Gambling

SIGNIFICANCE: American attitudes toward gambling have shifted back and forth throughout history; however, since the mid-twentieth century, all forms of gambling, including state-run lotteries, have spread throughout the United States.

Gambling appears to have existed as long as civilization itself. Archaeologists have uncovered objects used in gambling games that date back as far as 2300 BCE in China. Additionally, anthropologists and archaeologists have found evidence of gambling in almost all ancient cultures. Although gambling has always been a part of human civilization, it has not always been an accepted practice. During the fourteenth century, for example, England’s King Henry VIII criminalized gambling when he found that the men in his armies were spending more time playing games of chance than they were in their studies and training. The history of gambling in the United States has followed a similar course. Although gambling clearly is an integral part of American culture, public acceptance of gambling and gamblers has historically been at the whim of ever-changing social and political winds and influences.

Gambling in Early North America

The first European settlers in North America had divergent views on the appropriateness of gambling in the New World. As would come to be a common conflict regarding many social issues, English settlers brought with them English traditions and beliefs and viewed gambling primarily as harmless entertainment. The Puritans, on the other hand, viewed gambling in a much less benign manner and enacted prohibitory laws to reflect their beliefs. Thus, while gambling was primarily considered a proper gentleman’s diversion in many English colonies, it was strictly forbidden in the Puritan settlements.

Despite the tolerance of gambling among early English colonists, many colonists came to blame the practice for the ills of colonial life. In addition, monetary interests in Great Britain began to blame gambling for the perceived laziness and idleness of colonial settlers. During the early eighteenth century, Britain was still financially supporting its colonies, and its leaders were growing impatient waiting for the colonies to become self-sustaining. Although the monetary interests viewed gambling as a problem in the English settlements, they did not disregard the potential to raise revenue through gambling. By the time of the American Revolutionary War in the 1770s, all thirteen British colonies had instituted government-run lotteries to raise revenue. Lottery revenue contributed to the establishment of some of the most prestigious institutions of higher learning—Columbia, Yale, Harvard, Princeton, and Dartmouth. During the Revolution itself, the Continental Congress voted to hold a $10 million lottery to fund the war; however, the lottery was never held.

After the Revolution, extravagant casinos arose throughout the new country. As the United States expanded west, so did gambling. Gambling houses and establishments were started in the river towns of the South, and gambling moved west as the nation expanded to the Pacific Ocean. However, due to lottery scandals and public disdain for the professional gamblers who preyed on the weak, public attitudes toward gambling gradually shifted. This shift led to changes in many state gambling laws. By 1840, most US states had banned the lotteries, gaming houses, and riverboats that had come to represent gambling in the young nation.

The Wild West and Anti-Gambling Backlash

In many ways, the frontier spirit of American settlers paralleled the spirit of gaming enthusiasts. Similar to California gold prospectors, gamblers sought adventure and quick wealth. It was thus no surprise that gambling followed the mass movement to the West. During the California gold rush that began in 1849, San Francisco became the new capital of gambling in the country. Throughout California, gambling thrived among those seeking adventure and fortune in a still untamed territory.

Meanwhile, public feeling against gambling—and particularly professional gamblers—spread in the West. Leaders of the new settlements desired national respectability, which the wild nature of the frontier gambling culture did not provide. As in the East, gambling was increasingly blamed for social ills, such as crime, drug abuse, drunkenness, the disintegration of families, poverty, and sexual promiscuity. By the 1860s, professional gamblers were being lynched in San Francisco. By 1910, gambling was largely outlawed throughout the United States.

Antigambling laws sent an official message of morality and abstinence to the citizenry but did little to curb gambling. From private games of poker and craps to illegal lotteries and “numbers game” rackets and illegal casinos and gambling houses, gambling continued to flourish across the United States. Whether through paying protection money to law-enforcement officers or simply keeping illegal gambling activities sufficiently quiet, gambling remained integral to American culture.

Depression-Era Gambling and the Rise of Las Vegas

The Great Depression of the 1930s ravaged both the US economy and the morale of American citizens. As public officials became desperate to stimulate the economy, attitudes toward legalized gambling again shifted. During the 1930s, legal horse racing returned to twenty-one states. By the 1950s, bingo was legal in eleven states, and the public sentiment again approved some levels of legalized gambling.

As public officials changed their views on certain types of legalized gambling, law-enforcement agencies in the eastern United States began cracking down hard on illegal private casinos, sports betting, and numbers games controlled by organized crime groups. Crime families then began seeking more hospitable locations for their gambling operations. They initially turned to California, where they opened floating casinos in the Pacific Ocean, just beyond the three-mile limit of government jurisdiction. While organized crime groups were making money off the coast of California, a neighboring state, Nevada, was struggling with its recent decision to legalize gambling.

In 1931, partially as a result of flourishing illegal gambling and the view that antigambling laws were unenforceable, Nevada legalized most forms of gambling. However, cutbacks in consumer spending caused by the Great Depression caused Nevada’s new gaming industry to struggle. It was only after California began suppressing gambling within its borders that Nevada’s modern legal gambling empire began to grow. Intensified enforcement of gambling laws in California pushed organized crime groups to Nevada, where they financed most of the early casinos. Though these people remained criminals, they also had well-developed business skills and access to large sums of money—both of which were scarce in Depression-weary Nevada.

