USA Online Gambling
According to the latest statistics, gambling is a popular pastime in the United States. The American Gambling Association survey claims that millions of US citizens annually spend $4 billion to gamble online. Over the last decade, 10 million Americans have visited Internet websites to play online poker, make bets on sporting events, and to participate in different electronic casino games, including blackjack, slot machines, roulette and craps. During the period from 2003-2010, Americans spent about $30 billion on online gambling. Industry analysts value the U.S. online poker market as the largest in the world, having estimated the state of the specific field during 3 distinct periods (2002-2005; 2006-2011; after 2011).
Despite this popularity, online gambling has not yet been declared legal at a national level in the US. There are many online gambling sites that are situated overseas, so it is easy for American citizens to enjoy online gambling, even if their own state regulations do not permit it.
The following information attests to this reality:
- According to the UNLV (University of Nevada at Las Vegas), offshore internet gambling companies brought $5.1 billion from the USA in 2009.
- Thomas Allen, the Vice President of Morgan Stanley (American multinational financial services corporation), predicts that offshore online gambling will decrease sharply, due to the gradual legalization of online gambling in U.S. states in coming years, creating a booming industry for US companies. Morgan Stanley's Vice President notes that in less than 6 years the offshore online gambling market in USA will experience $5.2 billion decrease.
- American online gambling companies found to be conducting business within states where online gambling is illegal, have been repeatedly fined under the Unlawful Internet Gambling Enforcement Act of 2006.
When gambling online, Americans need to keep in mind not only the legality of their access to casinos in which to play, but also the taxes concerned. However, when a U.S. citizen chooses to make gains, they must be fully aware of their fiscal responsibilities regarding these earnings. Even when playing abroad, (e.g. in UK online casinos, SA online casinos, etc.), individuals are required by law to declare their earnings in their country of residence. A special section regarding foreign income is provided on your tax form for dealing with these types of revenue. This law also applies to Native Americans, who, unlike their tribes, are required as individuals to pay income tax.
Licensing & Legalities
Prior to the popularization of the internet, foreign and interstate wagering in the U.S. was regulated under the Federal Wire Act. Telephone wagering was banned in 1961 under this law. When the internet became widely available in the 1990s, more than 250 gambling websites came online for US players to enjoy while there was a vacuum in legislation. The Wire Act was renewed in 2002 but failed still to prohibit internet wagering.
It is up to each state to determine its own gambling laws, but Congress has the power under the Commerce Clause to regulate interstate and international gambling, which is easily extended to online gambling.
In 2006, the Unlawful Internet Gambling Enforcement Act or UIGEA, was passed by the Senate, thanks to the efforts of Senator Bill Frist. This act made internet gambling business operations a federal crime. The sites that dealt with money for illegal transactions or gambling were targeted and dismantled. Since the law did not make gambling activity itself an illegal operation, it did not do much to clarify the legality of different forms of gambling.
The legislation did, however, gradually succeed in making all privately-owned online gambling sites exit from the US market, with huge crackdowns occurring in 2011 on what are known as Black Friday and Blue Monday in the U.S. online gambling industry. Even players' deposits were seized in an unprecedented move. These events left behind a wary public and mostly small, unregulated operators.
In the face of crippling debt, some states have created legislation allowing online gambling. In the states of Nevada, New Jersey, and Delaware, a new source of public revenue has been found in levying taxes from this lucrative activity. Nevada has authorized online poker under the Nevada Revised Statutes. The other two states have approved a wide array of online gambling under the New Jersey Criminal Code and the Delaware Code, respectively. So far, only Nevada has any operating businesses in the sector. There is still very active debate in the United States about the definitions of gambling, wagering, playing games of skill, and gaming.
We’ve compiled a quick background of some of the most popular online gambling options available to US gamblers:
Poker - Poker gets around much of the current restrictive legislation in the U.S.. According to the Poker Players Research, 3.8% of all adults in the U.S. play online poker for real money. Only 5% of American online players have decided to stop playing, because of restrictions in legislation. 38% of poker players say they have or will change sites because of this legislation. Online Poker went through a significant boom in the early 2000s, drawing in triple-digit annual increases in revenue over several years before public crackdowns.
Lotteries – Now operating legally online but run by the state to generate funds for government expenses. Sales have seen significant increases in the four years following Black Friday and Blue Monday crackdowns on private online lottery operators under Bush-era UIGEA legislation. According to statistic portal Statista, sales of state lotteries increased from $58.25 billion (in 2009) to approximately $70.15 billion (in 2014).
Sports betting – Americans lead the pack on this pass-time, with 118 million individuals gambling $380 billion dollars on average a year, according to a 2008 report by ESPN. Also, about 67% of American college students bet on sports.
