Gambling, also called gaming, appears to have been a common phenomenon since the advent of recorded human history. Sporting events, notably horse racing, reflect both licit and illicit gambling. The common law definition of gambling is wagering something of value on the outcome of a game in which chance predominates over skill.
Gambling, while popular within many cultures, has often reflected the morality of the ruling or majority elements in society. Certain religious sects have long demonized public gaming and occasionally succeeded in imposing prohibitions. This was the case with Puritan New England.
The Genesis of Gambling in the United States
In the 1930s, Las Vegas, Nevada, was built on gaming, albeit with questionable legitimacy during these early years. Throughout most of the 20th century, illicit gambling was associated with organized crime along with black-market alcohol (during Prohibition) and drug trafficking, prostitution, and loan sharking. Gambling as a legitimate source of revenue began with state lotteries and Indian gaming—two events that began during the latter half of the 20th century. By the same token, efforts at the federal level were instituted to combat illicit gambling through the Racketeer Influenced and Corrupt Organizations Act (RICO). Clearly, the legitimization of Indian gaming, initiated by President Ronald Reagan, set the stage for the widely accepted practice through most of the country today. Indeed, gambling in the United States is widely accepted and promoted. In May 2013, a $590.5 million Powerball Lottery jackpot was won by a single ticket holder.
Informal gaming was prolific during the frontier days of rapid U.S. expansion especially within mining boom towns in the west and Alaska. Historically, gambling existed in cities with substantial ethnic communities, like New Orleans, Louisiana, or those that attracted transient populations like Miami, Florida, and Galveston, Texas. However, the economic, social, and human devastation associated with the Civil War led to a conservative backlash within the United States and along with it, prohibitions against gambling. This conservative backlash began during Reconstruction and was legitimized with passage of Prohibition—the Eighteenth Amendment to the U.S. Constitution—and the Volstead Act. Prohibition became effective on January 18, 1920, and while specifically addressing alcohol consumption, it is widely associated with attempts to legislate morality, especially among targeted groups—mainly Jews and Catholic immigrant populations (Irish, Italian, French, Polish), the same groups long associated with gambling, notably bingo.
The repeal of Prohibition (in the Twenty-First Amendment) occurred in 1933. This coincided with the establishment of Las Vegas, Nevada, as a gambling destination. In 1931, Nevada passed Assembly Bill 98 authorizing most forms of gambling. This and the state’s legalization of prostitution, in all but two counties, made it a mecca, especially for residents of southern California. Soon Las Vegas became one of the main sites for organized crime in the United States. “Bugsy” Siegel took Las Vegas gambling to a new level with the construction of the Flamingo Hotel and Casino. Howard Hughes’s investment in Las Vegas slowly brought about changes in the 1960s, and passenger air travel opened up Las Vegas and other Nevada gambling centers to a greater number of travelers. In the 21st century, Las Vegas is billed as a family-friendly vacation and convention center. The Mob Museum in downtown Las Vegas depicts the sordid history of gambling in the southwest.
Interestingly, the state lottery phenomena began in a conservative state, New Hampshire, one of the original Puritan colonies (Congregationalists and Presbyterians). On April 30, 1963, Governor John King signed the Sweepstakes Bill making New Hampshire the first state to legalize a state run gaming program. Given that New Hampshire prides itself on not having either a general sales tax or state income tax, the sweepstakes program was intended to provide aid to public education. New Hampshire has 221 towns and 13 cities, where local option voting was put to the residents in a special ballot in order to see if they supported the sale of sweepstakes tickets within their jurisdictions. The incentive to the communities was that the sweepstakes funds would defray property taxes, the main source of income for the state.
Only 13 communities voted the measure down and sweepstakes tickets went on sale on March 12, 1964. Since then, 37 other states, along with the District of Columbia, the Virgin Islands, and five Canadian provinces have established lotteries. (Puerto Rico has had a lottery since 1934). A consortium of lottery states joined forces under the Mega Millions and Powerball labels. The latter is coordinated by the Multi-State Lottery Association (MUSL), and in October 2009, MUSL and the Mega Millions consortium allowed U.S. lotteries to sell both games to their customers. California joined the 42-state consortium in April 2013, contributing to the largest single winner jackpot ever in the United States.
Racketeer Influenced and Corrupt Organization Act—RICO
The Organized Crime Control Act of 1970 (Public Law 91-452) represented the federal response to organized crime such as the Mafia, but was eventually expanded to include any organized criminal enterprise including motorcycle gangs, professional sports, street gangs, and insider trading. Under its broad authority, RICO applies to 27 federal statutes and eight state crimes, with a 10-year statute of limitation. A RICO conviction can lead to a 20-year sentence, a substantial fine, and forfeiture of assets and property. Illicit gambling is one of the RICO-specific statutes. Both the Gambino crime family and the Chicago Outfit have been adjudicated under the RICO statute. Illegal gambling is often a component of most organized crime enterprises, along with prostitution, extortion, and substance trafficking.
The legal battle over Indian gaming began in the late 1970s when the Seminole tribe of Florida established a high-stakes bingo hall on reservation land just seven miles from Fort Lauderdale. The tribal operation ran six days a week, in violation of state law limiting bingo operations to twice weekly, and offered jackpots far exceeding the state winning limit of $100. The tribe sought a federal injunction when the sheriff threatened to shut down the operation. In 1980, the federal district court ruled in favor of the tribe, a decision upheld by the U.S. Fifth Circuit Court in 1981 basing its decision on tribal sovereignty.
A similar situation occurred involving both the Cabazon Band of Mission Indians and the Morongo tribe, both located in Riverside County, California. Again, the lower federal courts defended the Indians’ right to establish gaming facilities. California appealed these decisions to the U.S. Supreme Court, which upheld them in 1986. Twenty-one other states joined California in its appeal. The U.S. Supreme Court ruled six to three in favor of the tribes, stating that bingo halls could operate under tribal laws and were justified because of the dire economic needs within Indian communities. The court also stated that if Indian gaming is to be regulated, it must be by provisions of the U.S. Congress and not the states.
This action by the U.S. Supreme Court led to passage of Public Law 100-487, the Indian Gaming Regulatory Act (IGRA), in October 1988. IGRA provided federal standards for gaming on Indian lands and established the National Indian Gaming Commission. Essentially, IGRA distinguishes between three classes of Indian gaming, providing regulations for each class. Class I gaming is limited to traditional games of chance that are likely to involve the participation only of tribal members. Class II gaming represents games like bingo and similar games of chance with a targeted audience that transcends tribal membership and therefore must meet with federal approval. Class III (casino-type) gaming in Indian Country requires a tribal-state compact as well as federal approval. Type II and III gaming is prohibited in two states that have a broad prohibition against all types of gambling—Utah and Hawai’i. Casino-type gaming has now spread to non-Indian operations as more states view this as a viable revenue resource.
- Durham, S. and K. Hashimoto. The History of Gambling in America. Upper Saddle River, NJ: Prentice Hall, 2010.
- Duxby, Neil. Random Justice: On Lotteries and Legal Decision Making. New York: Oxford, 2003.
- French, L. A. “Indian Gaming.” In Legislating Indian Country: Significant Milestones in Transforming Tribalism. New York: Peter Lang, 2007.
- Gabriel, K. Gambler Way: Indian Gaming in Mythology, History and Archaeology in North America. Boulder, CO: Johnson Books, 1996.
- Wilson, Richard L. “Lotteries.” In Ethics. Rev. ed. Pasadena, CA: Salem Press, 2004.