The History of Sports Betting in the United States
Sports betting in the United States has undergone one of the most dramatic transformations in modern American history. Once confined to shadowy backroom bookmakers, horse tracks, and a single state’s legal casinos, it is now a regulated, multibillion-dollar industry woven into the fabric of professional and collegiate sports. In 2025 alone, Americans legally wagered a record $166.94 billion on sports, generating $16.96 billion in gross gaming revenue for state-regulated sportsbooks—an increase of 22.8% from the prior year. That revenue contributed to a broader commercial gaming industry high of $78.72 billion and $18.09 billion in total state and local gaming taxes nationwide.
What was once viewed as a vice associated with organized crime is today embraced by major leagues through sponsorships and data partnerships, while mobile apps deliver real-time odds to millions of fans. This shift did not happen overnight. It reflects centuries of cultural attitudes, legal battles, scandals, and technological change.Colonial Roots and the 19th Century: Horse Racing and Informal Wagers
Gambling in the 1600s
The story begins in the 1600s with European colonists who imported both horse racing and the habit of betting on it. The first permanent racetrack in what would become the United States opened in 1665 on Long Island, New York. By the 1700s, racing had become a popular pastime across the colonies, especially in the South and mid-Atlantic regions. Prominent figures, including George Washington, participated in jockey clubs and laid wagers. Betting was not limited to formal tracks; informal side bets on boxing matches, cockfights, and early baseball games were common in taverns and public spaces.
Horse racing emerged as the dominant organized sport for wagering in the early 19th century. Commercialization brought larger crowds and professional bookmakers. New Orleans became the nation’s first major betting hub, where gamblers could place wagers on races, prize fights, and other events. Off-track bookmaking thrived, supported by telegraph wires that transmitted results quickly across the country. However, this unregulated environment bred corruption. Fixers and “wire services” controlled information flow, and scandals periodically rocked the sport.
Betting Scandals
By the late 1800s, professional baseball joined horse racing as a betting favorite. The rise of organized leagues created new opportunities for gamblers, but it also invited manipulation. The most infamous episode came in 1919 with the Black Sox Scandal. Eight Chicago White Sox players were accused of conspiring with gamblers—allegedly financed by underworld figure Arnold Rothstein—to throw the World Series against the Cincinnati Reds. Players received payments (estimates range from $70,000 to $100,000 total) to underperform. Although acquitted in criminal court, baseball commissioner Kenesaw Mountain Landis banned all eight for life, an act that underscored the sport’s determination to protect its integrity. The scandal remains a cautionary tale, symbolizing the dangers of unchecked gambling.
Point-shaving scandals in college basketball and other sports followed in subsequent decades, reinforcing public and political skepticism toward sports betting.Mid-20th Century: Nevada’s Rise and Federal Crackdowns. The modern era of legal sports betting began in the West. In 1931, Nevada re-legalized most forms of gambling to revive its economy during the Great Depression. Sports betting was formally authorized in 1949 as a way to boost tourism in Las Vegas. Nevada’s sportsbooks became the legal epicenter, but illegal bookmaking flourished nationwide, often tied to organized crime.
Federal intervention intensified in the 1960s. The Wire Act of 1961 targeted interstate transmission of betting information via telephone or telegraph, aiming to dismantle mob-controlled operations. In 1974, Congress reduced the federal excise tax on legal sports bets from 10% to 2%, helping Nevada’s industry grow profitably. Still, most Americans bet illegally. Estimates suggested the underground market dwarfed legal handle for decades.
Sports Betting in the 20th Century
The Late 20th Century: PASPA, UIGEA, and the Underground EraBy the 1980s and early 1990s, pressure mounted from sports leagues and anti-gambling advocates. Professional leagues feared widespread betting would erode fan trust and invite match-fixing. In 1992, Congress passed the Professional and Amateur Sports Protection Act (PASPA), signed by President George H.W. Bush. The law prohibited states from authorizing new sports betting schemes, with narrow grandfather clauses for Nevada, Delaware, Montana, and Oregon (primarily parimutuel horse and dog racing). PASPA effectively nationalized a ban outside those exceptions, pushing most activity underground. espn.com +1The internet era brought new challenges. Offshore sportsbooks proliferated in the late 1990s and early 2000s, accepting bets from U.S. customers via websites. Congress responded with the Unlawful Internet Gambling Enforcement Act (UIGEA) of 2006. The law did not criminalize gambling itself but made it illegal for banks and payment processors to handle transactions for unlawful internet gambling sites. It included a carve-out for fantasy sports (deemed games of skill), which helped launch the daily fantasy boom led by DraftKings and FanDuel. UIGEA slowed but did not eliminate offshore betting.
