Sportsbook Licensing: What Makes a Sportsbook Legal and Safe

Sportsbook licensing is the process by which state regulators authorize operators to legally accept sports bets. Every legal sportsbook in the United States holds a license from at least one state gaming authority, and that license represents a set of consumer protections that unlicensed operators do not provide. Understanding how licensing works helps you make informed decisions about where to place your bets and why it matters.

This guide explains what sportsbook licenses are, how operators obtain them, which regulatory bodies issue them, and how you can verify that a sportsbook is properly licensed before you bet on sports legally.

What Is a Sportsbook License?

A sportsbook license is a legal authorization granted by a state regulatory body that permits an operator to accept sports wagers within that state. The license confirms that the operator has met financial, technical, and ethical standards established by law.

Licensed sportsbooks are subject to ongoing oversight. Regulators audit their operations, review their financial records, and enforce rules designed to protect bettors. If a licensed operator violates regulations, the state can impose fines, suspend the license, or revoke it entirely.

Without a license, a sportsbook has no legal authority to operate and no regulatory accountability. Bettors using unlicensed operators have no recourse if something goes wrong with deposits, withdrawals, or disputed bets.

How Sportsbook Licensing Works in the United States

The United States does not have a federal sportsbook licensing body. After the Supreme Court struck down PASPA in Murphy v. NCAA (2018), each state gained the authority to legalize and regulate sports betting independently. This means sportsbook licensing is handled at the state level, and each state sets its own rules.

As of early 2026, more than 38 states plus Washington D.C. have legalized sports betting in some form. Each of these jurisdictions has its own gaming commission or control board responsible for issuing licenses and regulating operators.

An operator that wants to offer sports betting in multiple states must obtain a separate license in each state. DraftKings, FanDuel, BetMGM, and other major operators hold dozens of state licenses. The requirements vary by state, which means an operator licensed in New Jersey is not automatically authorized to operate in Pennsylvania or any other state.

The General Licensing Process

While specifics differ by state, most licensing processes follow a similar structure:

1. Application submission — The operator files a detailed application with the state gaming commission, including financial disclosures, ownership information, and business plans.

2. Background investigation — Regulators conduct extensive background checks on the company and its key personnel. This includes criminal history, financial stability, business track record, and connections to other gaming entities.

3. Financial review — The operator must demonstrate sufficient capital to cover player funds and operational costs. Some states require operators to maintain segregated accounts for player deposits.

4. Technical evaluation — The sportsbook platform undergoes testing by independent labs to verify that betting systems, random number generators, and geolocation tools function correctly.

5. Public hearing — Some states require a public hearing before the gaming commission votes on license approval.

6. License issuance — If approved, the operator receives a license that authorizes sports betting operations under specific conditions.

7. Ongoing compliance — Licensed operators must submit regular reports, undergo periodic audits, and renew their licenses according to state schedules.

State Regulatory Bodies That Issue Sportsbook Licenses

Each legal state has a designated agency responsible for sportsbook oversight. These agencies issue licenses, investigate complaints, and enforce regulations.

State	Regulatory Body
New Jersey	Division of Gaming Enforcement (DGE)
Pennsylvania	Pennsylvania Gaming Control Board (PGCB)
New York	New York State Gaming Commission
Michigan	Michigan Gaming Control Board (MGCB)
Illinois	Illinois Gaming Board (IGB)
Colorado	Colorado Division of Gaming
Virginia	Virginia Lottery Board
Arizona	Arizona Department of Gaming
Ohio	Ohio Casino Control Commission
Massachusetts	Massachusetts Gaming Commission

Most state regulators publish lists of licensed operators on their official websites. This is the most reliable way to confirm whether a sportsbook is authorized to operate in your state.

The structure of these agencies varies. Some states house sports betting regulation within existing casino gaming boards, while others created new departments specifically for sports wagering. Regardless of structure, these bodies share common responsibilities: reviewing license applications, monitoring operator conduct, investigating consumer complaints, and enforcing penalties for violations.

What Sportsbooks Must Do to Get Licensed

State licensing requirements are intentionally rigorous. They serve as a filter to ensure only legitimate, financially stable operators can accept bets from the public.

