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Why You Shouldn’t Use A Credit Card For Sports Betting

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Planning to charge your next gameday wager to your credit card? While this may be possible, it’s a risky bet. Despite credit cards’ ubiquity and convenience for digital transactions, funding online gambling with your card can lead to debt and, if you’re not careful, a negative impact on your credit.

Can I Use a Credit Card for Sports Betting?

Like many “can I use my credit card for…” questions, the short answer is: sometimes. It’s common now to be able to use a credit card for almost everything. With online betting, though, it gets more complicated. Sports betting is only newly legal in most of the U.S. and industry regulations remain in infancy, with plenty expected to change in the coming years.

While it’s most often legal to use a credit card for online gambling, some card issuers, online sportsbooks and regulatory bodies—both internationally and in the U.S.—are showing skepticism about the practice. Whether or not a credit card will work in the first place depends on a number of factors, including the sportsbook, the credit card issuer, the card’s payment network and the state where the consumer seeks to bet.

Why Won’t My Credit Card Work for Online Sports Betting?

Even though credit cards sometimes work for filling up an online betting account, it’s also common to see them declined. Unlike most other situations where a card is declined, this may not always have to do with a fraud alert or exceeding a credit limit. Instead, it’s typically because either the credit card issuer or the sportsbook prohibits the use.

Many credit card issuers simply don’t consider gambling an acceptable purchase—they may see it as too risky. This is mostly because banks and other credit card issuers are worried about inadvertently facilitating illegal behavior and facing legal consequences, even where the applicable state law allows online gambling. While this stance is not uncommon at the moment, it may change with increased legislative clarity.

Sportsbooks in the U.S., by contrast, may take the step to ban credit card use more as a measure against excessive bettor debt rather than any liability. While sports betting is considered gambling, fantasy sports leagues generally are not.

Does My State Allow Credit Cards for Online Sports Betting?

While the federal government exercises some control over gambling laws in the U.S., it’s largely up to states to decide what type of sports betting they might choose to allow. At the time of this writing, sports betting is live and legal in 38 states plus Washington D.C., according to the American Gaming Association. Of the states that allow it, 29 (and D.C.) allow online or “mobile” betting. In the states that don’t, credit card users may hit a wall when they set out to open and fund an account, regardless of the intended payment method.

States allowing online gambling are within rights to further regulate activity, including what types of sports can be bet on and acceptable payment methods. Like several foreign countries, some states have singled out credit card use for gambling as a cause of elevated risk for debt and as a result, have sought to restrict it.

Individual states’ laws about credit card use with online gambling are in flux and enforcement hasn’t been consistent, so it can be difficult to tell what exactly is possible in which state. States that have outlawed credit card use include Iowa, Tennessee and Massachusetts. States are also able to limit the number of cards and the amount of credit that can be used for a single online gambling account. Government regulations like these are largely aimed at changing consumer behavior (rather than mitigating security or money-laundering concerns) and will likely increase as the era of legal online gambling in the U.S. forges on.

Downsides of Using Credit Cards for Sports Betting

While it may be appealing, the use of credit cards for sports betting is largely a bad idea. There are several reasons why, including how the issuer levies fees on the transaction, the security risks involved and the risk to overspend.

Treated as a Cash Advance

Among the credit card issuers that do allow sports betting transactions, it’s common to treat payments made for gambling as cash advances rather than as normal purchases on credit. This remains a major downside to using a credit card for sports betting because of the expense it adds to using credit and the risk it creates for serious debt accumulation. Forbes Advisor recommends against using a credit card for a cash advance.

In the case of charging sports betting transactions to a credit card, issuers view the practice as comparable to withdrawing cash at an ATM with a credit card. The cardholder not only typically faces a cash advance transaction fee (often 5% of the transaction amount) but also a separate, cash-advance APR for which interest starts accruing instantly, without a grace period.

These elevated cash advance rates can push 30%, making for inefficient borrowing even if the debt is paid off relatively quickly. Additionally, the cardholder may begin to exhaust their cash advance credit limits, often restricted to only a fraction of the overall credit limit. Cash advance transactions do not usually earn rewards.

