When Did State Sanction Betting Begin?

State-level legalization and regulation of sports betting began in the early 1990s, but it wasn’t until the 21st century that sports betting truly came of age.

Since then, scores of states have legalized sports betting, and the industry has grown from a small operation in New Jersey to a $150 billion-a-year business. In 2019, the U.S. legal gambling industry will contribute $94.4 billion to the American economy, representing a 23% increase from 2018.

Early Years

The first recorded case of bookmakers setting odds on the outcome of sporting events happened back in 1841, when a Mr. Beasley opened a gambling house in London. England had previously banned bookmakers, but now that they were operating legally, odds could be set and wagers could be placed.

A hundred years later, sports betting would make its way to the U.S., where it would become a widely illegal activity. However, as with most things involving the American frontier, gambling would eventually become legal.

When Did the Interstate Wire Act Go Into Effect?

In 1957, the U.S. Congress passed the Wire Act, which made it illegal for bookmakers to accept wagers from outside of the state in which they were located. Additionally, they were barred from conducting business within the state of New York.

This was aimed at stopping illegal gambling, but it had the side effect of preventing sports betting outside of the existing states that had legalized it. As a result, until the 1990s, people in legal betting states couldn’t risk placing wagers on sporting events held outside of their home state. As legal gambling was rolled out across the U.S., this proved to be a major setback for the industry.

The Early 1990s

However, as the 1990s began, a small group of states began pushing for a change in federal law. New York had become the first state to legalize sports betting in 1987, and the decision was quickly followed by Mississippi, Illinois, and Arizona. By the early 1990s, 18 states and the District of Columbia had legalized sports betting, prompting the federal government to change their stance.

The Major Leagues

The two major professional sports leagues, the MLB (Major League Baseball) and the NFL (National Football League), soon got into the act as well, with the MLB instituting a set of regulations that required member clubs to either pay or lose money based on how much they bet on baseball games. Additionally, the leagues required teams to set aside a portion of their revenue for competitive balance and to limit how much they could bet on football games.

The NCAA And The PGA

The NCAA (National Collegiate Athletic Association) was also an early adopter of legal sports betting, setting odds on numerous sports and allowing members to wager on their athletic rivals. In 2019, the NCAA legalized esports betting, making the games truly virtual sports.

The Professional Golfers’ Association was also a driving force behind the movement to legalize sports betting, setting odds on the PGA Championship and encouraging golfers to bet on their favorite hole. This led to a surge in popularity of golf betting, with numerous states licensing and regulating sportsbooks to operate within their borders.

The Birth Of Modern Sports Betting

The early years of the 21st century saw the gradual legalization of sports betting in the U.S., with many more states following New York’s lead. In terms of the sports covered by odds, the early 2000s were a transformative period. For the first time in history, people could legally wager on a variety of professional and collegiate sports events. Additionally, due to advances in technology, it wasn’t long before people could do so from the comfort of their own home.

Thanks in large part to the legalization of sports betting, the 21st century was truly the era of the individual sports fan. Before the legalization of sports betting, people who wanted to wager on their favorite sports team had to do so in secluded locations, either individually or in groups. However, with legal betting, it became possible for fans to follow their teams on the road and at home and to place wagers wherever they wanted, whenever they wanted. This is one reason why sports betting became such a popular industry segment in the early 21st century. Individual sports fans wanted to be able to follow their teams wherever they went, and with advances in technology, they were able to make these wagers from the comfort of their homes. This made sports betting accessible to the masses, contributing to its explosive growth during the early 2000s.

Where Do We Go From Here?

While the future of sports betting looks incredibly positive, there are still plenty of challenges the industry must overcome. For one, illegal sports betting is still prevalent, and until stricter enforcement efforts are made, it will remain so. Additionally, with the legalization of sports betting gradually becoming commonplace across the country, people will inevitably want to wager on sporting events that they are not familiar with, leading to the potential spread of disease. Finally, while many people enjoy following their favorite teams and players, those who root for the under-dog often find themselves at a disadvantage in terms of odds, since most sportsbooks prefer to take the money and run, as it were.

These challenges may appear to be surmountable, but with the ever-evolving world of technology, who knows what new hurdles the industry will have to overcome. However, for now, things appear to be going well for the sports betting industry and the many individuals and businesses that operate within it.