Illegal Gambling Penalties: What You MUST Know About Gambling Laws in the US

by Ed Miller
17 Apr 2023

Ed had dived into the cryptocurrency market before everyone got on the bandwagon. Therefore, his blockchain & crypto expertise can boast of both retrospective and prospective analyses, as well as their level-headed and well-targeted peer reviews. Ed has long realized that the online crypto gambling market would soon evolve into another investment sector for those willing to not only have some fun playing but to scale up crypto assets, too. He did online gambling market research, tested tens of crypto casinos, got a fix on trends and target users’ feedback, and is ready with his insights and recommendations on how to combine crypto business with gambling pleasure.


A law specialist reading a document and calling someone on her phone
Illegal Gambling: All you must know

Do you want to dive into the exciting world of casino games but are not sure if it is against US gambling law? The legality of casinos and sportsbooks in the United States is a complicated subject; in fact, it comes down to the local laws. While there are states where gambling is legal to a certain extent, several jurisdictions prohibit all forms of gaming for profit.

To help you understand the nuances of gaming legality, we have prepared this guide. Read on to get answers to the following questions:

  • What is illegal gambling?
  • In what states is gambling illegal? 
  • What are the possible penalties for illegal gambling?
Lawyers in the office
Illegal gambling can bring you to court!

Is it legal to gamble in the US? The legality of gaming activities varies across states. Each state has the right to make its own laws on permitted types of gaming. 

Nevada, Delaware, Michigan, and New Jersey are among the most gambling-friendly states where a range of betting activities, including playing at online casinos, is legal. States where gambling is illegal in all forms, are Hawaii and Utah.

Is it illegal to gamble in your state? Be sure to check your local US gambling law before heading down to a land-based or online casino. Knowing the gambling laws in the US will help you avoid participating in unlawful activities. Penalties for illegal gambling can be severe — up to imprisonment.

Below, we’ll look at some states where gambling is illegal or legal to this or that extent.

Gambling in Texas

In Texas, gaming activities are subject to regulations listed in the Texas Code, section 47, and Texas Revised Civil Statutes, section 179. In this state, you can legally participate in charitable gaming, play in tribal casinos, place pari-mutuel bets, and play lottery games. Sports betting and playing casino games, both online and offline, are examples of illegal gambling in Texas.

Gambling in Ohio

Wondering where is sports betting legal? Ohio is among the states where gambling is legal in many forms, including sports wagering, commercial casinos, and lotteries. 

As for online betting, it remains a so-called “gray area” in Ohio. While there are no American online casinos that can operate in Ohio legally, gaming platforms located outside the US don’t have to conform to any US gambling law. Thus, many gamblers from Ohio prefer playing casino games on offshore casino platforms that support crypto payments.

Gambling in California

California is a less gambler-friendly state — commercial casinos and sportsbooks are prohibited there. Although online gaming is permitted in California, the only legal way for CA residents to gamble over the Internet is through a social casino website. 

Is it illegal to gamble for money in California? CA players can still legally visit Indian casinos, buy the California State lottery tickets, and place pari-mutuel bets on horse racing. Charitable gambling is also available there.

Gambling in Nevada

If you’re looking for the top casino destination in the US, look no further than Nevada. What is considered illegal in many other states is perfectly legal here. Nevada is one of the 24 states where gaming is legal in the form of commercial casinos. Here, you can also play in tribal casinos and place bets on sports. Lotteries aren’t available in Nevada, though.

Legality of gambling across the US states 
Legality of different gaming activities in US states and territories

Why Is Gambling Illegal in Some States? ❌

A photo of slot machines
Slot machines on the casino floor

As discussed previously, some states have rejected certain forms of gaming activities. Why is gambling illegal there?

Since the federal government has left gaming regulation up to the states, it is difficult to come up with a one-size-fits-all approach that would work in every region. The authorities of each state should consider the interests of different groups — operators, citizens, as well as local Indian tribes. The legalization of casinos and sportsbooks is not always in the interests of each of the stakeholders.

