Sports Betting in the United States: An Overview



The recent firing by the Los Angeles Dodgers of a language interpreter for Shohei Ohtani, a major league baseball star from Japan, has renewed interest in the topic of sports betting, particularly as the United States is in the midst of the annual NCAA March Madness Basketball Tournament.  Ippei Mizuhara, the language interpreter, was fired in March 2024, following reports of alleged ties to an illegal bookmaker and gambling debts in excess of one million dollars.  While Mizuhara is alleged to have placed bets on international soccer – not baseball – the IRS recently confirmed he is nevertheless under criminal investigation by the agency’s Los Angeles Field Office for illegal sports betting.  In light of the renewed interest in sports betting following the Mizuhara development, this article describes the historical and current state of sports betting and what constitutes illegal sports betting in the United States.

Early Federal and State Laws

In the late nineteenth century, many professional and amateur sports teams came into existence and were formally established, organized, and recognized.  See generally (describing formation of National League and American League in 1876 and 1901, respectively).  Soon after, betting on sporting contests became rather widespread throughout America.  See generally David G. Schwartz, “Cutting the Wire: Gambling Prohibition and the Internet,” at 29-30 (William R. Eadington ed., 2005).  By the middle of the twentieth century, the nature of sports betting in America transitioned from a generally local and casual nature to one operated and controlled by organized crime syndicates.  See id. at 100.  These operations were illegal and employed then-common means of communication, including phone lines and telegraph lines, to make and accept wagers, thwarting efforts of state authorities to control the practice.  See id. at 99.    

Given the inability of state authorities to keep up with the crime syndicates’ control of illegal sports betting, Congress, at the urging of then-Attorney General Robert F. Kennedy, passed a series of laws to combat organized crime’s control of illegal sports gambling.  See id. at 93-95.  These early federal laws included the Wire Act (18 U.S.C. § 1084), the Travel Act (18 U.S.C. § 1952), the Interstate Transportation of Wagering Paraphernalia Act (18 U.S.C. § 1953), and the Illegal Gambling and Business Act (18 U.S.C. § 1955).  The Travel Act and the Interstate Transportation of Wagering Paraphernalia Act, for example, “were both parts of a comprehensive federal legislative effort to assist local authorities in dealing with organized criminal activity, which, in many instances, had assumed interstate proportions and which in all cases was materially assisted in its operations by the availability of facilities of interstate commerce.”  Erlenbaugh v. United States, 409 U.S. 239, 245 (1972) (affirming convictions for violations of the Travel Act (18 U.S.C. § 1952)) (citations omitted).  Generally speaking, these laws were directed at criminal organizations and not individual bettors.  See, e.g., United States v. King, 834 F.2d 109, 113 (6th Cir. 1987) (“The term conduct was chosen in order to reach both high level bosses and street level employees, but not bettors.”) (internal quotation marks and citation omitted). 

Passage of the Professional and Amateur Sports Protection Act

Traditionally, each state government regulated the forms of gambling, if any, that were permitted within its borders.  See, e.g., 28 U.S.C. § 3001(a)(1) (“the States should have the primary responsibility for determining what forms of gambling may legally take place within their borders;”).  In 1992, however, Congress passed the Professional and Amateur Sports Protection Act (PASPA) which, in essence, banned almost all states from sanctioning sports gambling.  See 28 U.S.C. § 3701 et seq; see also Eric Meer, “The Professional and Amateur Sports Protection Act (PASPA): A Bad Bet for the States,” UNLV Gaming Law Journal, vol. 2, pp. 281-309 (2011) (Meer).  Various exceptions to the law grandfathered in Nevada, Oregon, Delaware, and Montana to continue those sports betting operations existing at any time between 1976 and 1990.  See 28 U.S.C. § 3704(a)(1); Meer at pp. 288-289.  An additional exception would allow New Jersey to conduct casino operations so long as such operations became authorized within one year following the effective date of the legislation.  See id. § 3704(a)(3); Meer at 289-290.

PASPA was the law of the land during the years 1992 through 2018, at which time the legislation was ruled unconstitutional by the U.S. Supreme Court.  See Murphy v. National Collegiate Athletic Ass’n, 584 U.S. 453 (2018) (declaring PASPA unconstitutional).  The events leading to the demise of PASPA commenced when, in 2011, well beyond the one-year grace period provided by PASPA, New Jersey voters approved an amendment to the State Constitution making it lawful for the legislature to authorize sports gambling (the Sports Wagering Law or the 2012 Act).  See Murphy, 584 U.S. at 461.  In response, the NCAA and various other professional and amateur sports leagues brought suit seeking to enjoin then-Governor Christie from implementing the 2012 Act.  See National Collegiate Athletic Ass’n v. Christie, 926 F.Supp.2d 551 (D. N.J. 2013) (Christie I).  In short, the district court found PASPA not unconstitutional and the 2012 Act preempted by PASPA.  The district court then permanently enjoined the 2012 Act.  A divided panel of the Third Circuit affirmed the district court and the U.S. Supreme Court denied review. 

