We’re eagerly awaiting the day that we can offer merchant accounts for online gambling in the U.S. It’s coming, but it may be years away because of countless hurdles.
Very few things ever happen quickly in America (hence our reference to former British Prime Minister Winston Churchill last week). Change happens very, very slowly, gradually, annoyingly so. We’re witnessing this with the many issues surrounding marijuana legalization, including credit card payment processing for such. Slowly, states are warming to legalization for sale, possession and use, but the card brands are still wary of federal laws.
It’s a similar situation with online gambling in the US. More and more states are warming to the idea of legalizing sports betting. The latest is Mississippi, which accepted its first wagers on Aug. 1, becoming the third state to do so (next to New Jersey and Nevada).
The state of online gambling in the US
Online gambling in the US isn’t illegal. Instead, the federal government has placed the onus on banks and financial institutions, prohibiting them from accepting transactions from online casinos via credit card. If we received a request today for a merchant account for online gambling in either Nevada, New Jersey or Mississippi, we wouldn’t be able to get an approval. At present, gamblers can make legal wagers in any of those three states, but only at licensed brick and mortars (or riverboats) and largely cash only.
Recent events fueling optimism about online gambling
Any consumer used to be able to play online poker or blackjack in the US just after the turn of the millennium, before the passing of the Unlawful Internet Gaming Enforcement Act (UIGEA) in September of 2006. As a result, online gambling websites worldwide began refusing US players.
With the Supreme Court repeal the Professional and Amateur Sports Protection Act (PASPA) in May, however, each state will be able to decide for itself whether to legalize sports betting — Mississippi won’t be the last. More than a dozen states supported New Jersey’s push for sports betting.
There seem to be signals of change, however, with every passing week.
- New Jersey sports books generated $16.4 million in the first two weeks after the repeal of PASPA (Many other states are watching closely).
- The states of West Virginia, Rhode Island and Delaware have put forward sports betting regulations with the goal for consumers to place bets by Oct. 1.
- The NBA and WNBA have collaborated with MGM as its official gaming partner.
- Caesar’s Entertainment announced it is opening sports betting facilities in both New Jersey and Mississippi.
- One week after the PASPA repeal, the NFL released a list of core principles for sports wagering. (91 percent of NFL teams have engaged in some form of partnership with fantasy sports giants DraftKings and FanDuel).
- Speaking of DraftKings, it predictably announced it will be offering sports betting options within the legal states.
Chargeback rates will soar with online sports betting
While all the above signifies progress toward merchant accounts for online gambling, the credit card giants remain understandably lukewarm about offering credit card payments for sports betting.
A significant reason for this is chargebacks. While sports betting volume will surge over the next year (we can’t wait for the figures to roll in), so will the pressure on the giant card brands to allow credit cards to place bets in more states.
The challenges for the card brands in offering merchant accounts for online gambling in the US are two pronged:
- It wasn’t me: Let’s say a consumer places a large bet on an NFL game, and loses a significant amount of money. For a myriad of reasons — embarrassment, fear and/or shame — they’ll telephone their credit card issuer to claim their card had been stolen and used to place large bets.
- Spouse doesn’t recognize the charge: Another scenario has a husband away on a business trip to the UK, Europe or Asia. After a full day of meetings, he and his co-workers hit the casino to place a few bets on horses, soccer or rugby. Weeks later, the wife examines the credit card statement and doesn’t recognize the charges. A call to the credit card issuer follows, and the chargeback process begins.
While the card brands mull over the possibilities of credit cards for sports betting, hopefully they’ll have a solution to counter the probable rise in chargebacks as a result.
Merchant accounts for online gambling with Instabill
Instabill got its start as an e-commerce payment service provider for online gambling in 2001 in the UK, and has been providing merchant accounts for online gambling in proper jurisdictions worldwide since. Our merchant account managers prefer a telephone conversation to find out more about your needs and to get the partnership started.
Solutions can be had by calling us at 1-800-530-2444.
