The PASPA repeal on May 14, 2018, was the moment the United States Supreme Court reshaped an entire industry. In a 6–3 decision in Murphy v. National Collegiate Athletic Association, the Court declared the Professional and Amateur Sports Protection Act — known as PASPA — unconstitutional, striking down the federal law that had banned regulated sports betting in 46 states for 26 years.

That single ruling is the reason DraftKings, FanDuel, BetMGM, and Caesars now operate across dozens of states. It is the legal foundation of the entire US regulated gambling industry as it exists today. To understand the American iGaming market in 2026, you must first understand PASPA — and why its repeal was such a watershed moment. For a broader market view, see our US iGaming Market Size 2026 guide.

The Professional and Amateur Sports Protection Act of 1992 — also called the Bradley Act, named after New Jersey Senator and former NBA star Bill Bradley — was a federal law that effectively outlawed sports betting nationwide, with narrow exceptions for four states: Nevada, Delaware, Montana, and Oregon.

The law was enacted in the aftermath of high-profile sports gambling scandals, most notably the Pete Rose affair, in which the Cincinnati Reds manager was found to have wagered on baseball games. Congress feared that widespread legal sports betting would corrupt the integrity of professional sports. As one legislative record stated, lawmakers worried that legal wagering would change sporting events from “wholesome entertainment for all ages to devices for gambling.”

PASPA did not make sports betting a federal crime for individuals. Instead, it made it unlawful for state governments to authorize, license, or sponsor sports gambling — effectively freezing the regulatory map. Any state that wanted to legalize sports betting was legally blocked from doing so, regardless of what its own voters or legislature decided.

Nevada, already home to Las Vegas, remained the only state where a full-scale legal sports betting market existed. For the next quarter century, it held a monopoly that the rest of the country watched from the sidelines.

PASPA’s prohibition did not stop Americans from betting on sports. It simply pushed the activity underground.

Before the repeal, the American Gaming Association (AGA) estimated that US bettors were wagering approximately $150 billion per year on sports — yet only about $5 billion of that was happening legally in Nevada. The rest flowed through offshore online platforms, bookmakers, and illegal channels that offered no consumer protections, no age verification, no responsible gaming tools, and no tax revenue for state governments.

The illegal market operated freely for decades while regulated operators were legally barred from entering. This reality became an increasingly powerful argument for PASPA’s opponents: the law was not preventing sports betting. It was simply preventing it from being safe, regulated, and taxed.

The state that ultimately brought down PASPA was New Jersey — and it took six years of litigation to do it.

In 2011, New Jersey voters approved a state constitutional amendment permitting sports betting. The following year, the state legislature passed the Sports Wagering Act of 2012, authorizing wagering at casinos and racetracks. It was an immediate violation of PASPA, and the NCAA, NFL, NBA, NHL, and MLB quickly sued to block it.

New Jersey lost at the district court level. It lost at the Third Circuit Court of Appeals. The Supreme Court declined to hear its first appeal in 2014.

Undeterred, New Jersey tried a different legal strategy. Rather than authorizing sports betting — which PASPA explicitly prohibited — the state legislature passed a new law in 2014 that repealed portions of existing New Jersey laws that had banned sports gambling. The distinction mattered: the state argued it was simply removing a prohibition, not creating a new authorization.

The leagues sued again. New Jersey lost again at the district court and the Third Circuit, which concluded the partial repeal was effectively equivalent to authorization. But the dissenting opinions in those cases gave New Jersey’s lawyers enough ammunition to petition the Supreme Court once more.

In June 2017, the Supreme Court agreed to hear the case. By this point, New Jersey Governor Chris Christie had left office and was succeeded by Governor Phil Murphy — giving the case its final name: Murphy v. National Collegiate Athletic Association.

Oral arguments were heard on December 4, 2017. Theodore Olson argued on behalf of New Jersey. Paul Clement represented the NCAA and the professional sports leagues. The US Department of Justice sided with the leagues.

Five months later, the Court delivered its verdict.

The majority of the Court, led by Justice Samuel Alito, relied on the anti-commandeering doctrine from the Tenth Amendment in making its decision. The Court held that PASPA violated the anti-commandeering doctrine because it prohibited states from allowing their citizens to bet on professional sports.

In a memorable passage, Justice Alito wrote that the federal law’s command to state legislatures represented something to which:

The Court found that there is no meaningful constitutional distinction between the federal government commanding a state to do something and commanding a state not to do something. Both violate the same Tenth Amendment principle.

PASPA, by forbidding states from authorizing sports betting, was forcing state governments to maintain a legal status quo dictated by Congress — and that was unconstitutional.

The holding: provisions of PASPA that prohibit state authorization and licensing of sports gambling schemes violate the Constitution’s anti-commandeering rule; no other PASPA provisions are severable from those provisions. The entire law fell.