According to the authorities of some states where gambling is illegal, casinos and bookmakers most often act unethically. That is, casino operators deliberately profit from the players, so the distribution of wealth favoring the casino is initially unfair.

Regular Gambling VS Social Gambling: How the Law Controls Those

People playing cards
Playing cards and casino chips on the wooden table

In the traditional sense, gambling is a business in which the operator earns money from the games being played. In some states where gaming is illegal as a business, so-called “social gambling” may still be permitted. We can define social gambling as an activity where players compete on equal terms, and neither party earns anything of value apart from the player’s personal winnings, if any.

At the time of writing this guide, social gambling was legal in approximately 25 states, including Alaska, California, Connecticut, Hawaii, Louisiana, Maine, North Dakota, Oregon, South Carolina, and Wyoming. Select states to permit social gambling with certain limitations. For example, in Iowa, your maximum winnings or losses within 24 consecutive hours cannot exceed $50.

Gambling VS Gaming

A photo of the roulette wheel in the casino hall
A croupier spinning the roulette wheel

Before we move on to the illegal gambling definition, let’s take a closer look at the concepts of “gambling” and “gaming.” What’s the difference between these two terms?

By the term “gaming,” the authorities usually mean activities that are either legalized by current legislation or are not subject to criminal law. When the laws governing a particular type of gaming are violated, the activity may turn out to be gambling. So, the concepts of “gambling” and “gaming” are not mutually exclusive.

For example, playing at an online casino would be considered gambling in the US. No state has yet finalized any US gambling law that expressly allows online operators to offer any casino games. 

Illegal Gambling Definition

A judge signing on the papers
Illegal gambling penalties can be rather tough…

Now, what is considered illegal gambling? While the definitions vary across states, we can outline the key components that constitute the outlawed gaming activities:

  • Playing casino games when you are under 18, regardless if a state permits such activities 
  • Locating your gambling activity in a region that prohibits it 
  • Wagering on a certain outcome in a region that bans betting
  • Betting outcomes that depend more on luck than skill
  • Playing to win something of value
  • Performing gambling operations without a license
  • Using your property as a gambling hub
  • Playing online because land-based gambling is prohibited
  • Gambling for money laundering purposes 
  • Other cases. 

Participation in activities that meet these three criteria may result in facing illegal gambling punishment.

What about those who manage unlawful gaming? Gambling for profit is outlawed in many states. Thus, operating a gaming hall, selling entry tickets for a game, or collecting a portion of players’ wagers will be illegal there.

Overall, it is up to the state authorities to decide which activities violate the local US gambling law and may result in illegal gambling charges. So, checking your local laws and regulations is essential. 

Examples of Illegal Gambling Activities

Still, wondering what is illegal gambling exactly? To make things more clear, let’s look through the common examples of illegal gambling.

Commercial Casinos

Commercial casinos are gambling establishments operating on non-Native American land. These businesses provide a place for people to gamble, record or forward wagers, and earn money from games played. Players visit these venues to place their bets with the intent of winning. Such casinos are prohibited in 26 US states, including Alaska, Alabama, Connecticut, Florida, Kansas, and Virginia.

Online Gambling

Playing casino games over the Internet is illegal in most US states. Just like in physical casinos, players wager on the game outcomes that often depend on luck. The casino site operators, in turn, make a profit from games held online. Thus, playing in or managing a digital casino is an illegal gambling example.

The seven states where it is legal to play casino games online are CT, DE, MI, NV, NJ, PA, and WV.

Online casino legality across the US
The legality of online casinos in different US states

Sports Betting

Another illegal gambling example is sports betting in states such as AL, AK, CA, GA, HI, ID, KY, ME, MN, MO, ND, OK, SC, TX, UT, and VT. In sports betting, players wager on the outcomes of athletic competitions through sportsbooks — companies that accept bets and earn money from the odds set.

In recent years, many US states legalized sportsbooks. Where are sports betting legal today? As of early 2023, wagering on sporting events was lawful in 33 US states and Washington, DC.

