bolt on spacers aren't illegal cause they are effectively an outwards extension of the hub.
slip on spacers however, are illegal as they place a lot more strain on the wheel studs.
the biggest problem with bolt on spacers is getting the original stud to not sit out further than the spacer,
requiring that the existing studs be shortened or changed for newer, shorter ones if they do stick out.
Edit: The above applies to ACT and i can only assume, other states also.