FanDuel & DraftKings Drop Credit Cards: Sports Betting Payment Changes

The online sports betting landscape is undergoing a significant shift as major players move away from accepting credit card deposits. March 2nd marks the date FanDuel will join DraftKings in banning the practice, a move spurred by concerns over hidden fees charged by credit card companies and championed by U.S. Senator Elizabeth Warren.

FanDuel’s decision, announced February 11th, follows a similar step taken by DraftKings last August. The company stated the change has been “in the works for months” and is intended to “improve the deposit experience for our customers.” This comes after Senator Warren publicly criticized the industry for allowing what she termed “junk fees” associated with credit card transactions for sports betting.

The issue, as highlighted by Warren, centers around credit card companies often treating sports bets as cash advances, triggering hefty fees – sometimes as high as $10 for a $20 bet – and higher interest rates. Warren’s advocacy prompted her to send letters to ten major sports betting companies, including FanDuel, requesting information about their credit card policies. She argued that many users are unaware of these additional costs.

FanDuel and DraftKings collectively control over 70% of the U.S. Online sports betting market, according to data from Casino Reports, making their combined decision a substantial blow to the prevalence of credit card usage within the industry. While FanDuel and DraftKings are leading the charge, not all sportsbooks are following suit. BetMGM and Caesars continue to accept credit card deposits.

The move isn’t entirely new territory for the industry. Several states – including Massachusetts, Iowa, Tennessee, Rhode Island, Oregon, and Vermont – already prohibit the use of credit cards for online sports betting. Massachusetts regulators even fined DraftKings $450,000 last year for lacking sufficient controls to prevent improper credit card use by residents of the state.

FanDuel’s announcement also coincided with the launch of its “Play with a Plan” program on January 22nd, a responsible wagering initiative designed to help bettors track their activity, set spending limits, and receive deposit notifications. This program underscores a broader industry trend toward promoting responsible gambling practices.

The decision to eliminate credit card deposits aligns with a growing understanding within the industry that these payment methods are inherently more expensive for customers. As one analyst told Front Office Sports, credit cards are “the most expensive forms of payment.” The fees charged by card companies cut into potential winnings and can create a less transparent betting experience.

Fanatics, a relative newcomer to the sports betting scene, confirmed that its sportsbook and casino platforms have never accepted credit card transactions, stating it’s a “core part of our business model.” This suggests a potential competitive advantage for Fanatics as the industry grapples with the fallout from eliminating credit card options.

While some companies, like Bet365, Caesars, and BetMGM, did not respond to Senator Warren’s request for comment, the momentum is clearly shifting towards alternative payment methods. The future of online sports betting deposits appears to be leaning towards debit cards, bank transfers, prepaid cards, and other options that avoid the costly fees associated with credit card transactions. The industry’s response to Warren’s pressure and the evolving consumer landscape suggests a commitment – albeit a reactive one – to greater transparency and fairer practices for bettors.