FanDuel bans credit card-funded bets, following DraftKings

• Key insight: The bulk of the online sports-betting market in the U.S. will no longer accept credit cards as a form of payment, following bans by FanDuel and DraftKings.
• Supporting data: FanDuel and DraftKings make up more than 70% of the online sports betting market, according to data from Casino Reports.
• Forward look: The FanDuel policy, which the company said will improve the deposit experience for its customers, takes effect on March 2.

FanDuel will no longer accept credit-card deposits to fund sports bets in the United States, the company announced, following a similar move from rival DraftKings last summer.
The New York-based company’s ban on accepting credit cards, which will become effective March 2, comes days after Sen. Elizabeth Warren, D-Mass., lambasted the sports gambling industry over the cost of paying with a credit card.

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But FanDuel said Wednesday that its decision has been in the works for far longer.

“Over the last few months, FanDuel has been evaluating the payment methods that we offer to customers and made the decision to remove credit cards as an option for our sportsbook, casino and racing product in the United States,” a FanDuel spokesperson said in an emailed statement. “This change was made to improve the deposit experience for our customers.”

On Wednesday, Warren said the rest of the sports betting industry should “follow suit” in banning the use of credit cards. FanDuel and DraftKings together make up more than 70% of the total online sports betting market in the U.S., according to data from Casino Reports.

Bets placed with credit cards are typically more expensive than bets made with other forms of payment. Card companies frequently charge fees on such transactions, which they often classify as cash advances. Those fees can be $10 or 3-5% of the amount advanced, whichever is larger.

Several states currently ban the use of credit cards for online sports betting, including Massachusetts, along with Iowa, Tennessee, Rhode Island, Oregon and Vermont.

Ahead of the Super Bowl, Warren sent letters to 10 sports betting companies, including FanDuel, requesting more information about their credit-card acceptance policies. She said many users are unaware of the costs and fees associated with such credit-card use.

“Specifically, users are reporting that they did not realize that using their credit card to place a bet on a sports gambling website would be treated as a cash advance and accrue additional fees and interest,” Warren wrote. “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.”

Along with FanDuel, Warren sent letters to various other gambling companies, including DraftKings, Bet365, Caesars, BetMGM, Fanatics, Wynn Resort Holdings, Hard Rock Digital, Bally’s Corp and Penn Entertainment.

A Fanatics spokesman said in an email that its sportsbook and casino platforms have never accepted credit-card transactions. He said the company’s unwillingness to accept credit-card transactions is “one of the core parts of our business model.”

DraftKings said last August that it had banned the use of credit cards to help customers avoid fees and to “improve the deposit experience.” The month prior, the company was fined $450,000 by Massachusetts regulators after the state’s Gaming Commission ruled that DraftKings lacked sufficient controls to prevent the improper use of credit cards by Massachusetts customers.

Bet365, Caesars, BetMGM, Wynn Resort Holdings, Hard Rock Digital, Bally’s Corp and Penn Entertainment did not respond to a request for comment on Warren’s letter. Bet365, Caesars and BetMGM are among the sports gambling companies that accept credit cards for deposits.