Bettor Be Warned: Don’t Use Credit Cards to Fund Sports Betting Accounts

With Missouri slated to enter the sports betting fray at some point next year, and assuming no other states legalize and launch online sports betting in 2025, approximately 30 states and Washington, DC will offer true mobile wagering that doesn’t require a visit to a brick-and-mortar casino.

Nevada is “the offender” on that front, but the reality is anywhere from eight to nine of every 10 sports wagers in the US is placed via a computer or mobile device, and bettors love the convenience. They should, however, be wary of funding their accounts with credit cards.

Plus, those cash advance fees are hard to avoid. The CFPB noted that of the seven largest credit card issuers in the US, all featured stipulations in their card member agreements pertaining to the treatment of legal wagering services as cash advances.

Credit Card Fees Another Vig

It’s not new that credit card issuers are treating gaming charges as cash advances. That policy has been in place for years, but the CFPB is calling attention to it at time of surging growth in the US sports wagering market.

One way to look at the cash advance fees is that they act as another vig. In a standard -110 sports wager, the bettor is risking $110 to potentially win $100, with the $10 difference being the vig or nothing more than a convenience charge levied by gaming companies. Throw in the cash advance costs and betting becomes more expensive.

Cash advance fees often have a minimum charge of $10, making smaller cash advances particularly costly,” according to the CFPB. “This means that someone wagering $20 could face the same $10 fee as on a $200 cash advance ATM withdrawal. The most common cash advance APR in reviewed agreements is 30 percent which is charged even if the cardholder would typically not incur interest on regular purchases.”

Something else to consider: cash advances and the ensuing fees don’t count toward cash back, miles, points, or other forms of rewards offered by card issuers.

Sports Betting Prompting More Cash Advances

Despite the aforementioned issues, it appears as though many sports bettors are funding their mobile accounts via credit cards.

The CFPB analyzed data from two states — Iowa and Kansas — noting that after sports wagering was legalized in those jurisdictions, a surge in cash advance activity followed.

“Through the CFPB’s limited analysis of two case studies where the timing of legalizing sports betting lined up with the frequency of our data from major issuers, the percentage of credit card accounts with a cash advance fee spiked in the first month people could legally bet,” added the bureau.