Gambling Regulations in the USA — A Practical Jurisdiction Comparison for Licensing

Hold on. If you’re thinking “one US licence covers everything”, that’s not how it works. The United States is a patchwork: each state (and certain tribal authorities) sets its own rules for online and land-based gambling, and federal laws provide guardrails that complicate cross‑state activity.

Here’s the useful bit up front: if you want to operate legally in the US you will generally need (1) a state-level licence for each state you target, (2) certified gaming software (RNG, reporting, security), (3) player‑fund segregation and AML/KYC systems, and (4) robust geolocation to prevent out‑of‑state play. The rest is detail—and it matters for cost, timing and business model.


Why the US is different — short overview

Something’s off if you treat the US like the UK or Malta. On the one hand you have conservative federal laws—on the other you have states aggressively licensing and taxing online play. The split means operators must choose between building a multi‑state footprint or focusing on one regulated market and scaling there.

At the federal level two statutes matter most: the Unlawful Internet Gambling Enforcement Act (UIGEA, 2006) which restricts payment flows, and evolving DOJ positions on the Wire Act (notably the 2011/2018 interpretations). These set boundaries; states fill in the commercial rules and tax regimes. For practical licensing work, treat the federal rules as “must‑comply” and state rules as “business model shaping”.

Quick comparative table — major US licensing options

How state differences shape your licence strategy

Hold on — licence cost isn’t just the application fee. You should budget for:

• Application and annual licence fees (state dependent).
• Background investigation costs for principals (fingerprinting, lawyers, travel).
• Technical compliance (audits, RNG certification, penetration tests).
• Taxes on gross gaming revenue (can make or break margins).

At first glance, a state with low taxes looks attractive; then you realise access to player liquidity and product mix (casino vs sports vs poker) changes lifetime value dramatically. On the one hand you can pick Nevada for regulatory certainty; but on the other, New Jersey and Michigan deliver much bigger online player pools for casino operators.

Typical licensing steps and timelines (practical checklist)

Here’s the pragmatic sequence that most operators follow. Expect 6–18 months depending on state and preparedness:

1. Pre‑application feasibility: product scope, tax modelling, local partner outreach (if needed).
2. Prepare corporate documentation: incorporation, beneficial owners, audited financials.
3. Submit application and pay fees; begin background checks for owners/key staff.
4. Technical submission: game manifests, RNG certificates, software & platform audit reports.
5. Integration tests and on‑site/remote inspections by the regulator.
6. Approval, licence issuance, and post‑licence reporting cadence setup.

Mini case — launching in New Jersey vs Pennsylvania (hypothetical)

Quick numbers: assume projected monthly gross gaming revenue (GGR) $2M. Tax scenarios change net revenue materially.

• New Jersey: at ~15% tax, monthly tax ≈ $300k. Regulatory fees and compliance add headcount cost but attract strong liquidity.
• Pennsylvania: with higher effective tax and local fees, tax burden could be ~$400–$500k on the same GGR, reducing cashflow and marketing budget.

The practical takeaway: higher tax states require either more scale or higher margins per player. That influences product mix (more slots vs more table games) and bonus strategy.

Where tribal gaming fits in

Tribal casinos operate under the Indian Gaming Regulatory Act (IGRA). Many tribal nations negotiate compacts with states to provide online offerings—so partnering with a tribe can be an alternate route into some markets. But compacts add negotiation complexity and revenue share that differ from standard commercial licences.

Offshore licences vs US state licences — the real risk

Here’s the blunt point: an offshore licence (for example, Curaçao) can get you a white‑label live fast, but it does not permit serving US customers. Accepting US players from an offshore platform risks enforcement, blocked payment rails, and prosecution in extreme cases. If your business model targets US consumers, state licences are the only safe route.

To illustrate a real choice: some operators use a hybrid approach—use an offshore entity to run non‑US markets while applying for state licences for each US state they prioritise. That separates risk profiles and accounting. It’s more expensive, but often prudent.

Compliance essentials — checklist (quick)

• 18+/21+ age verification flows and clear T&Cs.
• Robust KYC: ID document capture, proof of address, PEP/sanctions screening.
• AML program: threshold monitoring, SAR filing capability, AML officer.
• Technical security: SSL/TLS, encryption at rest, network segmentation.
• RNG and game fairness: independent lab certification (e.g., GLI, eCOGRA where accepted).
• Geolocation and IP blocking for out‑of‑state players.

Common mistakes and how to avoid them

• Underestimating background checks: expect months, not weeks. Fix: prepare CVs, clean financial records, and engage counsel early.
• Ignoring tax modelling: a small change in tax rate can flip viability. Fix: run conservative, mid and aggressive scenarios before committing.
• Poorly scoped technical documentation: regulators reject vague security or RNG statements. Fix: pre‑audit with a recognised lab and present clear test reports.
• Assuming one licence equals nationwide access: it doesn’t. Fix: map your target states and plan licences sequentially or via tribal partners.
• Relying only on offshore payment processors: payment acceptance in the US often requires domestic banking/processor relationships to avoid UIGEA issues. Fix: onboard compliant payment providers early.

Where to find liquidity (player pools) and why it matters

Big point: player liquidity is king for online poker and sports betting. States that permit interstate pooling (e.g., multi‑state poker networks) increase per‑player value. New Jersey and Nevada have mature pools; newer markets like Michigan are growing fast. Design your licence roadmap with liquidity access as a primary decision criterion.

When an alternative link helps (practical resource)

If you’re researching operators or game libraries while building state applications, it helps to inspect live platforms to understand deposit/withdrawal flows, KYC prompts, and marketing compliance. For example, some long‑running offshore platforms illustrate the practical differences in product mixes and payment options; exploring them can sharpen your compliance checklist when transitioning to US‑licensed operations — libertyslots official site offers an example of an offshore operator’s product presentation and policies (note: it is not a substitute for regulated US licensing).

18+. Regulations vary by state. If you or someone you know has a gambling problem, contact your local support services — in Australia call Gambling Help Online (1800 858 858), in the US use state problem gambling helplines listed on the National Council on Problem Gambling site. Play responsibly.

Sources

• https://www.justice.gov/archives/opa/press-release/file/1092096/download
• https://www.congress.gov/bill/109th-congress/house-bill/4954
• https://www.nigc.gov/

About the author

James Carter, iGaming expert. James has 12 years’ experience advising operators and suppliers on US market entry, licensing strategy, and technical compliance. He works with legal teams and testing labs to translate regulation into operational checklists.