Bingo – This game has been extremely popular in the United States since the turn of the 20th Century, and online Bingo has not been an exception to the trend. Marketers have taken Bingo online in much the same way as poker, as the two games share the similarities of being social games. According to the studies in North America, a bingo industry gets $90 million revenue every week. The game is played by 1 in 8 Americans; this fact makes bingo more popular than even major sports event in the USA. More than 10% of the adult population of USA has played bingo for real money or fun.
In compliance with UIGEA legislation, banks and other payment processing institutions in the U.S. are prohibited to handle money related to offshore gambling sites. This is due to the fact that offshore online casinos are not regulated in the way that land based operations are. For this reason, users should refer to credible reviews of online casinos before making any deposit. Most publicly operated online casinos in the US have made special provision with major payment providers to accommodate U.S. residents. Players will often find that privately operated casinos offer limited, although secure, transaction options by comparison.
Deposit methods vary widely between casinos and are generally more liberal than withdrawal options. Most online casinos offer a mix of the following deposit options:
Online tellers tend to be popular among gamers, creating an extra barrier between their personal bank accounts and their gambling accounts, despite the fact that this extra step creates an added delay in withdrawal processing times. This banking method also makes transaction histories easy to follow. Rapid Transfer is popular among players wanting to invest cash.
Online gambling sites vary widely in regards to the withdrawal method options. Some sites limit withdrawals to only one or two options; others offer several variants to choose from. Most sites require strict verification and a short delay before first withdrawals. Common withdrawal methods include:
Bank Accounts Transfer
Before you start to gamble on any site, make sure you know the withdrawal options and associated fees. Keep good receipts of your transaction history as all earnings, including offshore earnings, must be declared on your income tax return whether you are an amateur or professional gambler. Most non-professional winnings are taxed at a 25% flat rate. Losses are deductible as well, up to the year's total winning amount.
While Nevada, New Jersey, and Delaware have made gambling legal, the other states are yet to go with this change. Here are some promising facts about U.S. online gambling:
California and Pennsylvania, among others (Massachusetts, New York), are currently considering reform of gambling laws with the intent of legalizing online gambling.
New York is supposed to test iGaming waters in 2015.
Online gambling can bring in huge revenue and is doing so in more than 80 countries and states where it is legalized. The global online gambling industry is valued at over half a billion US dollars. New Jersey saw nearly 1 million dollars in revenue in its first week of operations in 2013.
There are only nine states where online gambling is explicitly prohibited. These include Washington, South Dakota, Wisconsin, Louisiana, and Indiana. Most other states have not yet written legislation about internet gambling, although as many as 43 have allowed public lotteries to operate within their borders.
Choosing Online Casino
Don’t start playing at an online casino until you find out some crucial information about the company including:
Deposit/ withdrawal options and associated fees, imposed both by the site and the payment processing institution.
Security measures should be in place that will ensure the privacy of your financial and personal details.
Sign-up bonuses should be compared and ensure that you know all the terms and conditions for any bonuses offered.
Investigate the variety and types of games available both to patrons and novice players.
Help and support facilities should be available to assist you on a round the clock basis. Inadequate customer support can be very frustrating if something goes wrong.
What are the most popular countries for offshore gambling among U.S. citizens?
Companies in countries such as Jamaica, the Dominican Republic, Antigua, Costa Rica and Panama have taken advantage of the market created by online gambling restrictions in the U.S. and are offering offshore gambling options to U.S. citizens. This is still an illegal process, but it is hard for the U.S. government to prosecute it.
How many states allow commercialized casinos?
Currently, 13 states house 443 separate commercialized (non-Indian) casinos. According to the statistics portal Statista, casinos’ combined gross revenue in 2014 was $69,110 million.
How many states have some form of legalized gambling?
48 states have some form of legalized gambling. Hawaii and Utah remain the only gambling-free states.
How many states have lotteries? What states are without lotteries?
44 states (and the D.C. area) have legalized public lotteries. The six remaining states that do not have lotteries are AL, AK, HI, MS, NV and UT.
How long does it take to withdraw earnings from an online gambling site?
Generally, withdrawals take between 3 and 5 business days to process, but if you are using online bookers and a banking system to access your money, this could easily double. Allow at least a week for payment processing unless otherwise advised.
What are the taxes for professional gambling players in the US? Do they differ from state to state?
Professional gamblers in USA are required to file all their winning/losing gambling results in the Schedule C. From the gambling profit, they may deduct all reasonable expenses (e.g.: computer ISP, mileage & travel, books/ training materials, etc.) Being a subject of the self-employment tax, they are required to pay a 15,3% tax (12,4% social security; 2,9% Medicare) of the first $90,000 won and 2,9% for the subsequent gains. The tax is the same for all states.
In spite of all the controversy, raging about online gambling in the United States, fans of all types of gambling can still enjoy the casino games online. While there is a significant opposition to legalizing gambling online, its advocates will prevail in the end; now there are millions of Americans who enjoy online gambling, which is worth over $4 billion of which 0% revenue reaches the states. The lure of tax revenue and the popularity of casino gambling are definite advantages that would tip the scales in favor of legalization soon.