Security Risks

Some consumers are more comfortable sharing credit card information than others, but with any purchase, cardholders expose themselves to some level of risk. Everyday purchases from familiar or widely-trusted businesses remain relatively safe, but when it comes to online gaming transactions, consumers have reason to be extra cautious with this sensitive information.

Typically, the concern is that improperly-secured information will be exposed to unwanted parties post-transaction rather than any risk of direct misconduct on the part of the betting site. These sites store large amounts of sensitive consumer information and have proven to be a juicy target for hackers. While options like virtual cards, other prepaid cards and cryptocurrency can provide a barrier between the bettor’s financial info and the online sportsbook, credit card information remains a liability after a purchase is made.

Deposit Fees

Depending on the online sportsbook, funding an account may incur deposit fees, sometimes described as processing fees, which are usually a percentage of the amount of money transferred.

While there may be no way to avoid these, some sportsbooks differentiate the deposit fee policy based on payment method. Sportsbooks may choose to waive deposit fees for debit cards, for example, as a means of enticing customers to front money they already have instead of gambling on credit.

Given the fees credit card companies charge to vendors (in this case, the sportsbook) every time a customer swipes a card, sportsbooks generally don’t choose to waive bettors’ deposit fees when credit cards are involved. These fees may seem like a small price to pay for the convenience of instant credit, but costs can start to add up over time, especially when other fees such as cash advance fees are also accounted for.

Overspending Comes Easily

Online sports betting with plastic combines two touchy areas: credit card debt and gambling. Because each invites dangerous spending patterns in their own right, mixing them together threatens to create a toxic cocktail.

For some cardholders, the elevated risk exposure to overspending should be the biggest concern of all. Excessive credit card debt can quickly become shockingly expensive and difficult to manage, and it’s a more common problem than many assume—the average American had over $6,000 in credit card debt last year.

The only thing worse than spending money you can’t afford to lose is spending money you don’t even have to begin with. Even borrowers who are confident in their ability to repay can still face trouble, as carrying any level of credit card debt, even temporarily, is far more expensive than most other forms of debt, such as personal loans. Forbes Advisor does not advise using personal loans to acquire capital for gambling ventures.

Another concerning wrinkle is the ease of paying with a credit card. Debit cards and ACH transfers or prepaid or virtual cards limit funds to what a gambler already has. This way, money that the bettor sets aside for gambling is contained providing an easy out if and when the money runs dry.

Credit cards don’t necessarily involve the same finality. The only direct limit to in-the-moment spending is one’s credit limit, which will far exceed what cardholders should actually be charging to a card in order to maintain good credit. Credit card information is often saved by betting sites so bettors can replenish an account through easy, one-click deposits.

Betting sites may further incentivize credit card use by offering rewards credit cards, such as the MGM Rewards Mastercard. Combine these factors and environment with the 24/7 access to gambling online sportsbooks provide (often, through super-convenient mobile betting apps) and it’s easy to see how dangerous habits can easily form.

Find the Best Secured Credit Cards of 2024

Bottom Line

Even with the cost of the several fees potentially involved, any bettor should still carefully evaluate the other downsides of reaching for a credit card when betting. The risks remain real to any financial position. Sports bettors are at least twice as likely to experience a gambling problem as gamblers in general, and this rate only climbs when the betting is taken online.

For many, managing this risk with a credit card in hand will only increase the challenge. As newly legal sports betting and evolving gambling technology intersect, there are sure to be bumps in the road—that’s why we recommend limiting the costs and risks by keeping the credit cards out of it.

Frequently Asked Questions (FAQs)

It depends on the state. While the U.S. Supreme Court’s 2018 decision in Murphy vs. NCAA effectively ended a federal prohibition on sports betting, individual states may still choose to prohibit it. Whether online or in person, state laws apply to the bettor’s location when they seek to gamble, meaning bettors in states where sports gambling is prohibited may legally travel elsewhere to do so.

What states allow sports betting?

At the time of this writing, sports betting is legal in 38 states and Washington D.C. Legal betting is active in:

Why do banks treat betting with a credit card as a cash advance?

Credit card issuers treat betting or gambling charges as cash advances because the bettor’s funds are technically purchasing gambling credit—a cash alternative—rather than a normal product or service (in this context, bettor funds on an online sportsbook are viewed much the same as gaming chips at a casino). Credit card companies commonly differentiate these types of transactions in fine print.

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