A new policy from Visa could pave the way for more widespread acceptance of online sports betting payments in the US.
Starting January 1 next year, Legal Sports Report understands Visa will classify payments to general purpose reloadable (GPR) cards and digital wallets as gambling transactions.
For example, a payment to a Skrill wallet or Sightline prepaid card would be tagged with a 7801 code — the same code as a direct deposit to a sportsbook.
In the short term, that will mean a lot more failed deposits, as some banks — like Bank of America — block those transactions. That’s part of the legacy of the federal Wire Act.
That could lead to an immediate 10% hit on gross gaming revenue, according to payments consultant and Eilers & Krejcik analyst Jerry Rau.
A temporary problem?
However, the change from Visa is not an attack on the industry and any disruption likely will be temporary.
888 noted it would offer alternative payment methods such as Play+ and Visa Debit, and it expects any impact to be minimal.
And long-term, the switch is Visa’s attempt to improve transparency and create a framework where banks know exactly what transactions are being used for gambling.
Ultimately, that could encourage the card issuers to embrace gambling and process those transactions, expanding options beyond PayPal and the like.
“Does this create a little bit of short-term pain?” said Joe Pappano, CEO of Sightline Payments. “Yes, but it creates transparency. This change will inform banks’ rules engines so they know what to do with these transactions. Visa is heavily engaged with the sports betting industry, and hopefully more issuers are coming on board.”
Visa did not respond to an LSR request for comment.
Who are the holdouts?
Pappano named Bank of America, Capital One and Chase as the key issuers who have not yet embraced gambling. However, Chase has started accepting debit card transactions and is expected to expand that to credit in Q1 2021.
Pappano said he expects Bank of America to start taking debit card transactions for gambling in Q1.
That could pave the way for full acceptance of betting transactions across the US, and ultimately, a meaningful uplift for US sportsbook operators.