Credit Cards and Online Gambling: What’s Allowed in the U.S.?
If you use your credit card for most of your purchases, it may be surprising to find out that you can’t always use it for online gambling in the U.S. While credit cards are still accepted in some cases, there has been a shift away from using them for many reasons.
Online casino operators
If you want to use a credit card for online gambling, you need to make sure that the US online casino you choose to play at will accept it. Online casinos may offer various payment options that may include credit cards or not. It is easy to check on the casino site which payment options it accepts.
Some of the reasons major legal operators have started to phase out the use of credit cards for deposits include consumer protection and responsible gambling. Credit cards are also more expensive and riskier from an operator’s perspective. Fraud is common, processing fees are high, and chargebacks are costly.
Most of the major U.S. legal sportsbooks don’t accept credit cards anymore. Offshore sportsbooks may accept them, but this comes with legal and safety risks.
Operators try to steer players towards other payment options such as debit cards and digital wallets.
The state where you choose to gamble
Even if you do find a credit card that suits your needs for online gambling, you won’t be able to use it just in any state. Some states don’t allow online gambling. Many states allow sports betting but only a handful allow online casino gambling and sports betting. Several states also restrict or ban credit card gambling deposits.
The card issuer
It may be the card issuer rather than the gambling site that has a problem with allowing credit card deposits for online gambling. Many major issuers in the U.S. such as Citibank and Wells Fargo address online gambling in their card terms. They may prohibit its use for gambling altogether or address how it will be handled. Even if an issuer does not explicitly prohibit use for online gambling, it doesn’t mean the bank will routinely approve such payments either.
An issuer may treat a credit card purchase for gambling as a cash advance, which is problematic for various reasons. Both American Express and Chase categorize online gambling as a cash advance.
Managing your money means watching fees and interest. You may have to pay a one-time cash advance fee when using your credit card for gambling, which is typically the greater of 5% or $10 per transaction.
The annual percentage rate for cash advances is higher than for regular purchases and it starts accruing interest from the time you make the transaction.
A separate cash advance limit on your credit card may be lower than your overall credit limit. Depending on how much you want to bet, you might not have a high enough limit for the transaction.
Using a credit card for gambling may also mean you don’t qualify for rewards, such as travel points or cash back.
Your credit score
A credit card is borrowed money. It is clearly better to use your own money rather than borrowed funds to gamble. Your credit score may be on the line when late fees and interest accumulate in your card balance.
If you regularly use your credit card for gambling, it may raise your credit utilization ratio. This is the percent of credit you use versus your total available credit, which plays a role in arriving at your credit score. If it hurts your credit score, you may find it more difficult to borrow in the future.
