To learn what started betting on sports one has to first examine the historical past of sports gambling in the US. The USA has a long history of allowing some kinds of legal gambling and even illegal betting to some extent. Political control and scandals concerning gaming interests have ended in selected backlashes that have resulted in prohibition or regulation of sports gambling. Standards and laws relating to sports gambling have kept changing.
Nelson Rose describes 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 till the early 20th Century and the 3rd wave commenced during the Great Depression and is still continuing.
During the Colonial Era, diverse attitudes were enforced towards betting. Puritan attitudes were adopted towards gambling and possession of dice, cards, gaming tables etc were outlawed. Afterwards it was allowed so long as it was not a calling or trade but for moderate and innocent recreation. Settlers brought with them views that said gambling was merely a harmless past time. The frontier spirit encouraged the appeal of gambling as it involved risk taking, high expectations and opportunism.
Eventually all colonies used lotteries as a solution out of financial problems and to benefit the colonies. It was a civic responsibility and proceeds were used 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 popular and the Long Island built the very first race track in 1665. Casino gaming began 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 grand river with its riverboats became a major trade avenue for wealthy merchants and farmers. New Orleans quickly gained recognition as the gambling capital. Through the 1830s southern settlers turned against professional gamblers who were blamed for committing crimes, debasing morals of society and endangering streets. During 1800s there was increasing attack of gambling especially lotteries and when operators absconded with the proceeds lottery scandals eventually led to prohibition of gambling.
The Gold Rush in California set off a tremendous surge 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 lots of cities had licensed gambling centers. But soon the Legislature made most forms of gambling illegal and a number of professional gamblers were lynched. This prohibition drove gambling activities underground and could 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 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 was a preferred tourist destination. Regardless of its illegality sports gambling became very popular and already is a high dollar industry.