To learn what started betting on sports one has to first examine the history of sports gambling in the US. The US has a long history of allowing certain types of legal gambling and even illegal betting to some extent. Political control and scandals concerning gaming interests have ended in selected backlashes which have lead to prohibition or regulation of sports gambling. Standards and laws relating to sports gambling have kept changing.
Nelson Rose describes these adjustments in law as three waves. The first wave was in the colonial era that lasted till the mid 1800s, the second wave started at the end of the Civil War and lasted till the early 20th Century and also the third wave commenced during the Great Depression and is still continuing.
Throughout the Colonial Era, different attitudes were enforced towards betting. Puritan attitudes were adopted towards gambling and possession of dice, cards, gaming tables etc were outlawed. Later on it was allowed as long as it was not a calling or trade but 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 as it involved high risk, high expectations and opportunism.
Eventually all colonies used lotteries as a solution out of economic problems and to benefit the colonies. It became a civic responsibility and proceeds were utilized to create some of the first prestigious universities, build churches and also libraries. Lotteries remained popular right to the initial 19th Century. Horse racing was also preferred and the Long Island built the first race track in 1665. Casino gaming started to emerge slowly as roadhouses and taverns began to permit 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 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 was increasing attack of gambling especially lotteries and whenever operators absconded with all the proceeds lottery scandals finally concluded in prohibition of gambling.
The Gold Rush in California set off a huge 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 also by 1850 California and lots of cities had licensed gambling centers. But soon the Legislature made most types of gambling illegal and certain professional gamblers were lynched. This prohibition drove wagering activities underground and did not eliminate it. Gambling was legal during 1869-1910 in Nevada.
It is possible to now understand what started gambling on sports in the USA. With all the many 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 preferred tourist destination. Despite its illegality sports gambling became quite popular and today is a high dollar industry.