To understand what started gambling on sports one has to first examine the history of sports gambling in America. The USA had a long history of permitting some kinds of legal gambling and even illegal betting to some extent. Political control and scandals regarding gaming interests have led to certain backlashes which have resulted in prohibition or regulation of sports gambling. Standards and laws pertaining to sports gambling have kept changing.
Nelson Rose explains these adjustments in law as three waves. The 1st wave was in the colonial era that lasted up until the mid 1800s, the second wave started following the Civil War and lasted up until the early 20th Century and also the third wave commenced while in the Great Depression and it’s still continuing.
Throughout the Colonial Era, different attitudes were enforced towards betting. Puritan attitudes were adopted towards gambling and possessing dice, cards, gaming tables etc were banned. Afterwards it had been allowed as long as it was not a calling or trade but for moderate and innocent recreation. Settlers brought with them views that said gambling was merely a harmless activity. The frontier spirit encouraged the appeal of gambling since it involved high risk, high expectations and opportunism.
Eventually all colonies used lotteries as a solution out of financial problems and to help the colonies. It became a civic responsibility and profits were used to establish a number of the first prestigious universities, build churches and also libraries. Lotteries remained popular right to the early 19th Century. Horse racing had also been popular and the Long Island built the very first race track in 1665. Casino gaming began to emerge slowly as roadhouses and taverns started to permit card games and dice.
The Lower Mississippi Valley became an organized and legitimate gambling area in 1800s. The mighty river featuring its riverboats was a major trade avenue for wealthy merchants and farmers. New Orleans quickly gained recognition as being the gambling capital. Through the 1830s southern settlers turned against professional gamblers who were held responsible for committing crimes, debasing morals of society and endangering streets. During 1800s there seemed to be increasing attack of gambling especially lotteries and when operators absconded with all the proceeds lottery scandals finally led to prohibition of gambling.
The Gold Rush in California triggered a tremendous increase in the kinds of gambling and San Francisco was crowned the new gambling capital in the USA. During 1849 and 1855 gambling spread widely and also by 1850 California and many cities had licensed gambling centers. But soon the Legislature made most types of gambling illegal and a number of professional gamblers were lynched. This prohibition drove gambling activities underground and did not eliminate it. Gambling was legal during 1869-1910 in Nevada.
It is easy to now understand what started gambling on sports in the US. With the numerous scandals in the lottery gambling segments, 35 states in the US including California prohibited lotteries. In 1933 pari-mutuel betting was legalized and new automated systems and laws made horse racing betting more straightforward. In 1978 casino gambling was legalized by New Jersey and Atlantic City was a popular tourist destination. Despite its illegality sports gambling became quite popular and already is a billion dollar industry.