What Is Illegal Gambling?

All states prohibit some types of gambling. Learn about the possible penalties for engaging in illegal gambling, gaming, or betting.

By | Updated by Rebecca Pirius, Attorney

In decades past, gambling used to be a crime almost everywhere other than Las Vegas, Nevada, and Atlantic City, New Jersey. Today, more and more states have legalized various types of gambling, ranging from casinos to poker rooms and horse racing tracks. While some states have legalized certain types of gambling, other types remain illegal. All states have laws that prohibit at least some type of gambling.

What Is Illegal Gambling?

Gambling is defined in numerous ways but generally requires:

  • betting or wagering on an outcome
  • based partially on chance (not completely on skill), and
  • done so in order to win something.

Illegal gambling is any type of gambling that is specifically prohibited by state law.

Are Gambling and Gaming Different?

Gambling is sometimes referred to as "gaming." Depending on the language of state laws, gambling and gaming can mean different things, or the two terms can be used synonymously. "Gaming" typically refers to playing games for wagers, such as craps, card games, slot machines, and roulette. "Gambling" may refer to these same types of games but also includes other types of activity such as sports wagers or online gambling.

Why Is Gambling Illegal?

Gambling has long been considered a vice, associated with the likes of organized crime, money laundering, addiction, and immorality. Even federal law makes certain gambling operations illegal. The federal prohibition falls under racketeering-related offenses and focuses on large-scale operations that make a lot of money at the expense of everyday people. (18 U.S.C. § 1955.)

What Are Examples of Illegal Gambling?

Here are some examples of what typically makes an activity "gambling." Not all gambling is considered illegal. But if a state considers an activity to be gambling and makes it legal, the state typically regulates it with licensing requirements, inspections, and taxes.

Betting Involved

While most instances of gambling occur when someone bets money, courts have ruled that gambling can occur whenever a bet is made using anything of value. The item of value is sometimes known as "consideration" and can encompass anything that has any worth. The amount of the bet doesn't matter, and as long as the property that's at stake in the game is worth some value, the game is gambling.

Game of Chance or Skill?

Many state gambling laws outlaw games, bets, or wagers that are at least partially dependent on some element of chance. If a game or competition that gives prizes to winners is based on skill, such as a car race, marathon, or shooting competition, it's not considered gambling. (However, other laws or restrictions may apply in order to make such competitions legal.)

What differentiates a game of skill from a game of chance is usually determined by which of the two elements has the greatest impact on the outcome. If chance is the biggest factor, the game is one of chance and making bets or wagers on such games is gambling. Courts have ruled that in games that involve both skill and chance, and where a small group of skilled experts routinely win, this does not necessarily make the game one of skill. In determining what defines a game of skill or chance, courts often judge the game on the average player. If the average player's chances are dominated by chance, the law considers it a game of chance.

Chance of Winning

If you don't have any chance of winning something of value, you're not gambling. Gambling requires that there is a chance you might win something for your bet, whether it's money, property, or even more chances to play. Further, courts have ruled that you personally don't need to have placed any wager to be convicted of gambling. As long as a group of people has a chance to win something, and at least some of them have made a wager, you can be convicted of gambling if you are part of the group and stand a chance at winning.

Making a Profit

Those who win at gambling have obviously made some money. But aside from the players, what about the businesses that run or operate the gambling game or establishment? Business gambling occurs when a person or organization operates a gambling hall that collects fees or takes a portion of the amount the players bet. For example, a person who holds a "casino night" party and charges an entry fee breaks the law in a state that prohibits business gambling or gambling for profit.

Some state laws prohibit gambling as a business but allow "social gambling." Social gambling generally involves a game where the players are all equals and no one is collecting fees or making a profit apart from the outcome of the game. But not all states are game for social gambling—several states prohibit such activities.

Where Is Gambling Legal?

As noted above, the legality of gambling comes down to each state's laws. States may permit gambling through (highly) regulated state lotteries, horse racing, or charitable gambling, for instance. Many states also allow school raffles, promotional raffles, and the like. As described above, social gambling is often legal as long as no one is making money beyond the outcome of a game. If a neighborhood card game turns into a tournament, though, it could end up on the wrong side of a state's laws. (Although, even if a social game is illegal under state law, there's always the question of enforcement.)

It's always a good idea to consult your state's gambling laws and regulations, as well as any local ordinances. You can find a list of state gaming regulatory agencies here.

What Are the Penalties for Illegal Gambling?

While all states criminalize gambling to some extent, they also have vastly different penalties associated with gambling crimes. The type of penalty someone faces after being convicted of illegal gambling largely depends upon the state and the circumstances of the case.

Misdemeanor and Felony Penalties for Illegal Gambling

In some states, participation in illegal gambling carries misdemeanor penalties, while operating an illegal game could mean felony penalties. Those who engage in lawful gambling but cheat or commit some type of fraud can also face serious charges. Penalty levels might also increase if a person has prior gambling convictions or the game surpasses a certain betting limit.

Anyone convicted of misdemeanor gambling usually faces up to a year in a county or local jail, (though state misdemeanor penalties differ widely). Felony convictions, on the other hand, can bring a year or more in prison and, sometimes, as much as 10 years, especially where organized, professional gambling is present.

Instead of, or in addition to jail time and fines, courts can impose probation sentences for gambling convictions. Individuals under probation must abide by conditions set by the court or risk being sent to jail or prison. As a condition of probation, courts commonly order defendants to stop gambling and participate in a gambling addiction treatment program.

Fines and Forfeiture for Illegal Gambling

Misdemeanor fines for gambling are quite common and range from a few hundred dollars up to $1,000 or more. Felony gambling fines can be significant, sometimes as much as $20,000 or more. Fines can be separate from, or in addition to, jail or prison sentences.

States may also forfeit illegal winnings, proceeds, or equipment upon a criminal conviction. In forfeiture proceedings, the title to money and property that's tied to the illegal activity gets turned over to the government.

Speak to a Lawyer

Illegal gambling charges can impose significant penalties and can have a serious impact on your life, even if you aren't convicted. Anyone charged with a gambling crime needs to speak to a local criminal defense lawyer at the first opportunity. A good defense attorney will know the gambling laws in your state and have experience with the local prosecutors, judges, and court system.

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