Ryan Mack

Associate Editor

Loyola University Chicago School of Law, JD 2027

Since the Supreme Court’s 2018 ruling in Murphy v. NCAA, which struck down the Professional and Amateur Sports Protection Act, the sports betting industry has expanded at an extraordinary rate. Sports wagering is now legal in 38 states and Washington, D.C. In 2024, licensed sportsbooks handled nearly $150 billion in bets and generated more than $14.2 billion in operator revenue. State and local governments collected roughly $2.9 billion in taxes, and the federal government received over $375 million through the federal excise tax. This expansion, however, has also produced a complicated and evolving set of regulatory and compliance challenges.

The fragmented regulatory framework to sports gambling

One of the gaming industry’s most pressing compliance challenge is the lack of consistent federal regulation. Absent nationwide standards, each state has developed its own regulatory framework, which leaves operators to navigate a fragmented set of rules. This state-by-state approach has produced what many observers characterize as a confusing patchwork of regulatory requirements. As a result, companies must build and maintain distinct compliance systems for every jurisdiction in which they operate, substantially raising both their costs and the overall complexity of legal compliance.

The state-by-state regulatory model has led to significant disparities in how sports betting is governed across the country. In New York, for instance, taxes operate at an unusually high 51% of gross revenue and enforces stringent advertising rules that restricts certain promotional claims and mandate specific disclosures. By contrast, states such as New Jersey have adopted more operator-friendly frameworks, with online sports betting taxed at just 19.75%. Among others, New Jersey regulators have not hesitated to pursue enforcement actions against major sportsbooks for issues involving tax compliance, marketing practices, and responsible gaming obligations.

This regulatory inconsistency also affects core operating matters. Rules governing affordability checks, deposit limits, and advertising standards vary widely across jurisdictions. A 2024 survey of compliance professionals found that source of funds checks are viewed as the most challenging compliance obligation. Because no uniform standards exist, operators must design adaptable systems capable of meeting each jurisdiction’s distinct verification and documentation requirements.

The push for federal oversight

Growing concerns about problem gambling and game integrity have sparked renewed congressional interest towards federal oversight. In September 2024, Senator Richard Blumenthal and Representative Paul Tonko introduced the SAFE Bet Act (The Act), a bill that would significantly reshape the regulatory structure for sports wagering in the U.S. If in effect, their proposal would impose a nationwide ban on sports betting unless the state submits a new application through the Department of Justice (DOJ), which would evaluate whether the state’s regulatory framework satisfies the newly created federal baseline standards.

The Act focuses on three central regulatory areas: advertising, affordability, and the use of artificial intelligence (AI). The Act would impose a bar on sports betting advertisements during primetime programming and live sporting events, eliminate promotional incentives such as “bonus bets,” and require operators to perform affordability assessments before accepting wagers above specified limits. Moreover, it would cap customers at just five deposits within any 24-hour period and even forbid operators from using AI tools to monitor individual gambling behavior or generate personalized micro-betting opportunities.

Although The Act has not made it past the committee stage, and likely never will, its introduction does reflect growing political pressure to address the public health consequences associated with the rapid expansion of legalized sports wagering. Industry groups like the American Gaming Association have pushed back, contending that federal intervention would undermine state sovereignty and disrupt the individualized regulatory systems that states have developed in response to their own local needs and priorities.

Offshore operations and enforcement challenges

States have increasingly turned their attention to offshore sportsbooks that operate, some even illegally within the U.S. market. However, recent enforcement efforts suggest that targeted crackdowns can yield meaningful results. Regulators in Michigan and Colorado issued cease-and-desist orders to Bovada, one of the most widely used offshore sportsbooks. Bovada subsequently withdrew its services from both states. According to data from GeoComply, states that pursue similar enforcement actions experience noticeable growth in their legal markets, including increases in active users and a 39% higher rate of new account registrations compared to states that take no enforcement measures.

Integrity monitoring and responsible gaming

The proliferation of sports betting has only amounted in heightened concerns regarding game integrity, thus prompting operators to adopt increasingly sophisticated monitoring and reporting systems. In both 2024 and 2025, several high-profile incidents illustrated these emerging risks. For example, the NBA permanently banned multiple players and coaches for fixing their own stat lines and an FBI investigation led to the arrests of NBA figures on gambling-related charges.

Paradoxically, these gambling scandals also highlight that the compliance mechanisms within the regulated sports gaming market are working just as intended. Sportsbooks were able to detect irregular betting activity in real time, alert the leagues and state regulators, and set in motion the investigations that uncovered the underlying misconduct. Such monitoring and information-sharing capabilities were largely unavailable before the nationwide legalization of sports gambling, a time when most wagering took place through illegal bookies or offshore sites operating outside any regulatory framework.

Perhaps the most ethically complex aspect of compliance concerns the prevention and management of problem gambling. The National Council on Problem Gambling’s 2024 report shows wide disparities in responsible-gambling safeguards among states that allow mobile sports betting. Some jurisdictions require robust protections such as mandatory deposit limits, cooling-off periods, and accessible self-exclusion tools. Others offer only minimal consumer safeguards. This tension between maximizing revenue and protecting vulnerable populations creates inherent compliance difficulties that requires operators to tread carefully.

Looking ahead

The sports gambling industry faces an uncertain regulatory future. States will continue to revise their rules in response to emerging issues, especially around problem gambling restrictions and offshore operator enforcement. Although federal intervention is unlikely, political divisions and lobbyists have shown periodic interest, and even limited federal intervention could reshape existing state systems. Given this volatility, operators must continue navigating evolving, state-specific regulations while remaining alert to potential federal baseline standards. These dynamics reflect broader federalism debates: how to balance state autonomy with national uniformity, commercial expansion with consumer protection, and rapid innovation with effective oversight.