The history of gambling in the US is quite rich. Even the native tribes used to have gambling games such as the bowl game “Hubbub” or “Monshimout,” which can be seen as the precursor of today’s lottery.
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Gambling Industry in America — An Overview
Throughout history, gambling has gone from being strictly forbidden to being legal in most states across the USA. Well, at least some forms of it.
The current legal framework related to gambling in America is highly complex since the practice is regulated on two levels: the federal and statewide. In essence, each state is bound to abide by federal and its own gambling laws.
On a federal level, gambling is regulated according to the Interstate Wire Act, Professional and Amateur Sports Protection Act (PASPA), and Unlawful Internet Gambling Enforcement Act (UIGEA).
The Interstate Wire Act was passed by Congress back in 1961, and its sole purpose was to ban betting via wire communication facility. It wasn’t until 2011 and the Department of Justice’s decision that clarified that the Wire Act referred to sports bets and not online casino gaming.
The Professional and Amateur Sports Protection Act (PASPA), aka the Bradley Act, named after the senator that championed it, stopped all forms of sports betting no matter the method of placing bets. The only states that remained outside the reach of this law were Nevada, Delaware, Oregon, and Montana. Luckily, the US Supreme Court declared PASPA unconstitutional in 2018 and kicked the ball in every state’s court, leaving it to them to decide whether to legalize sports betting.
Finally, the UIGEA aimed at restricting banks from knowingly accepting transactions related to gambling on the internet, which, luckily, did not stop online gambling but impeded it severely.
At the moment, some states, such as Pennsylvania, New Jersey, Nevada, Michigan, West Virginia, and others are the beacons of hope for the iGaming world as they have legalized online casinos and/or sportsbooks. Some have even regulated online poker rooms as well, such as New Jersey and Pennsylvania.
Let’s learn more about how these states have legalized online gambling, the licensing procedures, costs, and other essential things that SoftGamings’ experts can help you with.
Types of USA Gambling Licenses
The forerunners of internet gambling in the US are New Jersey, Pennsylvania, and Michigan.
New Jersey has legalized both online casinos and poker rooms through Assembly Bill 2578, as well as online sportsbooks back in 2018. All companies that wish to run an internet gambling business need to have a land-based partner casino that has been legalized by the Division of Gaming Enforcement (DGE), the main regulatory body in New Jersey.
On the other hand, in Pennsylvania, the main gambling regulatory agency is the Pennsylvania Gaming Control Board, which oversees online casinos, sportsbooks, and poker rooms that were legalized according to the bill known as HB 271. Interested parties need to file for each of these licenses individually. These casinos and sportsbooks also need to have a partner in land-based casinos to launch internet gaming platforms.
Finally, the Michigan Gaming Control Board is Michigan’s gambling regulatory agency that issues licenses to land-based and internet casinos and sportsbooks.
Gambling Law Advantages
Obtaining gambling licenses in states across America is the only guarantee that you won’t be prosecuted by the authorities and that you can tap into the vast potential of the US market. In fact, the entire online gambling market is worth more than $50 billion, and only registered operators can get their share.
Also, casino and sportsbook operators licensed by states enjoy favorable tax rates that go from 8% to over 50%, depending on the state. However, considering the traffic and the profits potential, it is safe to say that the taxes won’t pose much of a threat to a successful business.
There are also numerous advantages for the players. They won’t have to opt for illegal gambling sites and worry about the games’ fairness and the safety of their funds and information. With regulated sites, those aspects are guaranteed.
Key Requirements to Get a License
The requirements to obtain a gaming license in the USA vary from state to state. For example, New Jersey, Michigan, and Pennsylvania demand online operators to secure a commercial agreement with a land-based casino before launching their gaming sites. Next up is the financial control, game testing, and background checks of the managers, owners, and all individuals related to the gambling operation.
Of course, all applicants need to fill the designated application form and submit it to the regulator for further revision. Provided that all goes well, applicants are also required to pay a corresponding license fee.
License Cost and Taxes
The license costs and taxes also differ from state to state and the type of license you want to get. Let’s take New Jersey as an example. The initial deposit for either online casino or sportsbook is $100,000. The issuance of the first yearly license costs an additional $300,000. The renewal permit incurs a fee of an additional $150,000.
On top of that, all online gambling operations need to pay $250,000 annually for a fee called Responsible Internet Gaming. The initial sports wagering license is $100,000, while renewal costs another $100,000. In New Jersey, internet casino games are taxed at 15% of the total revenue, while the annual 8.5% tax applies to sports wagering.
The situation in Pennsylvania is a bit different. The cost of a license for the interactive gaming certificate holder is between $4M-12M, and the initial term is five years. The renewal comes at the cost of $250,000 and is issued for the duration of another five years.
The sports wagering certificate holder, on the other hand, needs to foot a $10 million bill for the license. The renewal costs the same as for the online casino.
As for the taxes, Pennsylvania online casinos pay 54% of all revenue generated from slots and 16% for online table games, which is the same for online poker. Online sportsbooks pay a 36% tax.
In Michigan, all internet casino and sportsbook gaming license applicants need to pay a $50,000 application fee. The initial fee for the license is $100,000 and another $50,000 for the yearly renewal of licenses for online casinos and a 5-year renewal for sportsbooks. Online gaming is taxed between 20-28% of the adjusted gross receipts (AGR).
Application Procedure
The application procedure for online gaming licenses in the USA is somewhat similar. All interested parties need to complete an application form and submit it to the authorised regulator.
They need to provide detailed documentation about all aspects of the business — registration certificate, ownership charts, finance reports, description of games and bonuses, criminal records, tax returns, and many others. Jurisdictions such as Pennsylvania will even ask for a fingerprint.
Following the completed application, every entity hoping to get a license will undergo a detailed background check, and if everything checks out, a license will be issued.
Maintenance
The licenses need to be renewed either annually or every five years, depending on the state. For example, the state of New Jersey issues a new license every year, while Michigan issues 5-year licenses. The prices for renewals range from $50,000 to $250,000.
Make sure to contact our professionals at cs@softgamings.com for more details on the procedures in specific states and all other requirements.