The Turning Point: Murphy v. NCAA (2018) and the Legalization WaveNew Jersey became the catalyst for change. After voters approved a constitutional amendment in 2011 and the legislature passed enabling laws, the NCAA and major professional leagues sued to block the state under PASPA. The case reached the U.S. Supreme Court as Murphy v. National Collegiate Athletic Association. On May 14, 2018, the Court ruled 6-3 (with a 7-2 vote on the core anticommandeering issue) that PASPA violated the Tenth Amendment by commandeering state legislatures—essentially forcing states to keep anti-betting laws on the books. Justice Samuel Alito wrote that Congress could regulate gambling directly but could not dictate state policy in this manner. The decision opened the floodgates. Within weeks, New Jersey launched the first major post-PASPA sportsbooks. Delaware, Mississippi, West Virginia, and others followed rapidly. By 2026, 38 states plus Washington, D.C., and Puerto Rico offer legal sports betting in some form. Approximately 30–32 jurisdictions provide online and mobile wagering, which now accounts for the vast majority of handle. States like New York, New Jersey, Pennsylvania, Illinois, and Michigan dominate revenue. Leagues that once opposed legalization pivoted quickly. The NBA, NFL, MLB, and others struck data and sponsorship deals with operators. In-game betting, prop bets, and micro-wagers exploded, fueled by mobile technology. Fantasy sports, already popular, blurred further into traditional wagering.The Modern Industry: Boom, Revenue, and Regulation The post-2018 boom has been extraordinary. Sports betting revenue grew from negligible levels to $16.96 billion in 2025, with handle exceeding $166 billion. States collected $3.71 billion in sports betting taxes that year alone.
Biggest Sports Betting Sites
Operators like DraftKings, FanDuel (Flutter Entertainment), BetMGM, and Caesars dominate, often partnering with casinos, racetracks, and tribal gaming.Regulation varies by state. Some require in-person registration for online accounts; others allow full remote onboarding. Age limits are uniformly 21. Responsible gaming measures—deposit limits, self-exclusion, and problem-gambling hotlines—are mandated. Yet challenges persist: advertising saturation, youth exposure, and potential integrity issues. Scandals involving player betting or referee involvement have occurred, prompting enhanced monitoring partnerships between leagues and sportsbooks.Economically, the industry has created jobs, boosted tourism, and generated tax revenue for education and infrastructure. Critics, however, point to social costs, including rising gambling addiction rates, particularly among younger men. Public health experts and some lawmakers continue to advocate for stronger safeguards.Challenges, Controversies, and the Road AheadHistory shows sports betting thrives in legal, regulated environments but invites corruption when underground. The Black Sox era and point-shaving scandals of the past echo in modern concerns about match-fixing in lower-tier sports or esports. Prediction markets—distinct but overlapping—have emerged as a new frontier, raising fresh regulatory questions.
Sports Betting in 2026
As of 2026, several large states (California, Texas, Florida in limited form, and others) remain outside full legalization or mobile access, creating a patchwork map. Tribal gaming compacts, lottery involvement, and interstate compacts add complexity. Federal oversight remains light, focused on anti-money laundering and consumer protection rather than prohibition.Looking forward, the industry is poised for continued innovation: artificial intelligence for personalized odds, virtual reality integrations, and deeper league-operator collaborations. Yet growth will depend on balancing revenue with integrity and public health. The Supreme Court’s 2018 ruling affirmed states’ rights, but it also placed responsibility on them to regulate thoughtfully.
Sports Betting Conclusion
From colonial horse races to today’s smartphone-propelled wagers, sports betting has mirrored broader American themes: entrepreneurship, moral tension, federalism, and adaptation to technology. What began as informal gentlemanly wagers evolved through prohibition, scandal, and federal bans into a sophisticated, taxed, and mainstream industry. The 2018 Murphy decision marked not an end but a new chapter—one defined by choice, competition, and careful oversight. As the industry matures, its history reminds us that betting on sports has always been about more than the games; it reflects society’s evolving relationship with risk, entertainment, and regulation. Whether the next decade brings further expansion, tighter controls, or new technological disruptions, one certainty remains: Americans will continue to place bets, legally or otherwise.
