Can you use a credit card to sign up for a U.S. sportsbook? Depends on the state

As of November, 33 states allow sportsbook deposits via credit card

Generation Z in particular has gotten used to the most modern forms of financial transactions, meaning few have a savings account and even fewer have a checking account.

It’s more likely that they have a credit card, however – and in 33 U.S. states, that can be used to make deposits into legal sportsbooks.

But in the six other states that have legalized sports wagering – Massachusetts, Rhode Island, New Hampshire, Vermont, Iowa and Tennessee – you are barred from making that deposit via a credit card.

While there is a clear New England tendency here, you can use that Visa or Mastercard on a sportsbook app in neighboring Maine, Connecticut and New York – no doubt leading to some confusion.

Why the disagreement among the states on this issue?

It seems to come down to a focus on consumer convenience versus consumer protection. 

Sportsbook deposits are protected by the Fair Credit Billing Act, settling any concerns about possible fraud. Also, many credit cards offer “rewards points” for spending, so a bettor who has plenty of discretionary income for a deposit instead may prefer to use a card to collect those points. The major sportsbooks also do not impose any fee for credit-card deposits.

But in this scenario, there are bound to be a subset of bettors who don’t have the cash available to cover the deposit – meaning that unless they have a very successful month of wagering, they would be on the hook for interest charges that in some cases can extend beyond 20%. Even more affluent bettors would be wise to check directly with their bank of choice to make sure that the sportsbook deposit won’t be treated as a cash advance and thus charge even heftier fees than traditional interest on the credit card.

Further complicating matters is that some states that allow Visa and Mastercard sportsbook deposits don’t extend the same convenience to those who use American Express or Discover credit cards. Also, there are major banks that don’t treat these proposed deposits as legitimate, so they are declined. Meanwhile, some smaller sportsbooks don’t accept credit-card deposits – a group that included industry upstart Fanatics.

U.S. lawmakers may want to consider a unique compromise by their colleagues in New York State. Casual bettors can enjoy the convenience of credit-card sportsbook deposits, but only up to a maximum of $2,500 per year. Legislators considered that to be the sort of threshold that is unlikely to cause major financial upheaval for a particular consumer.

New York State Senator Joseph Addabbo Jr., the state’s leader in gambling-related issues, earlier this year introduced an online casino gaming bill that would feature the same maximum for that form of entertainment. That can be an aid in gaining sufficient votes, potentially swaying on-the-fence lawmakers for whom responsible gambling is a key concern.

Even the sportsbooks don’t always get it right

There are more than 20 states where DraftKings runs a mobile sportsbook app, but five of those happen to be among the six that ban credit-card deposits as funds for sportsbooks (the exception is Rhode Island). Furthermore, each state regulation on sportsbooks has its own unique language.

According to testimony in a hearing before the Massachusetts Gaming Commission earlier, a DraftKings executive outlined how an “internal miscommunication” by some of his colleagues over the state’s credit-card restrictions led to the confusion.

Massachusetts’ sports betting regulations prohibit not only in-state credit-card deposits, they also forbid the use of credit-card funds added to a sports betting account from outside the state to fund wagers that then take place in Massachusetts.