Warnings for Gamblers: Avoid Using Credit Cards for Deposits in Sports Betting Accounts
In the rapidly expanding US sports betting market, a significant number of wagers are being placed via computer or mobile devices. According to recent statistics, as many as 8 to 9 out of 10 sports bets are made in this manner. However, this method of betting may not be as cost-effective as one might think, due to the treatment of credit card funding for sports betting as cash advances.
This practice, common among sportsbook operators, can lead to higher fees for bettors. The Consumer Financial Protection Bureau (CFPB) has released a report indicating that most mobile account deposits via credit cards are treated as cash advances, not traditional charges. This treatment can result in fees that are often higher than those associated with regular purchases, with a minimum charge of $10 for cash advances, making smaller cash advances particularly costly.
The CFPB's report also noted a surge in cash advance activity in the states of Iowa and Kansas post-legalization of sports betting. The bureau is drawing attention to this issue at a time of surging growth in the US sports wagering market.
It's not uncommon for credit card issuers to treat gaming charges as cash advances, but the CFPB's report serves as a reminder of the potential financial implications for bettors. Cash advances and the ensuing fees do not count toward rewards like cash back, miles, points, or other forms of rewards offered by card issuers.
Interestingly, Nevada remains the only state that requires a visit to a brick-and-mortar casino for mobile wagering. As of the article's publication, approximately 30 states and Washington, D.C. offer mobile wagering for sports betting. Missouri is expected to join the sports betting market in 2025.
In light of these findings, it appears that many sports bettors are still using credit cards, despite the fees and issues associated with this method. However, the CFPB's report serves as a reminder for bettors to be aware of the potential costs and to consider alternative funding methods.
The CFPB has also highlighted that all of the seven largest credit card issuers in the US have stipulations in their card member agreements pertaining to the treatment of legal wagering services as cash advances. This underscores the need for transparency and education about the financial implications of sports betting for consumers.
This article was first published on December 17, 2024, providing a timely reminder for bettors to be mindful of the costs associated with their chosen method of funding their sports betting activities.
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