The History of Sports Betting in the USA

Two bookies taking bets on horse racing in 1936 with odds displayed on a blackboard

To get deep into the history of sports betting in the USA, we first need to define exactly what it is, and how it differs from other types of gambling. Even if you’re a dedicated sports fan who knows a lot about its recent history, you might be interested to learn more about how it has evolved. 

History of sports betting

To get deep into the backstory of sports betting in the USA, we need to first look at our Government’s relationship with the legalization of gambling. The country has a long and intricate history of gambling and betting on sports, and it has often taken place, regardless of anti-gambling laws. In fact, throughout history, there has been constant friction between gambling laws and people who enjoy gambling in its various forms – including online sports betting

When did sports betting start?

The first time this pastime came to light was alongside the uptake of organized crime in the mid-20th century. Congress then acted by passing gambling legislation that aimed to stop its spread. However, sports betting was soon legalized in most states, due to its popularity. Nowadays, US states can establish their own gaming legislation.  

Sports betting timeline throughout US history

To get a better idea of how gambling has grown and evolved in the US of A, let’s take a look at some of the key milestones throughout history.  

1607: Jamestown, Virginia – The first settlers arrive

Games of chance arrived with the first American settlers. During this time, there were no large-scale restrictions on any form of gambling. In fact, lottery-style gambling was used to generate capital for many community projects. 

1769: The lottery is banned

Did you know, lotteries were used to establish and improve universities and secondary schools in America? Many of the most prestigious universities, including Harvard, Yale, Princeton, Columbia, and Dartmouth, were all started through lottery revenue. In 1769, the British Crown – which ruled the country at the time – put a blanket restriction on all of these lotteries.

1775-1783: American independence

During this time, the lottery was used to help finance the American Revolution. To gain independence from England (the British Crown,) the American revolutionaries found creative ways to raise revenue to help them finance an army.

1783: Lottery becomes legal

In 1783, the American settlers gained their independence from England, and all official restrictions on the lottery and gambling were overturned. 

1860: Different types of gambling banned

The Revolutionary War led to the American economy suffering. The attitude toward gambling had changed, as it had become associated with corruption at municipal, state, and federal levels. In 1860, the Federal Government banned many forms of legal gambling, including sports betting. However, horse racing was not included in the ban.

1867: Horse racing for the elite

Horse racing in rain and mud at the 2019 Kentucky Derby

In 1867, thoroughbred horses raced at the now legendary Belmont Stakes, followed by Preakness Stakes, in 1873. In 1875, the Kentucky Derby debuted at Churchill Downs in south Louisville, Kentucky, and these three annual events became known as the Triple Crown. Betting on – and attending – horse races was reserved for the elite, and it was not viewed in the same way as conventional gambling.

1890: A boom in horse racing

Within 23 years, more than 300 horse-racing tracks had been built all over the US. This impressive number was a reflection of Americans’ favorable attitude toward betting on sport and gambling.

1910: Gambling is banned

Another favored sport to bet on was boxing. Fighters including Jack Dempsey and Gene Tunney rose to fame during this period. But as people got to hear of lottery scandals and fraud relating to gambling, the attitude to all forms of gambling shifted – and it was made illegal once again. 

1919: The Black Sox scandal

The Black Sox scandal is an important piece of American sports betting history. It happened during the 1919 World Series. Eight members of the favored Chicago White Sox were charged with intentionally losing the series to the Cincinnati Reds. They were bribed $10,000 each by a noted gambling syndicate run by Arnold Rothstein. This tainted the image of sports wagering and led people to believe that betting on professional sport could compromise the integrity of the sports themselves.

Mid-20th century: Las Vegas becomes the US’ sports betting capital

Retro photo of Las Vegas Street lights and cars taken in the 1950s

With so many different phases of legality and illegality, you might be wondering, “when did sports betting become legal again?” Well, in 1949, the state of Nevada legalized betting on sports to help improve its tourism industry. By 1951, the Federal Government had imposed a 10% tax on all sports bets. However, sportsbook casinos were losing out. In 1971, Congress proceeded to reduce the tax to 2%, which led to a rebirth of legal sports betting in Las Vegas.

If we take a look at broader trends throughout the country though, in the 1960s, organized crime continued to rule gambling and sports betting markets outside of Nevada.

1960s through 1980s: Congress establishes new laws

Led by then US Attorney General Robert F Kennedy, Congress worked resiliently to pass bills to curb illegal sports betting. But in spite of several laws that were applied, illegal bookmaking continued and escalated during the 1970s and 1980s. Atlantic City, New Jersey also made itself a firm player in the gambling industry during this time. 

The 21st century: Gambling and online sports betting

An sportsbook employee monitors sports betting odds on multiple computer screens

Thanks to the technological sea change that took place in the decades since the 1980s (not least the arrival of the internet!) the history of online sports betting goes back to when people started to demanding ways to place sports bets – as well as play casino games – online. And for sure, by the early 2000s, online sports betting had become very popular in the US market.

Similar to what happened before, in 2006, Congress tried to shut down online sports betting by targeting the flow of money. Basically, it decreed it unlawful for a person or business in the betting industry to accept funds via credit, EFT transfer, a money-transmitting business, or other methods. Crazy, right? Banks were also expected to block these transactions.

Many offshore sportsbooks were forced to abandon US-based customers and look at other payment-processing options. In 2007, the NBA referee Tim Donaghy pled guilty to two felony charges in connection with a mob scheme. He bet on games that he officiated. Basically, he called fouls, among other things to influence the game totals.

New Jersey began its eight-year-long pursuit to get rid of the law that did not allow for legal sports betting in the state. Its first attempt was unsuccessful. The US District Court for New Jersey ruled against “the plaintiff.” 

The state’s long and tireless battle was rewarded on June 11, 2018. Governor Phil Murphy signed Assembly Bill 4111, which legalized this pastime at casinos and racetracks within New Jersey. Casinos and racetracks could also seek approval for mobile and online sports betting after 30 days. And the rest, they say, is history. 

As of April 2021, there are 23 legal online sportsbook casinos licensed by the New Jersey Division of Gaming Enforcement. Many other states across the country have also gone through a legalization process, with differing restrictions on what teams can be bet on, and the legal betting age. 

Types of sports bets

Now that you’ve learned all about the history of American sports betting, you can now start thinking about placing some of your own wagers!

As we touched on at the very beginning of this article, there are many different types of bets that you can place on a game, or sporting fixture. It depends on the event, but some common examples can help you understand the most common things that people put money on when it comes to sports.

In American Football, for instance, you can place a wager on the total number of points that will be made in a game (“over/under” a set number,) or make a “moneyline bet,” where you can wager on the favorite, the underdog or evens/pick’em (that is, a win, loss or draw respectively.) 

In greyhound or horse racing, meanwhile, you can place bets on which dog or horse will win, or which place they’ll take at the end of the race. The legal online sports betting industry is constantly expanding to include a wider variety of sports, which include more obscure ones such as “virtual marble races,” which are designed with physics in mind!

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