Fantasy Sports

Fantasy sports is a fun gaming activity where individuals can select real sports players to be on their virtual team. The teams compete against each other based on the statistical performance of real players. Good performance converts into a greater number of points awarded to a virtual team. 

Since the skill elements predominate over the elements of chance in fantasy sports, many states don’t treat this kind of gaming as gambling. Still, playing fantasy sports in Arizona, Iowa, Louisiana, Montana, and Washington state is against the states’ US gambling law.

What Are the Penalties for Illegal Gambling?

A person in handcuffs
Oops…

When it comes to illegal gambling punishment, penalties vary across the states. The circumstances of the case also matter when defining a penalty for someone convicted of unlawful gaming activities. If the defendant already had similar convictions previously, the penalty for illegal gambling may be more severe.

Let’s break down the common illegal gambling penalties in the US.

Misdemeanor Penalties

A misdemeanor stands for a minor criminal offense. If the court qualifies a person’s unlawful actions as a misdemeanor, penalties for illegal gambling may involve up to 12 months in jail. Gamblers convicted of misdemeanors may also have to maintain probation or perform community service.

Felony Penalties

Compared to a misdemeanor, a felony is a more serious crime. If unlawful gaming constitutes a felony, a penalty for illegal gambling will be at least one year in prison. Punishment for unlawful gaming organized on a professional level is more severe — up to 10 years of imprisonment.

Fines

In addition to probation and imprisonment, misdemeanor and felony penalties for illegal gambling often involve fines. Misdemeanor convictions may cause fines of up to $1,000. Felony fines can reach tens of thousands of US dollars. These illegal gambling charges may be standalone punishment as well as an addition to a prison sentence.

Forfeiture

If a person convicted of unlawful gaming has won some money, the state reserves the right to forfeit illegal winnings. In this case, ownership of money and assets associated with illegal activities goes to the state government.

Real Cases

A person holding playing cards
Male hands holding playing cards and a smoking pipe

Curious about real cases of illegal gambling charges? Then keep reading!

A Case in Gaffney

In February 2023, South Carolina Law Enforcement Division (SLED) agents and Community Action Team (CAT) investigators raided a certain location in Gaffney and found six people playing on the illegal slot machines. Four of the players faced misdemeanor illegal gambling penalties and were released. The other two people were arrested because of the drugs in possession. 

The four individuals who managed the venue were arrested and faced illegal gambling charges for operating a gaming house with slot machines unlawfully.

A Case in Sterling Heights

In September 2022, Macomb County’s 16th Circuit Court charged four individuals for running a gaming house illegally. Here is the breakdown of felony penalties for illegal gambling the defendants faced:

  • Sam Daoud — 18-month probation plus fines of $498 
  • Nadia Daoud — 11-month probation plus fines of $798
  • Kim Green — 2 days in jail, 6 months probation, and a fine of $978 
  • Brian Shufeldt — fines of $798

The State of Michigan forfeited money and assets associated with unlawful gaming activities — $14,212 in cash and gift cards as well as 35 slot machines.

A Case in Flint

In 2018, the Michigan Gaming Control Board (MGCB) spotted a gaming house operating without a license and forwarded the information to the Department. Due to the covid 19 pandemic, the investigation of the case has been delayed. In 2021, 3 defendants in the case received the following sentences:

  • Adam Crossnoe — misdemeanor penalties with 2-year probation
  • Alvin Crossnoe — a 5-year felony penalty for illegal gambling
  • Bradford Barksdale — a 10-year felony for unlawful gambling, a 10-year felony for committing a crime using a computer, and a five-year felony for possession of a shotgun

Conclusion

Finding lawful ways to gamble in the US can be overwhelming. Even in states where gambling is legal, there might be limitations for specific types of gaming activities. We hope our guide will help you stay compliant with the law and avoid unwanted illegal gambling penalties.

Note that gambling laws in the US are constantly changing — what is considered illegal gambling today may become legal tomorrow. Be sure to keep an eye on these changes before you start playing casino games in your state.

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