To understand what started gambling on sports one has to first examine the history of sports gambling in America. The US has a long history of allowing some kinds of legal gambling and also illegal betting to a certain degree. Political control and scandals concerning gaming interests have led to certain backlashes which have resulted in prohibition or regulation of sports gambling. Standards and laws relating to sports gambling have kept altering.
Nelson Rose explains these changes in law as 3 waves. The 1st wave was during the colonial era that lasted till the mid 1800s, the second wave started at the end of the Civil War and lasted up until the early 20th Century and also the third wave commenced while in the Great Depression and is still continuing.
Throughout the Colonial Era, different attitudes were enforced towards gambling. Puritan attitudes were adopted towards gambling and possession of dice, cards, gaming tables etc were outlawed. Afterwards it had been allowed as long as it was not a calling or trade but 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 as it involved high risk, high expectations and opportunism.
Ultimately all colonies used lotteries as a solution out of economic problems as well as benefit the colonies. It was a civic responsibility and proceeds were utilized to create a number of the first prestigious universities, build churches and even libraries. Lotteries remained popular right to the early 19th Century. Horse racing was also 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 grand river featuring its riverboats became a major trade avenue for both wealthy merchants and farmers. New Orleans quickly gained recognition as the gambling capital. Through the 1830s southern settlers turned against professional gamblers who had been 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 all the proceeds lottery scandals eventually concluded in 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 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 possible to now understand what started gambling on sports in the USA. With all the numerous 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.