SummaryThe safe answer to the question regarding the legality of Internet gambling is to say that it is currently illegal, even though that is using a pretty generous interpretation of the law. Still, no arrests have been made in the United States for merely placing bets online.
With the WTO ruling of Dec. 21, 2007, it's highly unlikely that anything will change in the U.S. in the near future, as there is no longer any incentive to make any type of concessions to the gambling sector.
UPDATE OF NOVEMBER 21, 2009A bill of Barney Frank's to legalize online poker now has more than 60 co-sponsors, but the news isn't quite as good for sports bettors. Frank's bill that was introduced in May, 2009, will do nothing for sports bettors.
Almost as bad for sports bettors was how the four major sports leagues--the NBA, NFL, NHL, Major League Baseball--and the NCAA rallied together and were able to successfully shut down Delaware's plan to offer legalized sports betting.
The leagues argued that "would irreparably harm professional and amateur sports by fostering suspicion and skepticism that individual plays and final scores of games may have been influenced by factors other than honest athletic competition," and were able to sway the Third U.S. Circuit Court of Appeals and a federal appeals court to their way of thinking.
UPDATE OF NOVEMBER 10, 2013In the past four years since this article was last updated, not much has changed. New Jersey gave legalized sports betting its best shot, with the Justice Department and the leagues once again reverting to the old mantra that the integrity of the games would be compromised if sports betting were legalized.
In September, a three-judge panel from the 3rd Circuit ruled that the U.S. Professional and Amateur Sports Protection Act is constitutional. New Jersey Governor Steve Christie said in early November that he will try for a hearing with the 3rd U.S. Circuit Court of Appeals. He previously said the state will take the battle for legalized sports betting all the way to the Supreme Court if necessary.