All Internet casinos are located outside the U.S. They are generally licensed in the country they are in and have to report to the local government (although to varying degrees depending on the country). Antigua, Curacao, St. Kitts, Grenada, Dominican Republican, Gibraltar, Cook Islands are just a few countries that license online casinos. Having said this, though, many of the companies that run casinos offshore are actually operated from the US - it is just their servers that are located offshore. Indeed, several of the companies are listed on the NASDAQ stock exchange.
The reason these small countries allow online gambling operators to set up is because it can help boost their economy. Companies pay up to $100,000 to gain a gaming license in these countries, as well as paying ongoing taxes to the local government.
We at UKCasino Rankings know which countries have the strictest fairness and reporting laws and take these facts into account in our Ranking System.