Credit Card Bans Sweep Online Sports Betting, Led by FanDuel and DraftKings
The vast majority of the U.S. online sports betting market is moving away from credit card payments, following decisions by industry leaders FanDuel and DraftKings to prohibit their use.
The shift, impacting over 70% of the market according to data from Casino Reports, comes amid increasing scrutiny of hidden fees associated with credit card transactions and pressure from lawmakers like Senator Elizabeth Warren. FanDuel’s policy, designed to streamline the deposit process for customers, takes effect on March 2.
Mounting Pressure on the Industry
The move by FanDuel follows a similar decision by DraftKings last summer. Senator Warren, D-Mass., recently criticized the sports gambling industry for the often-unexpected costs of using credit cards for betting. Just days before FanDuel’s announcement, Warren publicly condemned the practice, highlighting the financial burden placed on consumers.
“Americans may be prepared to lose money on a bet they make — but most are not prepared to lose an extra 50% in credit card junk fees on top of their bet,” Warren wrote in a letter to multiple sports betting companies.
However, a FanDuel spokesperson clarified that the decision to eliminate credit card deposits was already in motion. “Over the last few months, FanDuel has been evaluating the payment methods that we offer to customers and made the decision to remove credit cards as an option for our sportsbook, casino and racing product in the United States,” the spokesperson stated. “This change was made to improve the deposit experience for our customers.”
The High Cost of Credit
Bets placed with credit cards are frequently more expensive than those made with other payment methods. Credit card companies often treat these transactions as cash advances, triggering substantial fees. These fees can range from $10 or 3%-5% of the amount wagered, whichever is greater.
Several states have already taken action to protect consumers, banning the use of credit cards for online sports betting. These include Massachusetts, Iowa, Tennessee, Rhode Island, Oregon, and Vermont.
Industry Response and Future Outlook
Senator Warren has urged other companies in the industry to “follow suit” and eliminate credit card acceptance. Fanatics, another player in the sports betting market, confirmed that its platforms have never accepted credit card transactions, stating it’s “one of the core parts of our business model.”
DraftKings banned credit card use last August, citing a desire to help customers avoid fees and “improve the deposit experience.” Prior to the ban, the company was fined $450,000 by Massachusetts regulators for insufficient controls preventing improper credit card use by state residents.
Notably, Bet365, Caesars, and BetMGM continue to accept credit cards for deposits, and did not respond to requests for comment regarding Warren’s letter.
The growing trend towards eliminating credit card payments signals a broader effort to enhance transparency and protect consumers within the rapidly expanding online sports betting landscape. This shift is likely to continue as regulatory pressure mounts and companies prioritize a more user-friendly and cost-effective experience for their customers.
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