Shortly thereafter, the New Jersey Legislature enacted a second law (the 2014 Act) that employed different language than that employed in the 2012 Act.  See Murphy, 584 U.S. at 464-65.  The same plaintiffs that brought suit and prevailed in Christie I quickly filed suit and again prevailed, both at the district court and at the Third Circuit.  See National Collegiate Athletic Ass’n v. Governor of N.J., 832 F.3d 389 (3d Cir. 2016).  In essence, the Third Circuit found, notwithstanding the use of new language, the 2014 Act produced the same end result as did the 2012 Act.  See id. at 397.  This time, however, the U.S. Supreme Court granted New Jersey’s writ of certiorari.  In finding PASPA unconstitutional, the Supreme Court focused on the anticommandeering doctrine, which concerns provisions in the Constitution that withhold from Congress the power to issue orders directly to the States.  See Murphy, 584 U.S. at 470.  As noted by the Court, “[t]he Constitution confers on Congress … only certain enumerated powers.”  Id. at 471.  “Therefore, all other legislative power is reserved for the States, as the Tenth Amendment confirms.”  Id.  “And conspicuously absent from the list of powers given to Congress is the power to issue direct orders to the governments of the States.”  Id.  “The anticommandeering doctrine simply represents the recognition of this limit on congressional authority.”  Id.  And with that, PASPA was found unconstitutional, thereby opening the floodgates for the states to determine whether to authorize and regulate sports gambling laws and, if so, to what extent. 

The Current Status of Sports Gambling in the United States.

Following the demise of PASPA, 38 states and the District of Columbia have legalized some form of sports betting; notable exceptions, where sports betting remains illegal, include California, Idaho, Utah, Texas, and South Carolina.  In jurisdictions where sports betting is legal, strict licensing requirements have been enacted to ensure game integrity and consumer protections.  Sportsbooks (i.e., bookies) that offer sports betting outside of these jurisdictions or in violation of the licensing requirements, whether in person or through the Internet, are illegal.  Federal laws, such as the Wire Act, the Travel Act, the Interstate Transportation of Wagering Paraphernalia Act, and the Illegal Gambling and Business Act also remain valid and enforceable.  Racketeer Influenced and Corrupt Organization (RICO) statutes provide law enforcement with further means to prosecute illegal sports gambling, both domestically and offshore.

Several cases, both pre- and post-PASPA, are illustrative.  In United States v. Cohen, 260 F.3d 68 (2nd Cir. 2001), for example, a defendant was convicted of violating the Wire Act.  Cohen, an American citizen, founded the World Sports Exchange (WSE), whose sole business involved bookmaking on American sports events.  WSE, based in Antigua, targeted customers throughout the United States, including in New York, where sports betting was illegal.  Under the Wire Act, Cohen was convicted under § 1084(a) for (1) transmission in interstate or foreign commerce of bets or wagers, (2) transmission of a wire communication that entitles the recipient to receive money or credit as a result of bets or wagers, and (3) transmission of information assisting in the placement of bets or wagers.  In this case, the Second Circuit affirmed a sentence of 21 months’ imprisonment for violating § 1084(a) of the Wire Act. 

In a report published in September 2023, the IRS notes that between 2021 and 2023, the agency initiated more than 100 investigations into illegal gambling activity totaling more than $178 million.  See IRS Criminal Investigation tackles illegal activity tied to sports betting | Internal Revenue Service.  Of these cases, 89 resulted in indictments, with an average prison sentence for convictions reaching 23 months in prison.  “Sports betting is all fun and games until funds are laundered and individuals fail to meet their tax obligations.”  Id.  In a more recent case, IRS and FBI agents uncovered an illegal gambling business based in the Chicago area and operated by Vincent Delgiudice, also known as “Uncle Mick.”  See id.  In an indictment handed down by a federal grand jury, Delgiudice and others were charged with conspiring to operate an illegal gambling ring and violations of Illinois laws and the Illegal Gambling and Business Act (18 U.S.C. § 1955).  As part of the conspiracy, Delgiudice accepted wagers from approximately 1,000 gamblers on the outcome of sporting events, including major league baseball, college and professional basketball, college and professional football, and other professional and amateur sporting events.  He laundered his gambling profits internationally through cashier’s checks and cash investments in businesses.  Delgiudice was sentenced in March 2022 to 18 months in federal prison and ordered to forfeit $3.6 million for money laundering and operating an illegal gambling business.  One co-conspirator, Casey Urlacher, pleaded not guilty to the charges in March 2020 and was pardoned by former President Donald Trump on January 20, 2021, during his final hours in office.  See Casey Urlacher – Wikipedia


Since the demise of PASPA, sports betting or gambling has become legal throughout much of the United States.  But, as noted above, it still remains illegal in 12 states, including California, where Mizuhara is suspected of placing bets or wagers on sporting events.  Time will tell where the investigation of Mizuhara ultimately leads, but based on the foregoing, he may have run afoul of at least California law prohibiting sports betting and one or more of the federal statutes described above, including the Wire Act if the bets employed transmissions in interstate or foreign commerce of bets or wagers.  In closing, for those desiring to place sports bets or wagers in the United States, outside of casual or isolated bets or wagers between friends on, for example, the outcome of the NFL Super Bowl or playoff games comprising the NCAA March Madness Basketball Tournament, be sure to do so in states where such is legal, using state regulated means of placing the bets or wagers, and avoid using unfamiliar or unapproved websites that may well be located in offshore locations.  Good luck!