FanDuel Follows DraftKings in Banning Credit Card-Funded Bets
In a significant move that could reshape the landscape of the online sports-betting market in the U.S., FanDuel and DraftKings, which collectively make up over 70% of the market according to Casino Reports, have decided to ban the use of credit cards as a form of payment.
FanDuel’s Decision to Ban Credit Cards
FanDuel announced its decision to no longer accept credit card deposits to fund sports bets in the United States. This policy, which is set to take effect on March 2, comes after similar action taken by rival DraftKings last summer. The decision is designed to improve the deposit experience for its customers, a FanDuel spokesperson explained in an emailed statement.
This move by FanDuel did not occur in a vacuum. It followed criticisms levied against the sports gambling industry by Sen. Elizabeth Warren, D-Mass., who particularly highlighted the high cost of placing bets using a credit card.
The Cost of Credit Card Betting
Betting with credit cards is typically more expensive than using other forms of payment. Card companies often categorize such transactions as cash advances, imposing fees that can be as high as $10 or 3%-5% of the amount advanced, whichever is larger. This practice has raised concerns about the potential financial strain placed on consumers, particularly those who might be unaware of these additional costs.
Sen. Warren brought this issue to light in letters sent to 10 sports betting companies, including FanDuel, ahead of the Super Bowl. In her letters, she pointed out that many users were not aware that placing a bet with a credit card would be treated as a cash advance, incurring additional fees and interest. “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,” she wrote.
Other Companies’ Stance on Credit Card Betting
DraftKings had already banned the use of credit cards last August, citing the desire to help customers avoid fees and to improve the deposit experience. The company’s decision came after a $450,000 fine was imposed by Massachusetts regulators, who determined that DraftKings lacked sufficient controls to prevent the improper use of credit cards by Massachusetts customers.
Other companies, such as Fanatics, have never accepted credit card transactions. A Fanatics spokesman stated that their refusal to accept credit card transactions is a core part of their business model. Meanwhile, companies like Bet365, Caesars, and BetMGM have so far continued to accept credit cards for deposits.
With FanDuel and DraftKings, two major players in the industry, taking a stand against credit card-funded bets, it remains to be seen whether other companies will follow suit. What is clear, however, is that the landscape of online sports-betting in the U.S. is undergoing important changes, with potential implications for the industry and its customers.
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