For much of American history, sports betting operated in the shadows. While horse racing had a long, accepted history of legal wagering, betting on other sports like baseball and football was widely considered a vice. By the mid-20th century, the federal government began to take a more active role in curbing illegal gambling, largely to combat organized crime.

One of the earliest and most significant pieces of legislation was the Federal Wire Act of 1961. This law was aimed squarely at the mob's lucrative bookmaking operations, which often spanned multiple states.

In 1961, a "wire communication facility" meant the telephone. The law effectively shut down interstate bookies who took bets over the phone. For decades, the Wire Act was a major barrier to any form of sports betting that crossed state lines. Its interpretation has been debated in the internet age, but its initial intent was clear: to stop the flow of money from illegal sports betting to organized crime syndicates.

For the next few decades, the legal landscape remained largely unchanged. Nevada was the only state where sports betting was fully legal and regulated. Then, in 1992, Congress passed a law that cemented this status quo across the country.

The Professional and Amateur Sports Protection Act, or PASPA, didn't make sports betting a federal crime. Instead, it prohibited states from authorizing or licensing sports betting schemes. It effectively grandfathered in the sports lotteries in Oregon, Delaware, and Montana, and the sports pools in Nevada, but banned any other state from getting into the game.

For 25 years, PASPA was the law of the land. It created a reality where legal sports betting was confined almost entirely to one state, while a massive illegal market thrived nationwide.

The push to overturn PASPA came from New Jersey. For years, the state fought in court for the right to legalize sports betting at its casinos and racetracks, arguing that PASPA was an unconstitutional overreach of federal power. The case, Murphy v. National Collegiate Athletic Association, eventually reached the Supreme Court.

In May 2018, the Court sided with New Jersey. The ruling focused on a key constitutional principle: the federal government cannot "commandeer" state legislatures by forcing them to enact or maintain federal laws. The Court found that PASPA did exactly that by telling states what they could and could not authorize.

The decision didn't legalize sports betting nationwide. It simply returned the power to do so to the states.

The repeal of PASPA opened the floodgates. Since 2018, dozens of states have moved to legalize and regulate sports betting, creating the patchwork of different laws and markets that exists today. This new, state-by-state landscape is the direct result of a long legal history, from the Wire Act's targeting of the mob to PASPA's federal ban and its eventual downfall.

Let's check your understanding of these foundational laws.