Gambling in the USA appeared almost immediately with the emergence of the state itself! The first U.S. casino was opened in the 19th century. Nevertheless, the authority’s attitude towards the issue has often changed – as well as towards other addictions. Much depends on the type of gambling and the state. Many people still mistakenly believe that gambling is completely prohibited in the United States and that it is impossible to conduct such a business here. This is a myth that has nothing to do with reality.
Obtaining licenses from American states is the only guarantee that you will be able to enter the U.S. gambling market, which has enormous potential. By the way, today, it is valued at $70+ billion. Licensed real money casino and sportsbook owners pay taxes and comply with many requirements regarding users’ protection, depending on the state. However, given the traffic and potential income, successful iGaming business development in the USA is quite possible!
The Main Aspects Of U.S. Gambling Regulation
Online and offline casinos and sportsbooks in the United States are primarily regulated at the state level. However, at the federal level, there are also 2 main laws. First, this is the Interstate Wire Act (1961). It was originally developed to combat organized crime. This mainly concerned gambling fraud via wired communications. The essence of the law is that it prohibits the use of wire or interstate communications (including the Internet) to transmit betting-related information. Until 2011, this law was used for all online gambling – betting, casino games, poker, bingo, etc.
However, in 2011, the US Department of Justice stated that the Wire Act applies to sports betting only. Later, it was confirmed by several US courts. Thus, the iGaming legalization stage has begun – it has touched sports betting and poker sites as well. Nevertheless, this has also entailed strict regulations and penalties for violations. The first states to take part in innovations were Nevada, New Jersey, Delaware, and Pennsylvania.
In 2006, the Unlawful Internet Gambling Enforcement Act was adopted. It has provoked the myth that online gambling is prohibited in the United States. But UIGEA regulates gambling payments on the Internet and doesn’t indicate online gambling as illegal. It prohibits online gambling operators from accepting payments relating to any online gambling activity that violates state or federal law. For example, these are payments from players who make online bets in a state where gambling is prohibited. However, the law establishes liability only for operators.
US Gambling: The Pitfalls
Operators intending to enter the U.S. gambling market must have as a partner a land-based casino legalized by the Division of Gaming Regulation, the state’s chief regulator. The Pennsylvania Gaming Control Board regulates online casinos, sportsbooks, and poker rooms, which were legalized by HB 271. Each of these activities has an individual license. To launch an iGaming site, the owner should also have a land-based partner. Finally, the MGCB (Michigan) issues licenses to land-based/online bookmakers and casinos. To conduct a legal business, gambling operators must take care of:
- Control of the coincidence about the locations of the bet initiation and acceptance (all manipulations within the territory of one state!).
- Reliable verification of the age and residence of each player.
- The legality of the bet in the state in which it was made.
- Usage standards to prevent unauthorized access (age, wrong location).
Important! Operators (local/international) should not allow customers from states where gambling is prohibited. However, the law contains several exceptions. For example, fantasy sports and state lotteries do not fall under it. Of course, this law negatively impacted the US gambling market. For example, the largest American gambling companies suffered significant losses overnight after its adoption. Moreover, many foreign gambling operators have banned US residents. By the way, US players prefer top Gamblorium poker games, bingo, and high RTP online slots.
How to Get a Gambling License in the USA?
The conditions for obtaining an online gambling license differ according to each state. However, most of them include 3 basic requirements:
- A registered legal entity in the state.
- A commercial agreement with a land-based casino.
- Providing information about the company and successfully testing the platform.
The U.S. licensing fee and its validity also vary. For example, in New Jersey, it will cost $100,000, and the license term is 5 years. In West Virginia, the license has the same term, but the fee is $250,000 (renewal fee is $100,000).
Thus, the US authorities don’t prohibit online gambling. However, operators need to rely on the laws of each state. Also, some experts say that soon other states will legalize iGaming services as well. Nodar Giorgadze agrees with this opinion, as this will contribute to further US industry growth. The requirements that online gambling operators must meet are indeed quite strict. For this reason, the United States is not the most popular jurisdiction to start a gambling business. Nevertheless, it is very attractive to those ready to comply with the rules and standards.
The US licensing process is quite simple. However, it includes a rigorous verification step. The licensee must come up with an application (containing a certificate of incorporation, information about owners, financial statements, descriptions of games and bonuses, tax returns, etc.) to the regulator. In Pennsylvania, iGaming sites’ owners will even have to submit fingerprints. Of course, every applicant can receive qualified advice.
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