iGaming History
• Online Casino and Poker
• Sports Betting and Horse Race Betting
• Lottery and DFS
• The Future Outlook for US Online Gambling
• Online Gambling Around the World

Internet Gambling History Overview

At the present date of online gambling history, the industry is in a markedly different place than it was only five years ago. Since 2018, more than half of US states have legalized online sports betting. Most states also permit or tolerate betting on DFS. The story for online casinos is much different.

To this date, only six states offer some form of legal online casinos and poker, with progress much slower than sports betting. Despite this, online gambling games generated roughly $5 billion in revenues in 2022, which shows a strong potential for the industry’s future. But how did we get here? Keep reading to find out.

The USA’s iGaming History

In the 1990s, the first online casinos began to pop up in the USA and abroad. As a new frontier in gambling, these sites were unregulated and untested, though many still flocked to these sites to play online slots, poker, and table games. However, this would soon be brought to a halt.

In 2006, the Unlawful Internet Gambling Enforcement Act (UIGEA) was signed into law by Congress. This was introduced after the US Court of Appeals determined that the Federal Wire Act only prohibited online sports betting and not games of chance. This meant that online casinos in states where online gambling wasn’t explicitly prohibited weren’t technically illegal.

The UIGEA explicitly prohibited gambling businesses from accepting payments involved with US players for bets or wagers over the internet. This forced many overseas businesses to stop accepting players in the USA out of fear of prosecution. However, not all companies stopped their US activity.

Online Casinos and Poker

In 2006, one of the darkest days in the history of gambling online came to be. Up until then, three online poker sites had still been accepting US players. On a day known as Black Friday, Full Tilt Poker, PokerStars, and Absolute Poker were raided by federal agents and charged with fraud, money laundering, and illegal gambling crimes.

Overnight, the online poker industry was wiped out. It wouldn’t be until 2012 until major advancements in online gambling happened when both Delaware and New Jersey passed laws to legalize online casinos and online poker. New Jersey also legalized sports betting, though this would be blocked by federal law.

By 2013, both states had launched online casinos and online poker platforms. That same year, Nevada, New Jersey, and Delaware signed the Multi-State Internet Gaming Agreement, which allowed players in all states to compete against each other in shared pools. Both cash games and tournaments began to flourish online.

New Jersey’s online casino market was and remains to be the largest, with seven casinos launched right away and iGaming history changed forever. The permitted activities included online slots, virtual table games, and eventually live dealer casino games. Within the next decade, Pennsylvania, Michigan, West Virginia, and Connecticut followed.

Sports Betting and Horse Race Betting

The next and most revolutionary advancement in online gambling history happened in 2018 when the possibility for online sports betting opened up. As we mentioned, New Jersey’s attempt to introduce sports betting was immediately thwarted by the federal Professional and Amateur Sports Protection Act (PASPA).

This essentially was a blanket ban on sports betting outside of Nevada and limited options in Delaware. New Jersey challenged the ban as being unconstitutional in a battle that headed to the Supreme Court. In 2018, the court ruled in favor of New Jersey, which allowed all states to introduce their own sports betting laws.

By then, a number of states had already passed sports betting laws in anticipation of the decision, which meant that land-based and online sportsbooks could launch right away. The first state to accept legal single-game wagers was Delaware, followed shortly by New Jersey. States such as Iowa and Pennsylvania soon followed.

As of 23, roughly 30 states have legalized some form of sports betting in the USA, though some of these states only permit retail wagering or mobile betting on location at land-based sportsbooks. Other states continue to introduce and pass sports betting laws, with most realizing the importance of online options to boost revenues.

As for horse race betting, its internet gambling history has been much less complicated. Off-track betting was first legalized in 1978 with the Interstate Horseracing Act. This was amended to allow betting over the phone or through electronic media in 2000, with specific language for legal internet gaming added in 2006.

Lottery and DFS

Daily fantasy sports (DFS) were one of the first types of online gambling games that were deemed legal in the USA, making them an important part of iGaming history. This was because there was a particular carve-out in the UIGEA that deemed DFS games to be a game of skill and not a game of chance.

This allowed states to create their own laws prohibiting or permitting these activities. However, in many cases, states have created no laws for these games at all, considering them to be non-gambling activities. Regardless, there are several DFS sites that can accept roughly 80% of US residents legally.

When it comes to online lotteries, there has been less movement. While these were initially banned under the federal Wire Act, the Department of Justice clarified its position in 2011 to state that online lottery ticket sales weren’t expressly banned. In 2012, Minnesota became the first state to sell lottery tickets online.

There are now roughly a dozen states that permit online lottery sales. These include Georgia, Illinois, Kentucky, Michigan, New Hampshire, North Dakota, North Carolina, and Pennsylvania. In some cases, these sites only permit local lottery ticket sales, while others allow sales for the Mega Millions and Powerball.

Georgia, Michigan, and Pennsylvania offer particularly unique online lottery games, including keno, digital scratch cards, and slot-like games. While you may find services that advertise lottery ticket sales online, we suggest you only source tickets from official state lottery sources to guarantee legitimate wins.

The Future Outlook of US Online Gambling

The story of the USA’s online gambling history only continues, with more states looking to online gambling expansion. This is likely due to budgetary issues in the wake of the COVID pandemic, with the closure of land-based casinos causing huge dents in state coffers.

In 2023, Indiana, New Hampshire, and Maryland will table iGaming bills that seek to legalize online casinos and online poker. In New York and Kentucky, the efforts are squarely focused on online poker, but this could expand to online casinos too. There are several more states also looking to legalize online sports betting this year too.

Online Gambling Around the World

While the USA’s online gambling efforts have mostly taken place in the last decade, many other countries have offered legal online gambling since the mid-90s. The first legal efforts began in 1994 in Antigua and Barbuda, which passed an act to allow licenses to be granted to online casino operators.

The same year, Microgaming launched to develop gambling software that was integral to online gambling operations. Microgaming continues to operate today and is one of the most trusted software developers in the industry. In 1996, Canada’s Mohawk Council of Kahnawake established its own gambling regulator to issue licenses around the world.

By the 2000s, there were hundreds of online casinos in operation that generated over a billion dollars annually. Realizing the potential harms of an unregulated industry, many global governments began to act. The UK Gambling Act of 2005 introduced the need for licensing and created the UK Gambling Commission.

The Malta Gaming Authority (MGA) was established in Malta as one of the first to regulate online gambling and create legislation around the industry. Both of these regulators are some of the most strict in the world and have set the standards that many other countries, including the USA, now follow.

It is estimated that roughly $60 billion in gambling revenues were generated online around the world in 2022, and it’s predicted to grow to over $150 billion by 2028. An inter-connected global industry is ultimately better for US players, as it allows greater access to high-quality games and innovative products.