To understand 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 certain types of legal gambling and even illegal betting to a certain degree. Political control and scandals regarding gaming interests have led to selected backlashes which have lead to prohibition or regulating sports gambling. Standards and laws relating 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 at the end of the Civil War and lasted till the early Twentieth 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 banned. Afterwards it had been allowed so long as it was not a calling or trade except for moderate and innocent recreation. Settlers brought with them views that said gambling was nothing but a harmless activity. The frontier spirit encouraged the appeal of gambling since it involved high risk, high expectations and opportunism.
Ultimately all colonies used lotteries as being a solution from economic problems and to help the colonies. It became a civic responsibility and profits were used to establish a number of the first prestigious universities, build churches and also libraries. Lotteries continued to be popular right to the early 19th Century. Horse racing had also been preferred and the Long Island built the first race track in 1665. Casino gaming started 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 both wealthy merchants and farmers. New Orleans quickly gained recognition as being the gambling capital. During the 1830s southern settlers turned against professional gamblers who had been held responsible for carrying out crimes, debasing morals of society and endangering streets. During 1800s there seemed to be 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 tremendous increase in the types of gambling and San Francisco became the new gambling capital in the USA. 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 forms 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 possible to now understand what started gambling on sports in the US. 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 became a popular tourist destination. Despite its illegality sports gambling became very popular and already is a high dollar industry.