American vs. British Gambling Legislation

American vs. British Gambling Legislation

Gambling laws vary across the world, and that includes two of the biggest gambling markets: the U.S. and the U.K. If you live in either location and want to play at various online casinos, it’s essential to understand the laws and how they affect your gameplay.
Depending on your location, it may be illegal for you to gamble online or offline.
American Gambling Laws
Although gambling is a multi-billion-dollar industry in the U.S., gaming laws can be messy and confusing. On the federal level, gambling is legal. However, interstate and online gambling can be restricted. In addition, each state has its own right to either regulate or prohibit gambling within its borders.
Casino-Style Gambling is Largely Restricted
Casino-style gambling is harder to come by in the U.S. The government gives Native American Trust Land the right to allow casinos, provided there is an agreement between the Tribal Government and the State.
There are only two states in the U.S. that allow gambling statewide:

  • Louisiana
  • Nevada

Other states have geographic areas, or certain cities, that allow gambling. Atlantic City, New Jersey and Tunica, Mississippi are two examples of cities where casinos are allowed to operate legally.
In total, 23 states allow commercial casinos to operate in some capacity. The U.S. has approximately 450 commercial casinos in operation.
Sports Betting Rules
The Professional and Amateur Sports Protection Act of 1992 makes sports betting largely illegal in the U.S., with the exception of a few states. However, in 2018, the Supreme Court declared that the law was unconstitutional.
Sports betting is now allowed in the following states and territories:

  • Colorado
  • Washington, D.C.
  • Delaware
  • Illinois
  • Iowa
  • Indiana
  • Michigan
  • Mississippi
  • Montana
  • Nevada
  • New Jersey
  • New Hampshire
  • New Mexico
  • North Carolina
  • New York
  • Pennsylvania
  • Oregon
  • Rhode Island
  • Puerto Rico
  • Virginia
  • Tennessee
  • West Virginia
  • Washington

Online Gambling is Very Limited
Online gambling is largely restricted in the U.S. The 1961 Federal Wire Act made interstate betting on sports illegal. However, that law did not address other forms of gambling, so online gambling has been the subject of many court cases.
The Unlawful Internet Gambling Enforcement Act of 2006 did not ban online gambling. Rather, it prohibited financial transactions associated with online gambling. As a result, many offshore casinos stopped offering services to players in the U.S.
Online gambling is permitted in the following states and territories:

  • California
  • Delaware
  • Illinois
  • Iowa
  • Indiana
  • Michigan
  • New Hampshire
  • Nevada
  • New Jersey
  • Rhode Island
  • Pennsylvania
  • West Virginia

Lotteries are largely legal throughout the U.S. The only states and territories that do not allow lotteries are:

  • Alaska
  • Alabama
  • America Samoa
  • Hawaii
  • Nevada
  • Utah

The two biggest lotteries in the U.S.  are Powerball and Mega Millions.
Taxes on Winnings
In the U.S., gambling winnings are taxable, and that includes winnings from:

  • Lotteries
  • Casinos
  • Horse racing
  • Off-track betting
  • Game shows
  • Sweepstakes

If you win a lot of money in a legal game of chance, the gaming establishment will deduct 24% of your winnings for taxes, and you will be given Form W-G2 to record the winnings.
There is a caveat here. Casinos aren’t required to withhold your taxes or issue Form W-G2 to players who win big at certain games, such as blackjack, roulette and craps. These are considered games of skill rather than games of chance.
Non-residents who gamble in the U.S. must also pay taxes. They are required to report their winnings on Form 1040NR. These winnings will generally be taxed at a flat rate of 30%.
Some states also require players to report their winnings and pay taxes on them.
British Gambling Laws
In the U.K., gambling is regulated by the Gambling Commission. The Gambling Act 2005 allowed for large, resort-style casinos to be built in the U.K. The Betting and Gaming Act 1960 allowed for bingo halls to be erected, and it also allowed for off-course betting.
London alone is home to over 1,000 betting shops. Online sports betting is a multi-million-pound industry.
Lotteries are also legal in the U.K. The National Lottery, Postcode Lottery and Health Lottery raise money for charitable causes.
In general, you must be at least 18 years of age to gamble in the U.K. For football pools, the minimum age is 16. Certain types of gaming machines have no minimum age requirements.
Violating gambling laws in the U.K. can have some serious penalties.

  • Underage gambling: £1,000 fine
  • Employing an underage person at a gambling facility: 51 weeks imprisonment and/or £5,000 fine
  • Operating a gambling facility without a license or providing a gambling machine without a license: 51 weeks imprisonment and/or £5,000 fine
  • Cheating, attempting to cheat or helping another person cheat at gambling: 51 weeks imprisonment and/or £5,000 fine

Legal,licensed casinos in the U.K. must comply with licensing regulations. For example, brick and mortar casinos can only be located in certain areas, and there are rules about which types of games they can offer.
Taxes on Winnings
In the U.K., you do not have to pay taxes on your winnings. Winners have the privilege of being able to keep all of their winnings, whether they played at a land casino or gambled online.
Players may not have to pay taxes on their winnings, but the gambling operators do. Operators pay 15% tax on all profits.
Gambling Licenses
Gambling is legal in the U.K., but operators must be licensed. British players are advised to play only at licensed casinos, or they risk losing their money.
The Gambling Act of 2005 made it so that any gambling operator who wishes to market to U.K. players must be licensed. Licenses are granted by the Gambling Commission, and operators must meet stringent requirements in order to gain a license. Operators must have protections in place for customers and to prevent crimes.
All licensed operators are required to display their license number on their website. Check the bottom of the page for a license number before depositing your money at a UK online casino.
Legal gambling operators must comply with the Commission’s Licence Conditions and Codes of Practice in order to maintain their licences.

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