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

As Missouri is expected to join the sports betting scene next year, and presuming no other states approve and initiate online sports betting by 2025, around 30 states and Washington, DC will provide genuine mobile betting that doesn't necessitate visiting a physical casino. 

Nevada is “the culprit” in that regard, but the truth is that between eight and nine out of every 10 sports bets in the US are made using a computer or mobile device, and bettors appreciate the ease. They ought to be cautious about using credit cards to fund their accounts. 

A recent report from the Consumer Financial Protection Bureau (CFPB) reveals that sportsbook operators permitting mobile account deposits through credit cards—an approach common in the industry— categorize these transactions as cash advances rather than standard charges. This indicates that gamblers might inadvertently face elevated fees compared to funding their accounts with cash in person or using debit cards attached to their checking accounts. 

In addition, it's tough to evade those cash advance charges. The CFPB observed that among the seven biggest credit card issuers in the US, each included clauses in their cardholder agreements regarding the classification of legal gambling services as cash advances. 

Credit Card Charges Another Exaction 

It's not surprising that credit card companies are considering gaming expenses as cash advances. That policy has existed for years, but the CFPB is highlighting it during a period of rapid expansion in the US sports betting market. 

One perspective on cash advance fees is to view them as an additional vigorish. In a standard -110 sports bet, the gambler stakes $110 to possibly win $100, with the $10 gap serving as the vig or simply a service fee charged by gaming firms. Include the cash advance fees, and wagering becomes pricier.

"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.”

Another point to think about: cash advances and their associated fees do not contribute to cash back, miles, points, or any other types of rewards provided by card issuers. 

Sports Wagering Encouraging Increased Cash Advances 

In spite of the previously mentioned concerns, it seems that numerous sports bettors are using credit cards to fund their mobile accounts. 

The CFPB examined data from two states — Iowa and Kansas — highlighting that following the legalization of sports betting in these areas, there was an increase in cash advance transactions. 

“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.