Background Checks and Financial Audits

Every principal owner, officer, and key employee of the sportsbook undergoes a thorough background investigation. Regulators look for criminal records, associations with organized crime, history of fraud, and financial instability. Companies must disclose their corporate structure, funding sources, and relationships with other gaming entities.

Responsible Gaming Requirements

Licensed sportsbooks must implement responsible gaming programs. These typically include self-exclusion options, deposit limits, time-out features, and links to problem gambling resources. Operators must train their staff to recognize signs of problem gambling and respond appropriately.

Technical Standards and Testing

Sportsbook platforms are tested by accredited independent laboratories. These tests verify that the software handles bets correctly, that odds calculations are accurate, that geolocation tools properly restrict access to authorized jurisdictions, and that player data is securely stored.

Consumer Protection Measures

States require licensed operators to segregate player funds from operating funds in many jurisdictions. This means if the sportsbook goes bankrupt, player deposits are protected. Licensed operators must also have clear terms of service, transparent house rules, and established dispute resolution procedures.

Licensing Costs

Obtaining a state license requires significant financial investment. Application and licensing fees range from $50,000 in states like Michigan to $10 million in Pennsylvania, with New York charging $25 million for its mobile sports betting licenses. Operators also pay annual renewal fees and state gaming taxes on revenue, which range from 8% to over 51% depending on the state.

Ongoing Compliance and Reporting

Licensing is not a one-time event. Operators must file regular reports on betting volume, revenue, suspicious activity, and responsible gaming metrics. Regulators can conduct unannounced audits and inspections. Licenses typically must be renewed on a set schedule, and renewal is not guaranteed.

How to Verify a Sportsbook Is Licensed

Before depositing money with any sportsbook, you should confirm it holds a valid license in your state. Here is how to check.

Check Your State Regulator Website

The most authoritative source is your state gaming commission or control board. Most publish a current list of licensed operators. Search for your state gaming authority and look for their list of approved sportsbooks.

Look for License Information on the Sportsbook Site

Licensed operators typically display their license number and regulatory information in the footer of their website or within their terms and conditions. If you cannot find any licensing information, treat that as a warning sign.

Check the state-specific legal guide for your location to find direct links to your state regulator and a list of licensed operators.

Red Flags of Unlicensed Operators

Watch for these warning signs that a sportsbook may not be properly licensed:

• No licensing information displayed anywhere on the site
• Licensed in a foreign jurisdiction (Curacao, Costa Rica, Antigua) but not in any US state
• No geolocation verification when you sign up or place bets
• Cryptocurrency-only deposits with no identity verification
• No responsible gaming tools or self-exclusion options
• Withdrawal delays or unexplained account restrictions

Licensed vs Unlicensed Sportsbooks: Why It Matters

The difference between a licensed and unlicensed sportsbook comes down to accountability and protection.

Fund Security

Licensed sportsbooks are required to maintain player funds according to state regulations. Many states mandate fund segregation, meaning your deposited money is kept separate from the company's operating capital. Unlicensed operators have no such requirements. If an offshore or unlicensed sportsbook goes under, your money may be gone with no legal recourse.

Withdrawal Reliability

One of the most common complaints against unlicensed sportsbooks involves withdrawal problems. Licensed operators must process withdrawals within timeframes set by state regulators. If an operator consistently delays payments, bettors can file complaints and regulators can take enforcement action. Unlicensed operators face no such obligations, and stories of frozen accounts, delayed payouts, and confiscated balances are common.

Dispute Resolution

If you have a dispute with a licensed sportsbook over a bet settlement, account issue, or withdrawal, you can file a complaint with the state gaming commission. The regulator has enforcement power and can compel the operator to resolve the issue. With unlicensed books, there is no authority to appeal to.

Fair Play

Licensed operators use independently tested software and must offer bets according to published house rules. Unlicensed operators can change rules, void bets, or manipulate odds without oversight.

Tax Compliance

Licensed sportsbooks report winnings to tax authorities as required by law. This simplifies your tax obligations and ensures you receive proper documentation. Unlicensed operators may not provide the tax forms you need to report your gambling income correctly.

