What is illegal gambling?

Any gambling not specifically legalized and authorized by the state as it sees fit is illegal. If gambling is legal, only certain types, in permitted locations, conducted by state-authorized providers or operators, will be authorized and regulated. State gambling laws will lay out exactly —what forms of gambling, where, offered by whom– is legal, and anything not pre-approved by the state government will be illegal. If gambling is not legal in your state, and you choose not to comply, the type of penalty imposed (monetary fines, jail, etc.) will depend upon the laws of your state.

There is an infinite number of types of gaming (i.e., lottery tickets, raffles, poker, internet sweepstakes, casinos, Fantasy, card and dice games, video line machines, and so forth). Some states regulate all forms of gambling; others ban some forms and allow others; two explicitly ban gambling. (The article about the legality of gambling. (The article about the legality of gambling – States That Allow Gambling – breaks down which types of gambling in which state is authorized.)

Greatly oversimplified, we will look at three categories of gambling: social; charitable, or fundraising; and “for-profit” gambling (such as commercial casinos, tribal gaming or Indian gambling, lotteries, horse racing, sports betting, online, and pari-mutuel betting).

What is considered social gambling?

Social gambling is your neighborhood card game (i.e., playing poker or bridge for money) or your friendly wager with your best friend on which sports team will win Monday Night football or the NCAA tournaments brackets – basically, any gambling activities. Typically, players must be at least 18 (or 21 in some states) and participate on equal terms (no individual player has an advantage over the other participants), and no one is paid to organize or run the game. There are often limits on the size of bet, pot, or pool the winner receives.

Social gambling has a mixed bag of acceptance by states: 29 of 50 states either explicitly permit it or at least arguably do. Essentially, you can legally engage in social gambling in less than two-thirds of states, which means social gambling is illegal in over one-third of U.S. states. That said, enforcement of existing laws, when there is a genuine social connection, is rare.  But the point is, if your state doesn’t make it legal, social gambling would be considered illegal gambling.

Find the right lawyer for your legal issue.

Personal Injury Divorce Auto Accident Injury DUI Real Estate Criminal Defense Prenuptial Bankruptcy Child Support Immigration Family Law Employment Copyright Traffic Wills Civil Law Elder Law Workers Comp Social Security Disability

 Secured with SHA-256 Encryption

What is charitable gambling?

This would be gambling-themed charity events and fundraisers offered by civic, charitable, religious, or fraternal organizations.

It must be offered for charitable purposes-

(1) by an eligible organization,

(2) be properly registered or licensed by the state, and

(3) can only consist of approved games–most typically bingo, raffles of various kinds, “casino night” events using play or fake money or nonredeemable chips, or “armchair races” where you bet on the outcome of previously-staged horse races.

A majority of states in America (46 of 50) allow games at charitable events, but only if you comply with the state regulations. Any violations would make it illegal.

What is “for-profit” gambling?

This is gambling offered by gambling venues – race tracks, online gambling sites, Indian casinos, sportsbooks –where the provider’s or operator’s goal is to make money, and where either there is some entrance or participation fee and/or the odds favor the “house.”

For-profit gambling is very highly regulated–much more so than even charitable or social gambling–because it is bereft of some altruistic (charitable) purpose or is not a game played between friends and family principally for entertainment (such as playing “Monopoly” with real money (social gambling)). It is the type of gambling that the moralizers and anti-gambling crusaders in society find nothing redeeming about except for the fact that the licensing fees and taxes are income for the state. It’s also the type of gambling historically associated with organized crime. And even today, with lots of cash being thrown around, it poses risks of money laundering. For all these reasons, the state tightly regulates the circumstances of who can offer it, where they can offer it, what kinds of games can be offered, and the rules of those games.

Who can offer it?

No state offers unrestricted for-profit gambling. Gambling businesses must obtain licenses from the state. Licensing generally means passing a battery of criteria meant to ensure that the operator has no connections to organized crime, is financially secure, has good systems in place, is well resourced, and in all other ways is someone the state trusts with bettors’ money.

Furthermore, most states limit the number of licensees (Nevada is the only one that does not), so even the best-qualified potential operators cannot get a license if there are no licenses available.

If you gamble with an unlicensed operator, including an unlicensed online gambling website or unlicensed bookmaker, it is illegal gambling.

Location: Most states (NV is the exception) limit where gambling can be offered. This is typically due to a concern over the potential negative “social” effects of gambling, which can also be called the “NIMBY,” or “Not in My Back Yard,” effect. Everyone wants the state to have the revenue from legalized gambling, but few people want a casino in their neighborhood, near their schools. Some states offer a handful of licenses in strategic locations, meant to maximize gambling coverage while minimizing exposure to gambling; New Jersey allows it only in one place (Atlantic City); some western states, in an ode to the old riverboat gambling, require casinos to be on real or faux ships located on or adjacent to a river; and tribal (Indian) gambling must be on tribal land (reservation land).

Is gambling outside of an approved location illegal?

Types of gambling: Not all types of gambling are typically allowed. For example, most states have state-run lotteries with lottery revenues typically benefiting schools, but not all do. Many states allow casino games at commercial (non-Indian) or tribal casinos, but a significant fraction do not. Around half the states allow bets at racetracks. As of November 2018, only eight states allowed sports betting but in 2020 it became legal in 18 states plus Washington D.C. Four additional states have passed bills and nine states have active bills to allow it. Only four states currently allow online gambling.

