State vs Federal Control = Who Really Regulates U.S. Online Gambling

We Spoke to Jemma McColgan About Who Really Regulates U.S. Online Gambling
 

There are occasions when we here at ReadyBetGo want to bring you interesting facts about the gambling industry  When something catches our eye, we will publish it for your enjoyment.

Image by Mohamed Hassan from Pixabay

Clearing muddy waters

Anyone on the outside looking in on the US gambling scene can be forgiven for being confused. Quite frankly, anyone on the inside can find it rather confusing as well. Rather than a single market, gambling is regulated at the state level, so it is essentially 50 separate markets. Well, it is, if you do not count Sweepstakes casinos and prediction markets, but they aren't gambling, are they? Well, that depends on who you talk to.

While operators of alternative speculation sites like Kalshi and Polymarket are keen to put 'clear water' between their offerings and gambling, the debate continues over exactly how they are defined. If it looks like a duck and walks like a duck, most people will assume it is a duck. But currently, prediction markets are legally trading platforms.  Sweepstakes casinos also muddy the waters, adding to the confusion. It seems that nothing is clear-cut.

We thought we had better speak to an expert to work out exactly what is what. So, we invited Jemma McColgan, senior content editor at independent review site Casino.org, to come and talk to us about how an online casino based in the US is regulated compared to a sportsbook or a prediction market site.

Readybetgo.com

Hi Jemma, welcome to Readybetgo.com. We hope you will do a bit of untangling regarding the regulation of online gambling in the US. Before we dive into trying to unravel the threads, could you tell us a bit more about the company you work for and your role, please?

Jemma McColgan

Thanks for inviting me in. I will do my best to make it all clear, as this is exactly what we as a business do for our readers. Casino.org is an independent casino and gambling review site that helps players find the best real money, sweeps, and social casinos and guides them to the best prediction market sites. We have been established for over three decades, are specialists in the regulated markets, and are passionate about responsible gambling. 

I love working in iGaming. It can get a bit of a bad reputation, but I find that unfair. It leads the way in tech innovation, and the level of creativity is incredible. In my opinion, it's one of the fastest-moving industries that constantly changes and grows – the US market is certainly no exception!

Readybetgo.com

Thanks for the intro, Jemma. So, cutting to the chase, who really regulates gambling in the US?

Jemma McColgan

Gambling for real money IS regulated at the state level. That was proven undeniably when the Supreme Court overturned PASPA's federal ban on sports betting in 2018. The court determined that it unconstitutionally infringed on states' rights. So, all real-money gambling, whether casino or sports betting, is regulated at the state level.

Kalshi avoids gambling restrictions because it is a federally regulated financial exchange rather than a traditional sportsbook. Legal prediction markets are approved by the Commodity Futures Trading Commission as  Designated Contract Markets (DCM). It derives its authority from federal derivatives law and does not rely on state authorization. This means that (for now) the 'anti-commandeering' protections that made PASPA invalid do not prevent prediction markets from operating across state lines.

Readybetgo.com

What about sweepstakes and social casinos?

Jemma McColgan

Sweepstakes and social casinos are not real-money sites and use virtual currencies for play. This means they are not classified as gambling for real money and are therefore covered by federal promotional law, but their primary regulator is the state's Attorney General.

Readybetgo.com

If they are not gambling in the eyes of the law, why does a site like Casino.com review prediction markets, sweepstakes, and social casinos?

Jemma McColgan

That is quite simple. While they do not fall within the strict legal classifications, both prediction markets and sweepstakes/social casinos share many similarities with real-money gambling sites. Inevitably, they will attract audiences similar to those of traditional sportsbooks and online casinos.

As our mission is to help guide our readers to the best and safest online gambling sites, it would be remiss of us to ignore them simply because they do not fit into a strict legal definition. In fact, both these alternative gambling formats have been designed specifically to appeal to gamblers who cannot access real-money services in their state.

We want to keep players safe and help them avoid dodgy or duplicitous operators.

Readybetgo.com

Are there any other authorities that regulate gambling in the US?

Jemma McColgan

While I wish I could say "no, that's everything", that really would not be true. According to legal firm Chambers and Partners, the regulatory system is a layered jurisdictional stack involving state gaming commissions, tribal regulators, and selective federal oversight.

Tribal online gaming differs from commercial online gaming. It is covered by the Indian Gaming Regulatory Act – a federal law that establishes the jurisdictional and regulatory structure for casino and gambling operations on Native American lands.

Readybetgo.com

Is there anything else that we have not covered?

Jemma McColgan

Well, while we are at it, for good measure, I should probably mention Fantasy sports, as these are another subset. They are regulated by the state and treated as skill games in many states (but not everywhere).

Poker is also a bit of an anomaly. It is most certainly a game of skill, but it is still very heavily restricted (less so than online casino games that are pure luck, like slots). While the federal Wire Act applies to interstate transmissions, multi-state compacts allow poker players to play matches for real money with players in other states.

Readybetgo.com

Do you have any recommendations for gamblers trying to navigate the marketplace?

Jemma McColgan

Shamelessly, I am going to advise gamblers to use our service. It is free, independent, and unbiased. We always advise players to check out a site's license before depositing any money. A great, reputable site will have worked hard to get a license and will display it proudly. While it might be tempting to bet in the gray market or on offshore sites, we actively discourage it. Things can go wrong. If and when they do, you need a regulator you can turn to try to get things sorted out. Playing on unregulated sites can offer little or no protection. We recognize that the US market is complicated and can be confusing, but it doesn't have to be difficult.

Readybetgo.com

Thank you, Jemma!