Legal Protection

Using a licensed sportsbook means you are engaging in legal activity. In some states, placing bets with unlicensed operators can carry legal consequences for the bettor, not just the operator. On the operator side, running an unlicensed sportsbook can result in fines up to $500,000, criminal charges, and permanent bans from the regulated industry.

Types of Sports Betting Licenses

Not all sportsbook licenses are the same. States typically issue several categories of gaming licenses related to sports betting.

Online and Mobile Licenses

These authorize operators to accept bets through websites and mobile apps. In most states, online sports betting generates the vast majority of handle. Some states require the online operator to partner with a land-based casino or gaming entity.

Retail Licenses

Retail licenses permit operators to accept in-person bets at physical locations such as casinos, racetracks, or dedicated sportsbook lounges. Retail sportsbooks were often the first to launch in newly legalized states.

Vendor and Supplier Licenses

Companies that provide technology, odds feeds, risk management, or other services to licensed sportsbooks may also need to be licensed. This ensures the entire supply chain meets regulatory standards.

Temporary and Conditional Licenses

Some states issue temporary or conditional licenses that allow operators to launch while their full application is still under review. These temporary authorizations come with the same consumer protection requirements but may have additional conditions or shorter renewal periods.

Management Company Licenses

In states that require a land-based partner, the online sportsbook brand often operates under a management company license. For example, New Jersey requires all online sportsbooks to partner with an Atlantic City casino licensed by the Division of Gaming Enforcement, and several other states have similar land-based partnership mandates. Under this arrangement, the casino or racetrack holds the primary gaming license, and the online operator manages the sports betting product under a separate management agreement. Both entities are subject to regulatory oversight.

Frequently Asked Questions

How do I know if a sportsbook is licensed in my state?

Check your state gaming commission website for a list of authorized operators. You can also look for license numbers in the sportsbook footer or terms of service. Every legal sportsbook displays its licensing credentials.

Can a sportsbook be licensed in one state but not another?

Yes. Each state issues its own licenses independently. A sportsbook licensed in New Jersey must apply separately to operate in Pennsylvania, Michigan, or any other state. Major operators hold licenses across many states, but coverage varies.

What happens if a licensed sportsbook closes or goes bankrupt?

State regulations require licensed operators to maintain player funds according to specific standards. In states that mandate fund segregation, player deposits are protected even if the company fails. The state regulator oversees the process of returning funds to bettors.

Are offshore sportsbooks licensed?

Offshore sportsbooks may hold licenses from foreign jurisdictions like Curacao or Antigua, but these licenses carry no legal weight in the United States. They are not subject to US state regulation, and bettors have no domestic legal recourse if problems arise. See our offshore vs legal sportsbooks guide for a detailed comparison.

What happens if I bet with an unlicensed sportsbook?

You lose every consumer protection that licensed markets provide. Your deposits are not held in regulated accounts, so there is no guarantee you can withdraw your funds. If the operator refuses to pay or shuts down, no state regulator can intervene on your behalf. You also risk exposing personal and financial information to an unregulated entity with no obligation to follow data privacy or security standards. In some states, placing bets with an unlicensed operator may itself be illegal.

How much does a sportsbook license cost?

License fees vary significantly by state. Initial application fees can range from tens of thousands to millions of dollars. For example, New York charged $25 million for mobile sports betting licenses, while smaller states may charge under $100,000. Operators also pay ongoing licensing renewal fees and gaming taxes on revenue.

Can a sportsbook lose its license?

Yes. State regulators can suspend or revoke a sportsbook license for violations including failure to pay taxes, inadequate responsible gaming protections, data security breaches, or consumer fraud. License revocations are public record.

Do I need to verify my identity with a licensed sportsbook?

Yes. Licensed sportsbooks are required by law to verify your identity, age, and location before you can place bets. This process, known as KYC (Know Your Customer), protects both you and the integrity of the regulated market. If a sportsbook does not verify your identity, it is likely not properly licensed.

Why do some states have fewer licensed sportsbooks than others?

States set their own rules on how many licenses to issue. Some states cap the number of licenses while others allow unlimited operators that meet qualification standards. Tax rates, market size, and regulatory requirements also influence how many operators choose to apply in a given state.