The industry’s response to the PASPA repeal was immediate. Within weeks of the ruling, the first legal sports bets outside Nevada were placed in Delaware and New Jersey.

Just weeks later, on June 5, 2018, Delaware became the first state outside Nevada to launch full-scale single-game sports betting. By the end of that year, New Jersey, Rhode Island, Mississippi, West Virginia, Arkansas, and Pennsylvania had also legalized or launched regulated sportsbooks.

The floodgates had opened. State after state moved to draft sports betting legislation — for the current map of legal markets see our state-by-state legal guide — driven by two powerful incentives:

• Tax revenue — legal sports betting generates significant income for state budgets without raising citizen taxes
• Competition — states bordering legal markets risked losing betting revenue to neighbors if they stayed on the sidelines

The scale of the PASPA repeal aftermath is difficult to overstate.

Before May 2018: one state (Nevada) with a legal full-scale sports betting market.

By 2026: 39 states, Washington D.C., and Puerto Rico have legalized sports betting in some form — representing more than two-thirds of all US states.

Legal sports wagering has expanded to 34 states and DC and counting as of 2026 and is showing no signs of slowing down. The American Gaming Association previously estimated that sports bettors in the US were wagering $150 billion annually prior to the overturning of PASPA, yet only about $5 billion of that was happening legally — in Nevada.

The US iGaming market now stands at $6.89 billion in 2026. In less than six years since the repeal, regulated sportsbooks took in over $300 billion in cumulative sports betting handle. The illegal market that PASPA could never eliminate was being replaced — step by step, state by state — by a regulated, taxed, consumer-protected alternative.

According to data published by the New York State Gaming Commission, New York alone generated more than $1.76 billion in sports betting tax revenue in fiscal 2023–2024 — more than the combined revenue of several smaller states’ entire gambling markets.

One of the most remarkable aspects of the post-PASPA era is how completely the professional sports leagues reversed their position.

The NFL, NBA, MLB, NHL, and NCAA were the plaintiffs in the original PASPA case — the organizations that sued New Jersey to keep sports betting illegal. Their stated concern was the integrity of their games.

Today, every major professional sports league in the United States has official sportsbook partnerships. Team sponsorships with betting operators are standard across the NFL, NBA, MLB, and NHL. Sportsbook advertising during live broadcasts has been normalized. The leagues that once fought sports betting tooth and nail are now among its most significant commercial beneficiaries.

The NBA was the exception early — commissioner Adam Silver wrote a New York Times op-ed in November 2014, nearly four years before the ruling, calling for legal, regulated sports betting. His argument was pragmatic: the betting was happening anyway; better to have it regulated and transparent than pushed underground.

The PASPA repeal (Murphy decision) did not create a federal framework for sports betting. It simply removed the federal prohibition and returned the decision to each state. The result is the complex, fragmented regulatory landscape that defines the US market today.

Every state that has legalized sports betting has written its own rules — understanding how online casinos get licensed in the US is essential context — its own tax rates, licensing requirements, permitted operators, and consumer protection standards.

New York taxes operators at 51% of gross revenue. Pennsylvania charges 36%. Nevada charges around 6.75%. This creates dramatically different market economics depending on the jurisdiction.

This state-by-state structure has important consequences for the iGaming industry:

• Operators must obtain separate licenses in each state they wish to operate
• Compliance requirements vary significantly across jurisdictions
• Affiliates must geotarget content to players in specific legal states
• Market entry costs are high, favoring well-capitalized operators like DraftKings and FanDuel
• Large states like California, Texas, and Florida represent enormous untapped markets — but face distinct political and legal barriers

For a deeper comparison of the two market leaders that emerged from this regulatory environment, see our DraftKings vs FanDuel 2026 guide.

The PASPA repeal opened the door not just to sports betting but to the broader legalization conversation around online casino gaming (iGaming). While sports betting and iGaming are governed by separate legislation at the state level, the political and economic arguments that drove sports betting legalization — tax revenue, consumer protection, recapturing illegal market dollars — apply equally to online casinos.

States that successfully regulated sports betting gained institutional knowledge, established regulatory infrastructure, and built political consensus that made iGaming legalization more achievable. Pennsylvania, Michigan, New Jersey, Connecticut, West Virginia, and Rhode Island — all states with active iGaming markets — had pre-existing or concurrent sports betting frameworks that paved the way.

The era after the PASPA repeal didn’t just create a sports betting market. It created a template for regulated digital gambling in America.

Despite the dramatic expansion since 2018, significant portions of the US population still live in states without legal sports betting:

The remaining holdout states represent the last major growth frontier for the US regulated gambling market — and the operators, affiliates, and media companies best positioned to serve those markets when they legalize will benefit most.