The recent Supreme Court decision to legalize sports betting brings challenges and opportunities. According to the American Gaming Association, Americans place $150 billion a year in illegal sports bets. To put this in perspective, 2016 gross revenues for America’s favorite pastime, Major League Baseball, were $10 billion, while the gross revenues for the National Football League were $13 billion, and the National Basketball Association 5.9 billion. Given the huge disparity in revenue it seems that sports betting wins hands down.
The ruling to legalize sports gambling in states that choose to allow it opens the door to a fast growing and profitable marketplace. This is why 20 states have already passed laws regarding online sports wagering to make it legal. With the new tax revenue opportunities that are opening, many other states are beginning to catch up as well so that they may also benefit from the revenue that passing these laws bring.
Currently, Nevada is the only state that allows single-game wagering while Nevada and Louisiana are the only two states that allow casino-style gambling. Prior to the ruling, the federal Professional and Amateur Sports Protection act of 1992 (PASPA) prohibited 46 states from allowing sports betting to take place. Nevada, Delaware, Oregon, and Montana are exempt from PASPA because they have already adopted betting practices.
As of this moment, there are over 40 states that have land-based casinos and/or state lotteries within them. The states that have allowed gambling already have a clear understanding of the gambling experience focused around online gaming and betting in general. These states will likely process this ruling quickly to allow betting to become legal.
As states sit down to create laws and regulations surrounding online gaming and betting, they will already have a clear foundation in place on which to base these upon thanks to the state lotteries/casinos found within them. This makes the process much less daunting which means that the United States is likely to see more gambling laws come into play very, very soon.
Regulatory Compliance for Online Sports Betting & Gaming
Gaming is a highly regulated environment and the following regulatory issues may arise with online sports betting, gambling, and gaming:
Age & Identity Verification for Online Gaming
iGaming, gambling, and sports betting operators are required to meet gaming regulators’ compliance obligations to verify the age of their customers. Additionally, some iGames and gaming apps must meet COPPA Compliance (Child Online Privacy Protection Act) and comply with parental authorization required by law by validating prior parental verification (PVV). This is why adopting a culture of compliance is vitally important for all operators.
Geofencing for Sports Betting
With geofencing, there is an extra elevated version of identity verification. With geofencing, people in states where betting is still illegal will not be allowed to gamble thanks to the GPS tracking capabilities behind geofencing. According to GeoMarketing, a geographic boundary is set up through GPS or RFID to create a ‘virtual barrier’. With geofencing, the administrator of the website can set up a trigger that can send texts, emails, or app notifications when the mobile device enters or exits a specified area. While geofencing can be used to target advertisements towards people based on the specific location they are in, geofencing can also be used to block people who are in states where that type of betting is illegal.
Chargebacks and Fraud
The best defense for gaming merchants is a strong offense. With DigiPay’s fraud platform operators have access to advanced identity authentication, fraud tools, and a team of fraud managers.
How Will Sports Betting & Gaming Affect Credit Card Processing?
Fast, secure electronic payments will be needed to complete these transactions. DigiPay is a great payment processor for all your online gaming payment needs. With DigiPay, online transactions are fast, easy, and secure. This is why DigiPay is the payment processor of choice for some of the largest gaming entertainment companies in the US and abroad. With competitive pricing, best in breed wallets designed for gaming, and a risk management platform, DigiPay has everything you need to launch or scale your business.
For states that wish to pursue legalized online gaming and sports bets, card fees will remain consistent with traditional card fees in this merchant category code. However, there will be regulatory compliance requirements such as geofencing and age & identity verification that are specific to online gaming, sports betting, poker, and gambling. Finding a turnkey solution from a high-risk processor with regulatory compliance experience is key. With DigiPay’s curated knowledge of gaming and compliance operators have a one stop shop solution to launch and scale their operation.
According to eCommerce Daily News, while fees for operators are an expected cost of doing business, paying consumers participating in gambling should check to see if their issuing bank plans to charge additional fees for the risk of using their credit card to gamble. Offering a digital wallet to avoid these upcharges may be a competitive advantage.
Want to learn more about DigiPay’s gaming solutions and our digital wallets? We look forward to speaking with you.