By the 1950s, gambling was flourishing in Nevada, particularly in Las Vegas. However, it was dominated by organized crime families. This fact was well known to anyone with even a passing knowledge of the industry. As its illegitimacy was again becoming a blight on respectable society, the authorities began once more to crack down on the criminal underbelly of the gambling world. During the 1950s, the US Senate found rampant levels of criminality within the hierarchy of the Las Vegas casinos. Such activities included money laundering, prostitution, and sheltering profits from taxes and led to a federal crackdown on gaming interests. As a result of federal and state pressures, organized crime families were forced to sell off their Nevada casino interests. Nevada’s casinos became highly regulated and closely scrutinized by both federal and state authorities. Nevertheless, organized crime remained involved in many of the casino world’s illegal satellite activities, such as prostitution.

The Return of Lotteries

At the end of the nineteenth century, no state-run lotteries existed in the United States. This fact, however, did not stop most Americans from participating in such games of chance. With millions of Americans playing various forms of illegal lotteries on a weekly basis, several problems arose. First, law-enforcement officers did not want, and did not have the ability to enforce, laws against lotteries. With so many Americans playing the numbers, few officers wanted to be involved in restricting such a popular entertainment source.

Whether buying tickets in legal lotteries in other nations—such as the Irish Sweepstakes—or playing illegal numbers games, many otherwise law-abiding Americans were knowingly breaking the law regularly. This led to another problem: if playing in illegal lotteries was a crime, then the country was teeming with criminals. Moreover, there was the danger that the disrespect showed for lottery prohibition could develop into general disrespect for the law. Such problems led to the general acceptance of numbers games by local authorities and law-enforcement officers. When law-enforcement officers cracked down on numbers games, they did so mostly to send warnings to criminals about their other illegal activities. The first half of the twentieth century saw a thriving numbers industry in the United States. However, government needs for new sources of revenue soon changed that situation.

By the 1960s, the public’s growing opposition to rising taxes and state needs for new sources of funding combined with the unenforceability of laws against numbers games led to reconsideration of state-sponsored lotteries. In 1963 New Hampshire authorized the first modern state lottery, and by 1971 New York and New Jersey also had state-run lotteries. In 1974, Massachusetts became the first state to offer “scratcher” lottery tickets. In 1978, New Jersey went a step further by legalizing casino gambling in Atlantic City, which was then a dilapidated former resort town; the influx of money immediately boosted the local economy and caused many communities to view gambling operations more favorably.

These developments were merely the beginning of major changes, and gambling developed into a growth industry in the United States. Some areas did see pushback against this trend, however. Notably, the increase in betting on sports events led Congress to pass the Professional and Amateur Sports Protection Act of 1992 (PASPA), heavily restricting such gambling.

Further Growth and Regulation

With the apparent success of Atlantic City (analysts would continue to debate the long-term benefits and drawbacks of the gambling industry presence), casino gambling saw rapid expansion in the 1990s and into the twenty-first century. In 1993, only ten states allowed any form of legal casino gambling, and often only on riverboats. By 2018, twenty states allowed commercial casinos, and twenty-six further states had legalized some form of gambling. In addition, Indian reservations have been permitted to make their own laws regarding gambling on their lands because of their sovereign status, and tribal gambling operations grew from the late 1970s. Native American casinos expanded so rapidly in California, for example, that by 2004 the state was poised to surpass Nevada in total gambling revenues. In the 2010s, nearly five hundred tribal gaming facilities in twenty-eight states together generated over $25 billion in annual revenues, surpassing $30 billion for the first time in fiscal year 2016. It reached a record high of $41.9 billion in fiscal 2023.

The online gambling market (also known as online gaming, but distinct from video and computer games also termed "online gaming") also saw explosive growth in the twenty-first century. The complex and disputed nature of regulation of online commerce made internet gambling a frequent subject of debate, especially as the market grew increasingly lucrative, and both state and federal law tended to be restrictive when addressing the issue. Preexisting legislation, including the Federal Wire Act, was used to limit the industry along financial lines. Though it did not technically ban online gambling, the Unlawful Internet Gambling Enforcement Act of 2006 (UIGEA) further cracked down on the industry by regulating the transactions by the gaming providers on the internet. Still, many services found ways around the regulations and online gambling remained popular. For example, the industry was estimated to have generated $35.5 billion in 2013 despite being illegal in most states. New Jersey took steps in 2010 and 2013 to legalize certain forms of online gaming, demonstrating a slow shift toward public and government acceptance of internet gambling.

By the early 2020s, Utah and Hawaii remained the only US states to bar all forms of gambling. An important development in the legal issues surrounding gambling in the United States came in May 2018, when the Supreme Court ruled that PASPA was unconstitutional, opening the doors to significant growth in legal sports betting. Delaware became the first state to fully legalize gambling on sports in the new legal landscape (Nevada had previously been exempt from PASPA), with state governor John Carney placing (and winning) the first official bet on a baseball game that June. New York, Connecticut, West Virginia, Pennsylvania, and Mississippi were among other states to take advantage of the ruling thanks to previously passed legislation. By 2022, more than half of US states had legalized sports betting. Yet the issue of sports betting remained controversial, with the four major US sports leagues (MLB, NFL, NHL, and NBA) all at times registering their concerns about the impact of legalized gambling on the integrity of their sports. Despite reservations, it was reported in May 2020 that over $20 billion had been spent on sports betting since legalization.

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