Online gambling has attracted a large audience since it began, but its popularity surged significantly during the pandemic. Consequently, U.S. online gambling regulations—which have historically undergone many changes—are now evolving at an accelerated pace, with more states choosing to legalize this activity. Meanwhile, proponents are calling for a more standardized regulatory framework for online gambling nationwide. With the growth of both traditional online casinos and newer formats like instant play casinos, players are now able to enjoy seamless gaming experiences directly in their browsers, adding further complexity to the legal landscape.
No matter if you are a passionate online poker enthusiast or run an online casino, it’s crucial to keep up with the latest online gambling regulations. Doing so helps you steer clear of any potential legal issues.
Federal vs State Gambling Laws
Online gambling in the US is regulated on both the federal and state levels:
Federal Gambling Laws: The Wire Act states that, even prior to the internet era, online betting and interstate gambling are considered illegal on a national level. Nevertheless, individual states can choose whether to permit or ban online gambling activities within their territories. Meanwhile, changes in intrastate gambling regulations are expected.
State gambling regulations: With the exception of Hawaii and Utah, all 48 states along with the District of Columbia permit some type of gambling. However, online gambling laws differ from state to state depending on the specific type of gambling in question. For instance, only a few states permit residents to engage in online poker at casinos, while many others either already allow or are expected to soon permit sports betting for their residents. Additionally, several states (including California and Texas) have prohibited online gambling altogether, which can lead to misdemeanor charges.
The variety and intricacy of online gambling regulations highlight the necessity of conducting thorough research, especially for gaming operators who need to ensure compliance.
Key Legal Developments in Online Gambling
Various legal advancements have significantly impacted important legislative modifications and the existing framework governing online gambling. Key changes encompass:
- The Unlawful Internet Gambling Enforcement Act, which bars betting entities from accepting payments from illegal gambling outfits and bans financial institutions from facilitating payment processes from unregulated online gambling sites.
- A major crackdown in the gaming world, widely known as “Black Friday,” which crushed the online poker boom and had a lasting impact on the industry.
- The DOJ opinion reversal on the Wire Act, which originally applied to all gambling and was later narrowed down to just sports betting. The Wire Act was later reaffirmed to apply to any form of gambling that uses wire communication across state lines.
Currently, the laws surrounding online gambling in the US are still changing. Nonetheless, it is clear that the popularity of online gambling is predicted to keep rising.
Legal Requirements for Online Gambling Operators
Managers of online gambling businesses must adhere to the particular laws and regulations applicable in their area. Typical obligations consist of:
- Age verification (typically between 18 and 21 years old, depending on the state and form of gambling)
- Identity verification
- Location verification
- Gambling license requirements
- Financial regulations (i.e., payment processing and revenue reporting)
- Responsible gambling measures to deter unhealthy gambling behaviors, like deposit limits and self-exclusion
Online gambling operators must comply with strict know your customer (KYC) and anti-money laundering (AML) regulations. This compliance not only protects players and operators from online gambling fraud but also helps maintain the reputation of these gambling entities.
Both Know Your Customer (KYC) and Anti-Money Laundering (AML) practices are essential. The surge in online gambling has correspondingly increased incidents of money laundering and other financial offenses.
Impact of Legal Changes on Online Gambling
Recent legal changes in the online gambling sector highlight its ever-evolving landscape. The US Supreme Court overturned the Professional and Amateur Sports Protection Act (PASPA), which previously prohibited sports betting outside of Nevada. This decision sparked significant growth within this particular segment of the industry.
The increase in online gambling during the pandemic has changed public opinion, creating a divide. Supporters argue that it plays a vital role in economic development, whereas critics raise concerns about its effects on mental health. Many people advocate for better cooperation among regulatory agencies to create clear standards defining the legality of online betting.
Ongoing changes in the legal landscape are being driven by various factors. This could lead to a rise in online casinos that are legally sanctioned, and as additional states implement updated sports betting regulations, it’s likely that more states will take similar actions.
In other words? It’s a thrilling time to be part of this world.
Staying Compliant in the US Online Gambling Market
Regardless of the pandemic, online gambling remains one of the largest and most exciting sectors globally. As its appeal increases, laws governing online gambling in the US are likely to evolve accordingly. This means that gambling operators must stay compliant with constantly changing federal and state regulations.
Utilizing technology is the most effective approach for accomplishing this. Automated Know Your Customer (KYC) processes keep up with regulatory updates and enhance efficiency.
At the same time, identity and age verification powered by AI can quickly and accurately validate players' identities. This process ensures both your business's security and that of your users.
Microblink's ID scanning and document verification tools are essential for gambling operators. Explore our demo today to discover the potential firsthand.