Federal Law vs. State Law

One of the trickiest elements of understanding sports gambling and Internet gaming laws is the subtleties of federal law vs. state law. As a general rule, federal laws supersede state laws when it comes to the regulation of gambling. However, recent court rulings have opened the door for states to take more control of the regulation of gambling.
Only two states allow casino gambling: Nevada and New Jersey, with only Nevada also allowing sports wagering. The Professional and Amateur Sports Protection Act of 1992 essentially banned sports wagering across the United States; the only exceptions were the states of Nevada, Oregon, Delaware and Montana, which were grandfathered in based on the states’ existing sports gambling laws that allowed either sportsbooks or state-run betting on sporting events.
A recent change in how federal law is interpreted is having a major impact on how states are treating Internet gambling on activities such as poker. The Justice Department has determined that the Federal Wire Act only bans sports gambling over the Internet and not poker rooms and other forms of gaming. This mirrors a Circuit Court ruling on the Federal Wire Act. The reevaluation of the Federal Wire Act has led several states to consider allowing online poker rooms and other forms of gaming as a way to increase their taxable revenue. Legislation has been introduced in states including California, New Jersey and Nevada that would set up a system to regulate online poker rooms within their states.