US Banks Slow To Incorporate Online Gambling Transactions
Against a backdrop of multiple US state legislatures issuing the green light on mobile and online gambling, commercial banks all over the country are still reluctant to accept electronic gambling-related payments and transactions.
Few US Banks Still Not on Board
As of today, online gambling is legal in states like Delaware, Nevada, Pennsylvania, New Jersey, and West Virginia and, according to projections, will soon gain legal status in Indiana, Illinois, Connecticut, and Massachusetts. To date, 25 US states have legalized sports betting.
With the fast rate at which many jurisdictions in the US are adopting online casinos, sportsbooks, and gambling in general, especially following 2018’s Supreme Court decision allowing states to decide their fate, surprisingly, some banks are blocking gambling-related payments and transactions.
The Reason for the Reluctance
According to reputable news publications, these banks and credit card issuers are blocking the transactions because they fear that law enforcement authorities may prosecute them for unknowingly being complicit in financial crimes. In essence, because of how recent the legality of online gambling is, these banks are acting with caution for fear of skirting the law. This becomes especially pertinent considering the less-than-ideal perception that is associated with gambling.
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The legal stance behind this fear from the financial institutions is pretty well-grounded. There are no federal sports betting or online gambling legislation. This means that despite being fully legal in select states, this activity still exists in a gray area at the federal level. As such, while states can give their full backing, there is still some ground for the prosecution at the federal law enforcement and court systems.
FanDuel has come out to state that a few big players (including BOA, Capital One, and JPMorgan Chase) have all forbidden their respective debit and credit cards to be used for online gambling transactions. According to the banks, some of their concerns range from chargebacks to UIGEA fears and money laundering.
Sadly though, these reticent banks are missing out on what appears to be an extremely lucrative source of income. Online gambling and sports betting revenues in some states are projected to exceed $100m yearly.
The market for online gambling and, by extension, the funds generated therein, are projected to rise exponentially in the coming years. Goldman Sachs predicts the global sports betting industry alone will surpass $100b by the year 2022. At the point of market saturation, the fattest purse will go to whichever jumped on board earlier.
Perhaps the most unfortunate news is that many industry analysts forecast a continuation of the status quo unless the government passes some form of all-encompassing federal legislation explicitly allowing online gambling and sports betting.
Some of the Progress Being Made
Despite what is going on, some form of progress has been made in the past few years with regards to the financial side of legal mobile gambling. In 2015, new credit card laws for online gambling transactions were put in place.
And, being the resourceful individuals they are, bettors in the US have since resorted to the plethora of alternative payment and withdrawal methods available to them. These include platforms like PlayPlus, PayNearMe, and well-known Paypal. Of course, these methods generally involve jumping more hoops than just using a credit or debit card, but they are oftentimes the only option.
Smaller banks are, ironically, expanding their portfolio to involve gambling transactions. Lexicon Bank Las Vegas, for example, was founded for the main purpose of handling proceeds and transactions related to in-person and online gambling. Popular poker player Daniel Negreanu actually moved his account to this bank, following the closure of a similar account at another institution.