Payments for legal online casinos have already improved in recent years

How Pennsylvania Could Improve Online Gambling Payment Processing

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The move by Pennsylvania to legalize online gambling could have repercussions beyond the Keystone State.

As the first state to legalize online gambling since 2013, Pennsylvania is expected to have a number of positive impacts. One of those is possibly restarting the momentum from 2013, when Nevada, Delaware and New Jersey all launched legal online gambling sites.

Among the ways Pennsylvania can make a difference is by spurring on legislative efforts in other states and increasing online poker liquidity through interstate agreements.

But Pennsylvania should also help on another front that has dogged the current legal markets: payment processing.

Payment processing was a big issue early on

Nobody really knew what to expect when New Jersey online casinos went live on Nov. 21, 2013. One thing no one anticipated was to see up to 90 percent of credit card deposits rejected.

These were legal online gambling sites. Operated by licensed land-based casino corporations and overseen by state gaming commissions. But none of that mattered to the banks and credit card companies.

Banks exercised extreme caution.

Further muddying the waters, the Unlawful Internet Gambling Enforcement Act is still in effect. Offshore online sites made it difficult for a financial institution to parse what was a licensed site and what was an unlicensed site.

With only four percent of the US population in states with legal online gambling, the number of transactions they were declining represented a microscopic percentage of total transactions.

Even if the risk was miniscule, there was little reason for a bank or credit card company to take on that risk.

Progress is already being made

Since its early woes, three developments have improved payment processing in the legal online gaming markets in the US:

  • Education efforts by operators during registration.
  • The creation of MCC credit card codes for legal online gambling transactions.
  • PayPal‘s decision to process legal online gaming transactions.


Online operators have been steering customers towards payment processing methods with track records of success.

Operators also began proactively addressing declined transactions. If a registrant’s card is denied sites will immediately offer a second option like PayPal, Neteller or PayNearMe.

Because operators are preemptively steering customers away from cards that are likely to be rejected, it’s hard to know what the actual rejection rate would be.

New codes

In addition to educating their customers, operators have also been engaged in a lot of outreach to banks and financial institutions.

This not only led to more credit cards accepting legal online gambling transactions, it eventually led to the three major credit card providers — American Express, MasterCard, and Visa — creating new MCC codes to differentiated between licensed online gambling operators and offshore, unregulated operators.


There is a growing list of credit card alternatives too.

ACH payments, PayNearMe and Neteller have been available for several years. While these methods are helpful, it was the addition of PayPal in the fall of 2015 that really seems to have had an impact.

So many people already had PayPal accounts. That made it the first mainstream alternative to credit cards in the New Jersey online gambling market. All of the others required most people to register for that service.

However, because of the fees, only a handful of operators offer PayPal transactions.

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How Pennsylvania can help

With these advances, rejection and approval rates have essentially switched. But there is still a lot of work to be done on this front, and Pennsylvania is expected to help.

Pennsylvania’s online gambling sites are expected to launch sometime in the second half of 2018. At that point the number of US residents that will have access to regulated online gambling sites will double from 13 million to 26 million.

Not only is Pennsylvania the fourth state to offer legal online gambling, it’s the largest. (It’s also the sixth state to offer online lottery.)

With the addition of Pennsylvania, eight percent of the US population will have access to legal online gambling, and 16 percent to online lottery.

Will that be enough for some of credit card companies to reverse course? Probably not. Online gambling is still a niche industry. Card companies won’t be losing much business by continuing to deny legal online gambling transactions.

However, Pennsylvania could be seen as relighting the fuse for legal online gambling. That, coupled with a full eight percent of the US population living in an online gambling state, could be enough to bring some credit card companies to the table.

- Steve covers nearly every angle of online poker in his job as a full-time freelance poker writer. His primary focus for OPR is the developing legal and legislative picture for regulated US online poker and gambling.
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