Historian George Santayana never spoke on a mobile phone. To the best of my knowledge, he never traded in cryptocurrency. The poor fellow did not even possess an email address.
Sadly, that is what happens when you die in 1952. Yet that famed historian who pecked out sentences on a manual typewriter can take full credit for identifying a problem that is presently perplexing gaming lawmakers, regulators, operators, suppliers and players when he penned this critical observation: “‘Those who cannot remember the past are condemned to repeat it.”
Gaming policymakers are confronting rapid advances in technology, and they are behind the curve. As Santayana might have noted (but didn’t), the issue boils down to this: Those who seek to exploit this digital divide are traveling at lightning speed and are halfway around the world while policymakers are still lacing up their shoes.
The regulated industry was built on a foundation of antiquated concepts such as “people watching people watching people.” Such notions could work when players were armed with rolls of quarters, dollar bills and bus coupons. But times have changed.
Samir Patel, a sports and technology attorney at Holland & Knight, is an astute observer of technological trends and an important figure in gaming regulation. He has identified several issues that are changing industry trends and dramatically creating regulatory and licensing challenges, including:
- Many U.S. bettors rely on offshore, unregulated gambling platforms such as Bovada, which accept cryptocurrency wagers and operate outside of U.S. regulatory oversight, undermining the domestic legal market.
- More online gaming operators that cannot compete against rapidly evolving, crypto-native platforms seek to be acquired by cryptocurrency exchanges—such as Coinbase or Kraken—as a viable exit strategy.
- Technologically adept bettors are taking advantage of advanced development tools, including Integrated Development Environments (IDEs) and Large Language Models (LLMs). This allows them to develop customized arbitrage betting software in a matter of minutes, exacerbating regulatory blind spots.
- Blockchain-based prediction markets, including Polymarket, as well as investment platforms like Robinhood, are offering event-based contracts and trading mechanisms tied to sports outcomes. These products, often denominated in cryptocurrency, are capturing a growing share of the under-35 betting demographic.
- The current federal legal framework—particularly the Wire Act and the Unlawful Internet Gambling Enforcement Act (UIGEA)—precludes the lawful operation of cryptocurrency-based online gaming platforms within the U.S. This fuels the continued growth of unregulated offerings in the digital black market. The technological architecture of blockchain-based systems is fundamentally incompatible with UIGEA’s provisions concerning “intermediate routing.”
- Model gaming legislation published by industry associations and standards-setting bodies is frequently obsolete upon release, reflecting both a systemic lack of engagement with emerging technological developments and a failure to educate stakeholders on the pace and nature of innovation in gambling products and platforms.
Patel also notes that many entrepreneurs operating at the intersection of blockchain, artificial intelligence, and gaming innovation do not view regulatory agencies or attorneys general as meaningful deterrents. Rather, the view of such “controls” is that they lack enforcement capacity, jurisdictional clarity, or technological literacy within these offices.
By any measure, the laws and regulations that govern gaming need to be more adaptable and relevant, as they must keep pace with change. Otherwise, states will be forced to respond from a position of weakness, rather than strength.
The digital solution for legislators and regulators who seek to recover what was once a level playing field in gaming is to come up to speed in this race through their own edification, as well as by further leveraging the resources of proven technology experts, which range from firms such as Holland & Knight and others on the legal front to Gaming Laboratories International (GLI) and others to play this increasingly important role.
The battle, however, cannot simply be waged on the digital front. An analog solution must be adopted. Policymakers – in particular, those in emerging generations – must be schooled in the history of regulated, licensed gaming over the past half-century.
Prior to 1978, gaming was not trusted nationwide and was widely characterized and seen as a province of organized crime and sometimes disorganized crime. That perception, very real and somewhat universal, is one reason why legal gaming had been hitherto limited to one state: Nevada.
New Jersey lawmakers – particularly my mentor and former boss Sen. Steven Perskie – developed a set of principles that led to a metamorphosis in the perception of gaming. These principles included:
- A gaming license is a privilege granted to those who affirmatively demonstrate their good character, honesty and integrity;
- The rules regarding operations, testing and all other areas of gaming are established in advance of authorization.
Licensure was not automatic, and several gaming pioneers – as well as some of their successors – were denied the ability to participate. Lawmakers and regulators were active in establishing the policies that governed this industry. Not reactive.
In 2025, a different approach is threatening to take hold: Bring the unlicensed, unregulated participants inside the tent. Tax them, test them and reap the financial rewards.
The risk from that approach is that the trust that has been carefully developed and nurtured over a span of several decades can be undone. At the same time, the licenses of those who played by the rules and invested massive sums to create the modern gaming industry would be diluted. When licenses lose value, investments decline, and so does employment, tax revenue and purchases of goods and services.
Adherence to such core regulatory principles – including the principle that policymakers must be active and not reactive – is not negotiable. The past that Santayana warned us to avoid repeating is not limited to the era of bell-bottom trousers and disco music. It is yesterday, and all stakeholders who depend on public trust in regulated gaming have a responsibility to make sure it is not tomorrow.
