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A pivotal 2018 Supreme Court decision determined that states may decide whether to allow gambling, sports betting, and other forms of gaming and wagering. While legal sports betting now exists in many states, there are often limits to what sports may be bet on and where bets can be placed. Many states still do not allow betting on sports, even when they allow gambling and gaming in other forms.

The following states allow sports betting in some form:

  • Arizona.
  • Arkansas.
  • Colorado.
  • Connecticut.
  • Delaware.
  • Florida.
  • Illinois.
  • Indiana.
  • Iowa.
  • Kansas.
  • Kentucky.
  • Louisiana.
  • Maine.
  • Maryland.
  • Massachusetts. 
  • Michigan.
  • Mississippi.
  • Montana.
  • Nebraska.
  • Nevada.
  • New Hampshire.
  • New Jersey.
  • New Mexico.
  • New York.
  • North Carolina.
  • Ohio.
  • Oklahoma.
  • Oregon.
  • Pennsylvania.
  • Rhode Island.
  • South Carolina.
  • Tennessee.
  • Virginia.
  • Washington.
  • West Virginia.
  • Wisconsin.
  • Wyoming.

If your state is on the above list, then some form of sports betting is legal in your state. You may want to confirm whether or not your state allows the type of bet you plan on placing. A handful of states limit gaming to tribal casinos, or limit which sports people can wager on. For example, in Oregon, betting is only permitted at a state-approved location, via a state-approved online app, or at a tribal casino. Additionally, in Oregon, wagers on college sports are not legal. Notably, some states, like California, do have tribal casinos and other gaming available, including betting on horse races, but expressly ban betting on sports.

The following states limit sports betting to tribal casinos only:

  • New Mexico.
  • North Carolina.
  • North Dakota.
  • Oklahoma.
  • Washington.
  • Wisconsin.

The following states ban sports betting altogether:

  • Alabama.
  • Alaska.
  • California (except on horse races).
  • Georgia.
  • Hawaii.
  • Idaho.
  • Minnesota.
  • Missouri.
  • Texas.
  • Utah.
  • Vermont.

While law enforcement rarely comes after informal sports betting pools between friends and coworkers, many states do ban these. Both California and Texas, for example, make it a crime to participate in an office sports pool. State laws may limit gambling to only state-run, state-approved, or tribal casinos.

Some states, however, like Colorado, have social exceptions that allow people who have a social connection to wager among themselves legally. In these contexts, generally, the organizer participates on an equal level and does not benefit from hosting the pool.

Can I host a sports pool with friends or coworkers?

Maybe. Even in places where gambling is legal, there may be restrictions on who can host or be the house. States with social exceptions may still limit how much people can bet or have other restrictions. To find out what requirements you may need to meet to organize a pool for your friends and coworkers, you may want to ask a lawyer. In states with strict anti-gambling laws, such as Utah or Hawaii, hosting a pool typically violates state laws. Additionally, employers may prohibit gambling or pools, or another rule or policy may do so indirectly, which may lead to potential trouble with your employer.

Can I gamble out of state online?

Maybe. This depends on the state laws where you are located. For example, if you are in California, where betting on sports is banned, it is illegal to place a bet online in another state.

Mobile and online gaming make up a large part of sports betting these days. Generally, states that allow it also regulate it. In states that prohibit gambling, like Utah, individuals can face legal penalties if caught gambling online. State and local law enforcement, however, often lack the resources to enforce these laws, particularly as online gambling generally occurs in the privacy of one's own home.

Bettors may want to read the fine print before cashing in. Collecting winnings or cashing out may be more complicated across state lines. Before wagering online across state lines, you may want to confirm that the sports book you bet with can legally issue the payment for your winnings.

So long as it is legal to wager on sports online in the state where you are physically located, and the service you are betting with is following your state's laws, then using a VPN makes no difference, legally speaking.

Using a VPN, however, does not circumvent state laws that prohibit gambling. You may want to confirm that the gaming service's terms and conditions do not prohibit connecting via VPN to circumvent a state's gambling laws. Violating a gaming site's rules could lead to being kicked off the site and difficulty collecting your winnings or cashing out.

Do I have to pay taxes on my winnings?

Yes. Taxes are generally owed on any income a person earns, even if it is derived from an illegal source. Individuals report gambling winnings as “other income” on their 1040 forms.

Casinos and online gaming websites often require players to provide their tax information to collect their winnings. This is because casinos and gaming websites are required to report payouts above a certain amount to the IRS and to state tax authorities. For certain types of payouts above those threshold amounts, casinos may be required to withhold taxes and issue an IRS W2-G form that documents the withholding.

If you have legal questions about gambling, whether online or with friends and coworkers, reach out to a Rocket Lawyer network attorney for affordable legal advice. If you need tax help, Rocket Lawyer can now match you with a tax pro for affordable and convenient tax preparation and filing services. Leave taxes to a pro with Rocket Tax.

This article contains general legal information and does not contain legal advice. Rocket Lawyer is not a law firm or a substitute for an attorney or law firm. The law is complex and changes often. For legal advice, please ask a lawyer.

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