After Prohibition: The Changing Legal Landscape of Sports Betting

After the federal ban’s end, many states have legalized sports betting

By Benjy Schirm, J.D. | Reviewed by Canaan Suitt, J.D. | Last updated on October 17, 2023 Featuring practical insights from contributing attorney Stephen Warren Solomon

Use these links to jump to different sections:

In a 2018 case called Murphy v. National Collegiate Athletic Association, the U.S. Supreme Court ruled that a 1992 federal law (the Professional and Amateur Sports Protection Act or PASPA) prohibiting sports betting violated the Constitution.

This means there is no longer a federal prohibition on sports betting.

However, this does not mean that sportsbooks will be opening at every gas station and street corner any time soon. Since the Supreme Court’s 2018 decision, the regulation of sports betting has been left to the U.S. states. Consequently, there is a variety of laws across America, though the majority of jurisdictions have legalized sports betting in some fashion.

  • States that have enacted legislation to legalize and regulate sports betting include Illinois, Mississippi, Nevada, New Jersey, New York, Oregon, Pennsylvania, Washington, and West Virginia.
  • States that haven’t passed sports betting laws include California and Texas.

A Changing Legal Landscape for the Sports Betting Industry

California gaming attorney Stephen Warren Solomon says that bookmakers are “in a never-never land right now. Lots of large economic speculation dollars are being moved around, but the legislatures have not acted yet, especially in California.”

Until the state’s legislature makes moves on legalizing, regulating, and controlling sports betting, it will remain in the shadows and in Vegas.

In California, there are tremendous competing interests between brick-and-mortar sports betting business operations and online sports betting. “The one area that has seemed to allow off-site betting is horse racing,” Solomon says, adding that you can bet online in 37 states. “Each track makes deals with internet providers and the state, and there is even a television station that allows betting on horses as well.”

There are federal laws that prohibit a lot and state laws that prohibit a lot, so it’s a massive web of difficult regulations to pass through in order to run a gaming business of any kind.

— Stephen Warren Solomon

Allocating Public Revenue from Sports Gambling

But whether you can bet on peak sporting events like the Super Bowl or World Series remains up to the state. “And there aren’t any gaming laws coming out of California,” Solomon says. “The integrity of all the games is in question. Who is going to regulate it, how are they going to regulate it, who is putting up the odds, how much tax is going to be required to be allowed under state law?”

And, consequently: Where are those taxes going to be allocated? Most states and local cities will use the money to fund their local governments and to further infrastructure. “Some will go to regulation, but most of it will go to filling potholes and making sure their bridges and buildings don’t fall down,” says Solomon. Gaming taxes are a huge lift to any state or local government that allows it in their jurisdiction. 

In California, American Indian tribes hold the exclusive rights to slot machines by constitutional amendment. “These 60-plus casinos in California pay for the tribal members and benefits but also boost the economy through jobs and the economic inflow involved in gaming,” Solomon says.

Find an Experienced Business Law Attorney if You’re Thinking About Opening a Sports Betting Facility

If you are itching to open your own sports betting facility with this new law or to cater to the groundswell of fantasy fans out there by taking a bet or two, Solomon warns, “There are federal laws that prohibit a lot and state laws that prohibit a lot, so it’s a massive web of difficult regulations to pass through in order to run a gaming business of any kind.”

You definitely want to speak with an experienced and reputable gaming attorney before you start your venture. For more information on the legal aspects of starting a business, see our business organizations overview and related content.

What do I do next?

Enter your location below to get connected with a qualified attorney today.
Popular attorney searches: Business Litigation Business Organizations

Related topics

Find top lawyers with confidence

The Super Lawyers patented selection process is peer influenced and research driven, selecting the top 5% of attorneys to the Super Lawyers lists each year. We know lawyers and make it easy to connect with them.

Find a lawyer near you