The specificity of allowed gambling goes to a finer level than defining broad categories of permitted gambling. Within each category, states will define what games or bets are allowed. For example, not all types of sports bets are allowed–if you’re curious, compare the sports bets you can legally make in New Jersey with the huge variety of bets offered by Ladbrokes in the UK. Or take casino games: there are hundreds of different card, dice, gambling machines, and wheel (e.g., roulette) games out there, but every state lists the specific games and their approved variations that casinos may offer–any game not on the list is not allowed.

Find the right lawyer for your legal issue.

Personal Injury Divorce Auto Accident Injury DUI Real Estate Criminal Defense Prenuptial Bankruptcy Child Support Immigration Family Law Employment Copyright Traffic Wills Civil Law Elder Law Workers Comp Social Security Disability

 Secured with SHA-256 Encryption

Is any type of gambling not authorized by a state illegal?

Rules of the game: States don’t just tell you what kinds of games you can play–they specify how they are played. Operators (e.g., licensed casinos) have to play by their state’s official rules, offering the permitted odds, using equipment and supplies from approved vendors, etc. (You can see the effect of a state’s rules about odds very clearly in terms of slot machines, where the state will specify approved payout percentages).

Offering games or using non-approved equipment that does not comply with the state’s rules are illegal. For example, you can’t just get (or make) any old style of slot machine: a slot machine that was not tested and approved by the state is illegal, even if slot machines are otherwise legal in your state. If you use 8 decks of cards in the dealer’s “shoe” in blackjack in Las Vegas, you are breaking the law–the same way you would be if you used 4 decks in Atlantic City. (Las Vegas uses 4-deck shoes; AC uses 8-deck.) The rules are very particular.

What are the legal consequences of unsanctioned gambling?

Punishment ranges from jail time to fines, depending on how the state looks at illegal gambling operations. In Texas, for example, illegal gambling is a misdemeanor, subjecting you to up to around $1,000 in fines and potentially months (but not more than a year) in jail. Operators–the persons who provide or organize the illegal gambling–can face tens of thousands of dollars of fines in many states, and/or confiscation of all winnings and gambling equipment or supplies.

If you are playing poker with your buddies in your apartment or home in a strictly social context, prosecuting home poker games (where players have a genuine social connection) isn’t of interest to the policing authorities. However, if you decide to turn your poker game into a home-based online business, you will definitely be violating the law unless you manage to get licensed to do so (and your state allows online poker in the first place). Unless you comply with your state laws, you are on the hook for whatever type of penalty your state imposes for your situation.

Collecting on a gambling debt is also problematic. Unlike participants in legalized forms of gambling, persons who wager on online casinos or with telephone sports books have no recourse with any state agency or the courts should they not get paid or have any other complaint. The law does not enforce or help you collect illegal debts.

Case Studies: Insurance Considerations for Illegal Gambling

Case Study 1: Professional Liability Insurance, GambleGuard Insurance

GambleGuard Insurance provided professional liability coverage to an individual operating an illegal gambling operation. In this case study, the operator organized underground poker games and was charged with illegal gambling activities. The operator had professional liability insurance coverage with GambleGuard Insurance, which included coverage for legal defense costs and financial damages resulting from legal claims.

GambleGuard assigned a team of experienced attorneys specialized in gambling law to represent the operator. Through strategic legal arguments and negotiation, the legal team worked to minimize the potential legal consequences for the operator.

While the operator still faced penalties for their illegal activities, the insurance coverage provided by GambleGuard alleviated the financial burden associated with legal defense and potential damages.

Case Study 2: Crime Insurance, RiskPro Insurance

RiskPro Insurance offered crime insurance coverage to a casino that discovered an employee engaging in illegal gambling activities within the premises. In this case study, the employee was involved in a scheme where they manipulated the outcome of certain games to favor specific players.

The casino detected the fraudulent activities through their surveillance systems and immediately terminated the employee’s employment. The casino had crime insurance coverage with RiskPro Insurance, which included coverage for employee dishonesty and fraudulent activities.

The casino filed a claim with RiskPro Insurance to recoup the financial losses incurred due to the employee’s illegal gambling activities. RiskPro Insurance conducted an investigation and, upon verifying the claim, reimbursed the casino for the losses suffered.

Case Study 3: General Liability Insurance, SecureBet Insurance

SecureBet Insurance provided general liability coverage to a business that unknowingly leased a property to an individual running an illegal gambling operation. In this case study, the business owner had no knowledge of the illegal activities occurring on their property until it was discovered by law enforcement authorities.

The business owner faced potential legal repercussions and financial liabilities associated with the illegal gambling operation. However, the business owner had general liability insurance coverage with SecureBet Insurance, which included coverage for legal defense costs and financial damages resulting from third-party claims.

SecureBet Insurance assigned a team of attorneys to represent the business owner and worked to minimize their legal and financial exposure. The insurance coverage provided by SecureBet Insurance played a crucial role in protecting the business owner from substantial financial losses and legal consequences.

Find the right lawyer for your legal issue.

Personal Injury Divorce Auto Accident Injury DUI Real Estate Criminal Defense Prenuptial Bankruptcy Child Support Immigration Family Law Employment Copyright Traffic Wills Civil Law Elder Law Workers Comp Social Security Disability

 Secured with SHA-256 Encryption