Punters see potential in the emerging eSports gambling market and are participating in exchange sites that offer odds for huge eSports events. However, is eSports betting legal in the United States? And, are there sportsbook operators legally providing bets for gaming competitions?
Disclaimer - We are not lawyers and this article only presents an opinion. This should not be taken as legal advice. Seek professional legal counsel before acting on anything you read online.
Let us discuss that question by discussing the legality of eSports betting in the US.
What Exactly Is eSports Gambling?
eSports is a competition between professional players where their court is a popular multiplayer game such as DOTA 2, StarCraft, and Counter-Strike: Global Offensive. Matches between professional gamers resonated with millennials adults that have a significant disposable income, allowing for the market to grow into a $1 billion industry.
Like sports betting, eSports gambling provides punters with betting odds during major competitions. Common types of bets include the winning team and match lines. Because of the mechanics in different games, eSports betting sites offer unique betting odds for matches such as the number of kills, or the first team to destroy a tower, and so on.
Legality of eSports Betting in the US
When it comes to US eSports betting legality, there are three important federal laws to consider.
The Professional and Amateur Sports Protection Act
PASPA, or the Professional and Amateur Sports Protection Act, is intended to make sports betting, including eSports betting illegal nationwide. According to David Stern, PASPA was an answer to the sports gambling problem in 1992.
New Jersey was the pioneer state that leads the way to fight the federal law and makes sports betting legal within their state. Residences of NJ flocked to the voting booths to vote for a state constitutional amendment to allow bookmakers in their jurisdiction. Their efforts bought in the Sports Wagering Act 2012 that made sportsbook legal in New Jersey as well as eSportsbook. Other states followed New Jersey to make sports and eSports legal in their area such as Nevada, providing opportunities for US gambling sites to operate in lucrative jurisdictions.
The Unlawful Internet Gambling Enforcement Act
One of the federal acts that have the least effect on US eSports betting laws, the Unlawful Internet Gambling Enforcement Act restricts any form of online gambling to accept payments from banks and other financial institutions. This law is the reason why major online payment services such as PayPal prohibit any transaction to an online gambling site.
For eSports punters, the federal law excludes fantasy sports and eSports betting since both are skill-dependent. However, punters have limited funding options for their online eSports exchange sites due to the law.
The Interstate Wire Act
One of the first federal laws to make "online" betting illegal was the Federal Wire Act or Interstate Wire Act in 1961. According to this law, all wagers or bets using a wire communication facility are illegal.
Over the years, the Interstate Wire Act has been amended several times. One notable change was in November 2018 that that widened the scope of the law by making prohibitions on all forms of wired gambling on sports betting, horse races, casinos, and eSports betting.
While the federal law makes it hard to make US eSports betting legal, it is not always enforced for minor operations.
States That Allow eSports Betting
Whilst eSports gambling is still in its infancy and in somewhat of a twilight zone, some states happily welcome and accept eSports betting (e.g., New Jersey, Nevada, and Delaware).
Several states have been working for years in repealing PASPA within their territory and allow the state themselves to set their US eSports betting legislation. New Jersey is the first one to successfully amend the federal law and allow sports and eSports betting within the state. A few years later, New Jersey passed the eSports Betting Bill that allows NJ lawmakers to expand its gambling laws. One of the common requirements stated by the law is to only have adult professional gamers participating in eSports events.
In 2017, the Nevada Gaming Commission allowed eSports betting within the state and are granting licenses to operators. With the growing eSport market, Nevada looks to become the central hub for major eSports competitions such as the International DOTA 2 tournament.
Delaware welcomes all forms of gambling open arms. With its iGaming Bill that lawmakers passed in June 2012, the state became the first one to allow eSports betting in the US. As a bonus, state residents are free to access offshore eSports exchange sites since no regulations are prohibiting them.
Despite stricter laws on online gambling, states such as New Jersey, Nevada, and Delaware allow punters to enjoy eSports betting in their area. Other states can also follow through with their own US eSports betting legislation.
This article was published on March 13, 2021, and last updated on May 25, 2022.