The American sports betting industry operates under a fragmented system of state control, a landscape Supreme Court Justices established with the 2018 repeal of the Professional and Amateur Sports Protection Act (PASPA). This ruling gave states the authority to create their own frameworks. Consequently, 39 states plus D.C. and Puerto Rico now offer some form of legal wagering.

The Foundation: State Sovereignty Post-PASPA

Prior to 2018, PASPA effectively limited sports betting to Nevada. The Supreme Court’s ruling in Murphy v. NCAA (2018) struck down this federal prohibition on the grounds that it violated the Tenth Amendment’s anti-commandeering doctrine, empowering each state to authorize and regulate the industry independently.

The Rise of the State Model

The repeal initiated a rapid, state-by-state legislative race, resulting in highly diverse regulatory models.

30 states plus D.C. offer full statewide online and mobile betting, accounting for over $14 billion in monthly wagers by mid-2025.

States vary wildly in taxing operators’ Gross Gaming Revenue (GGR). New York and Rhode Island impose the highest statutory rates at $51\%$, which is significantly higher than Nevada and Iowa, which levy the lowest rates at $6.75\%$. High-tax states like New York prioritize revenue, while low-tax states like Nevada and New Jersey favor market competition and channeling bettors away from illegal offshore sites.

Prohibited Markets (11 States): Major holdouts like California and Texas remain without legal options, often due to complex political dynamics involving powerful tribal interests or social conservatism.

Federal Guardrails and the Threat of Outdated Laws

While states manage daily operations, federal laws provide essential, albeit often contested, guardrails against interstate crime and financial abuses.

The Wire Act and Interstate Betting

The Wire Act of 1961 prohibits the interstate transmission of bets or wagers via wire communication (e.g., the internet) on a “sporting event or contest.”

After years of legal reversals and appeals (notably the New Hampshire Lottery Commission v. Rosen case), court rulings have solidified the narrow interpretation: the Wire Act applies only to sports betting, not to other forms of online gambling like state lotteries or online casinos.

This ruling is why US mobile betting apps rely on geolocation (geofencing) technology (provided by companies like GeoComply) to ensure every bettor is physically within the state’s borders. The Act remains the single biggest legal obstacle to a national, cross-state betting market.