Gambling and the Law ®: Pivotal Dates

© Copyright 1999, all rights reserved worldwide. Gambling and the Law ® is a registered trademark of Professor I. Nelson Rose, Whittier Law School, Costa Mesa, California.

Legal gambling has swept across the United States three times. The second wave ended shortly after the turn of the century. We are now in the middle of the third wave of legal gambling.

First Wave – Lotteries held in England to finance first settlements. In the colonies, government-approved and private lotteries actively encouraged. Scandals and the spread of Jacksonian morality end widespread legal gambling. By 1862 Missouri and Kentucky the only states that had not banned lotteries. Lottery prohibitions written into state constitutions.

Second Wave – Gambling, legal or tolerated, ubiquitous on the Western Frontier. Civil War devastates South, legal gambling seen as a voluntary tax. 1890s Louisiana Lottery scandal leads to first strong federal anti-lottery laws (still on the books) — all state lotteries shut down. Legal casinos in the West, racetracks in the East brought down by accusations of cheating and the rise of Victorian morality. Territories of New Mexico and Arizona told to close casinos to become states. 1909 Nevada outlaws casino gambling. 1910 New York outlaws racing, leaving only legal gambling in U.S. at racetracks in Kentucky and Maryland and a few scattered card clubs. 1917 The 18th Amendment to the U.S. Constitution, Prohibition of alcoholic beverages, submitted by Congress to the states. Prohibition becomes law in 1919 when ratified by the 36th state, Nevada.

Third Wave – 1931 Nevada re-legalizes casinos, becoming the only state with legal casino gambling. In the 1930s, 21 states bring back racetracks; low-stakes charity bingo spreads throughout the nation. Prohibition repealed in 1933.

1940s & ’50s Almost all states change their laws to allow low-stakes charity gambling and parimutuel betting on horse races at licensed tracks.

1963 New Hampshire Legislature rediscovers the state lottery, the first legal lottery in this century; labeled a “Sweepstakes” and tied to horse races to avoid 70 year-old federal anti-lottery statutes.

1964 New Hampshire holds first drawing. Sweepstakes fails to meet projections. Tickets cost $3, available only at racetracks and state-owned liquor stores; players fill out long forms; drawings only twice a year. But 80% of sales to residents of Massachusetts, Connecticut and New York.

1967 New York becomes second state to attempt a lottery; also, a failure.

1970 New Jersey gets it right: Tickets cost 50¢, drawing is weekly. First state with an online daily numbers game. By 1987 New Jersey Lottery breaks $1 billion a year in sales.

1975 Federal law amended to allow state lotteries to advertise on radio and T.V.

1976 Delaware State Lottery takes bets on National Football League games. The NFL sues – and loses! But Delaware Sports Lottery abandoned after 14 weeks: total sales $721,943.

1978 Resorts International opens in Atlantic City — New Jersey joins Nevada. Total pre-opening cost of the first casino: $45.2 million; first year’s gross revenue: $224.6 million.

1980 “Pathological gambling” recognized as an official “mental disorder or disorder” by the American Psychiatric Association.

1985 First interstate lottery, linking the state lotteries of Maine, New Hampshire and Vermont.

1986 Video poker machines open throughout Montana. November: North Dakota first state to vote against starting a state lottery. Otherwise, a typical boom year: voters approve lotteries in Florida, Idaho, Kansas, Montana and South Dakota.

1987 U.S. Supreme Court decides Cabazon case, affirming the right of Indian tribes to self-regulate high-stakes versions of all games not prohibited by state law.

1988 February: State lotteries create first national lottery, “Lotto America,” now called “Powerball.” October: President Reagan signs Indian Gaming Regulatory Act. November: South Dakota voters amend their constitution to allow low-stakes casinos in Deadwood.

1989 South Dakota Legislature approves Video Lottery Terminals; State Lottery is soon operating 8,000 slot machines throughout state. September: Oregon Lottery starts accepting bets on NFL games, later includes other professional sports teams. November: Low-limit casinos open in Deadwood.

1990 Video poker machines open at racetrack in West Virginia. New York Legislature amends law to allow off-track betting operators to accept phone-in bets from residents of other states.

1991 April 1: Picturesque, low-limit riverboat casinos open in Iowa to nationwide television coverage. Five months later: High-limit riverboat casinos open across the Mississippi River in Illinois. Five dollar maximum bet casinos open in three mountain-towns in Colorado.

1992 Riverboat and dockside casinos open in Mississippi; video poker machines in racetracks in Rhode Island, throughout Louisiana and Oregon. South Dakota votes to keep VLTs 62.8% – 37.2%; Colorado votes against more casino towns 80.4% – 19.6%.

1994 Iowa Legislature eliminates $5 limit on riverboat casinos, allows tracks to have slots. May For only the second time this century, voters failed to approve a state lottery: Oklahoma Gov. David Walters’ pro-lottery forces were far out spent by horse-racing interests. Nebraska Supreme Court declares off-track betting violates state constitution.

1995 May Sports International, licensed by Grenada, accepts first Internet wager.

1996 November For the first time in American history, the citizens of a state vote, in the face of active opposition, to bring in new, high-stakes casinos. In fact, the voters of two states, Michigan and Arizona, approve new casinos, without limiting the size of wagers nor restricting the gaming onto riverboats or mountaintops.

1998 November Proponents of legalized gaming win virtually every race: Voters in Arizona refuse to kill their state lottery. New Jersey approves a constitutional amendment to allow telephone race bets. The only incumbent governors not re-elected opposed a state lottery in Alabama and a state lottery and video poker in South Carolina. Missouri votes, again, to overrule a State Supreme Court opinion and keep casino boats-in-a-moat. Tribes in California spend $70 million to keep their casinos, winning Prop. 5, the most expensive initiative election ever fought.

Today, May 11,1999 – 27 states and three territories have legalized true casinos, through statutes and tribal-state compacts. At least 12 state lotteries are in the quasi-casino business with VLTs and keno. Three hundred web-sites accept wagers by credit card and computer.