To understand what started betting on sports one has to first examine the history of sports gambling in America. The USA has a long history of allowing some kinds of legal gambling and also illegal gambling to a certain degree. Political control and scandals concerning gaming interests have ended in certain backlashes that have resulted in prohibition or regulating sports gambling. Standards and laws pertaining to sports gambling have kept changing.
Nelson Rose explains these changes in law as three waves. The 1st wave was during the colonial era that lasted up until the mid 1800s, the 2nd wave started following the Civil War and lasted up until the early Twentieth century and the 3rd wave commenced during the Great Depression and is still continuing.
Throughout the Colonial Era, diverse attitudes were enforced towards gambling. Puritan attitudes were adopted towards gambling and possessing dice, cards, gaming tables etc were banned. Later on it had been allowed so long as it was not a calling or trade except for moderate and innocent recreation. Settlers brought along with them views that said gambling was merely a harmless past time. 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 from financial problems and to help the colonies. It became a civic responsibility and proceeds were used to create a number of the first prestigious universities, build churches and even libraries. Lotteries continued to be popular right to the early Nineteenth century. Horse racing had also been preferred and the Long Island built the first race track in 1665. Casino gaming began to emerge slowly as roadhouses and taverns started to allow card games and dice.
The Lower Mississippi Valley became a structured and legitimate gambling area in 1800s. The mighty river with its riverboats was a major trade avenue for wealthy merchants and farmers. New Orleans soon gained recognition as being the gambling capital. Through the 1830s southern settlers turned against professional gamblers who were held responsible for carrying out crimes, debasing morals of society and endangering streets. During 1800s there was increasing attack of gambling especially lotteries and when operators absconded with all the proceeds lottery scandals finally concluded in prohibition of gambling.
The Gold Rush in California triggered a tremendous increase in the types of gambling and San Francisco became the new gambling capital in the US. During 1849 and 1855 gambling spread widely and 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 wagering activities underground and could 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 all the numerous scandals within 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 honest. In 1978 casino gambling was legalized by New Jersey and Atlantic City became a popular tourist destination. Despite its illegality sports gambling became quite popular and already is a billion dollar industry.