To learn what started betting on sports one has to first examine the history of sports gambling in America. The US had a long history of permitting some kinds of legal gambling and also illegal betting to some extent. Political control and scandals concerning gaming interests have ended in certain backlashes that have lead to prohibition or regulation of sports gambling. Standards and laws pertaining to sports gambling have kept altering.
Nelson Rose describes these changes in law as three waves. The 1st wave was in the colonial era that lasted up until the mid 1800s, the second wave started following the Civil War and lasted till the early 20th Century and also the 3rd wave commenced while in 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 banned. Later on it was 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 nothing but 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 economic problems as well as help the colonies. It became a civic responsibility and profits were used to create some of the first prestigious universities, build churches and also libraries. Lotteries remained popular right to the early 19th Century. Horse racing had also been popular and the Long Island built the first race track in 1665. Casino gaming began to emerge slowly as roadhouses and taverns started to permit card games and dice.
The Lower Mississippi Valley became a structured and legitimate gambling area in 1800s. The mighty river featuring its riverboats was a major trade avenue for both wealthy merchants and farmers. New Orleans soon gained recognition as the gambling capital. During the 1830s southern settlers turned against professional gamblers who had been blamed for carrying out 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 eventually led to prohibition of gambling.
The Gold Rush in California set off a huge surge in the types of gambling and San Francisco was crowned 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 types of gambling illegal and a number of professional gamblers were lynched. This prohibition drove gambling activities underground and did not eliminate it. Gambling was legal during 1869-1910 in Nevada.
It is easy to now understand what started gambling on sports in the USA. With all the many scandals within the lottery gambling segments, 35 states in America 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 became a popular tourist destination. Despite its illegality sports gambling became very popular and already is a billion dollar industry.