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Bet on the Big Game? You Probably Broke the Law

Industry experts expected yesterday’s Super Bowl game to bring in around $100 million in legal sports wagering in Nevada. That’s a lot of moola, but it pales in comparison to how much Americans bet illegally. While it’s hard to know exact numbers, the American Gaming Association estimated that Americans would spend around $3.8 billion in illegal gambling on the Super Bowl.

While gambling on a football has probably been around since the first game, many state and federal statutes prohibit even small, friendly wagers among friends.

The Unlawful Internet Gambling Enforcement Act of 2006: Although UIGEA doesn’t outlaw gambling online, it does prohibit payment transactions related to “unlawful” online gambling. While the law doesn’t specify what it considers “unlawful” gambling, it does specifically exempt fantasy football, qualifying it as a “game of skill.” That said, betting on the real-world outcome of a single game wouldn’t qualify under this exemption. So, if you’re wagering on the Super Bowl online, you are very likely violating this federal law.

The Interstate Wire Act of 1961: This law prohibits cross-state betting on sports. The courts and federal entities have generally interpreted “wire” to apply to both telephone and Internet communications, so this law prohibits all on or offline betting on sports that crosses state lines. Because online data is usually shuttled between servers in various states, it is taken to mean that any online sports betting is interstate sports betting and in violation of this law. Even collecting or paying out money with online processors like PayPal or LeagueSafe could get you into trouble if it is connected to betting on sports.

The Professional and Amateur Sports Protection Act of 1992: PASPA was passed at the behest of the sports leagues and prohibits wagering “on one or more competitive games in which amateur or professional athletes participate, or are intended to participate, or on one or more performances of such athletes in such games.” The prohibition exempts states that already had legal sports betting within a year of the law’s passage, such as Nevada, Delaware, Montana, and Oregon. New Jersey has attempted, unsuccessfully, to overturn PASPA as unconstitutional.

While some states have exemptions for “social” or “recreational” gambling, it doesn’t always mean that your home pool is safe. For example, despite the fact that Pennsylvania passed a law explicitly allowing charitable and volunteer clubs to offer small betting pools on events like the Super Bowl, state police raided the social halls of three fire departments and seized their pool money. When criticized by state lawmakers, the police stated that they don’t recognize the new state law because it conflicts with federal prohibitions on sports betting.

Indiana police have also made a tidy sum raiding these small-stake betting pools. Over the last two years, they have collected around $300,000 from establishments operating illegal Super Bowl betting pools.

While it’s unlikely your home or office pool would garner the attention of the police, there are other ways your wager could get you in trouble, as six Verizon employees found out in 2011 when they were fired over their participation in an office pool that ran afoul of the company’s policies.

And in New Mexico, a teacher’s job may be on the line for her involvement in a $20-per-square Super Bowl pool. In New Mexico, a teacher is under investigation for selling $20 squares in a pool.

And then there’s the tax man. Even if your wagers are among friends, you’re more likely to pique the interest of the authorities if the amount wagered is very large. For example, the day after the 2009 Super Bowl, agents from the Illinois Department of Revenue raided a Streator bar, seizing $122,000 in “proceeds from bets on sporting events.”

Since all but two states have some sort of legal gambling, including lotteries which offer the worst odds, the prohibition against betting on sports is unjustifiable. Furthermore, one need only survey people around the office or in your circle of friends to realize that the ban is not working; if people want to wager a few dollars to make a game slightly more interesting, they will find a way to do it. It’s high time regulators got out of the business of telling Americans when and where they should be allowed to bet.