As sports betting legalization spreads like wildfire across the US many states operating sportsbooks have come across one common issue.
After the Supreme Court removal of the Professional Amateur Sports Protection Act (PASPA) in May of 2018, US States have been allowed the choice to regulate and tax sports gambling on a state by state basis. This newfound legislative stance had led five states to legalize and actively offer sports gambling options to their state residents and out-of-state visitors.
However, some of these states like New Jersey have found reoccurring issues between banks and their gambling institutions. Due to the Unlawful Internet Gambling Enforcement Act (UIGEA), banking institutions are prohibited from knowingly processing gambling transactions. To be on the safe side, banks tend to decline any and all transactions relating to gambling even if those transactions are made with legal and legitimately licensed state-regulated gambling operators.
Traditional banking cards like Visa, Mastercard, American Express, and Discover have a decline rate of 50-75% regarding gambling transactions. This means bettors and gamblers cannot successfully utilize traditional banking debit or credit cards to deposit or withdrawal funds at state-owned and operated sportsbooks and other gambling entities.
However, offshore online gambling sites and online sportsbooks have been able to circumvent the Federal ban to serve Americans for many years through using reloadable prepaid cards. Prepaid cards do not need to be directly connected to any banking institution which allows it to skirt UIGEA protocols. Which is why prepaid cards are one of the most commonly used payment methods in the online gambling industry.
Prepaid cards do not gather sensitive personal information from users either thus offerings anonymity. This is one reason they are favored by tech-savvy millennials, those without a bank account, those seeking to expand the number of bank accounts they own, contract workers, small businesses, and those who are self-employed.
Prepaid cards also offer incredible transaction speeds since it lacks the need for bank verification. Deposits made through a prepaid card are instant whether online or at a brick and mortar sportsbook. Prepaid cards can be appealing to new sports bettors with no previous background or knowledge of sports gambling as they require no fuss, extra steps or worries like with traditional banks.
Sportsbooks in the US have even gone so far as to create their own branded prepaid cards which not only allow instant deposits but also permits direct withdrawals which would reload the branded prepaid card automatically. Bettors reluctant to use a branded prepaid card can deposit from a prepaid card of their choice and withdrawal their winnings via cryptocurrency like Ethereum or Bitcoin or an online wallet.
With prepaid cards, US sportsbooks can offer quick and easy deposit and withdrawal methods (for branded prepaid cards only) for bettors which provides a sustainable solution to traditional banking cards.