Can you use a credit card for gambling on sports?

In recent years, many states have legalized sports betting. If you’re thinking of trying your luck, you might be wondering if you can pay with a credit card?

The short answer is that you probably shouldn’t.

For starters, it’s often not allowed. Some states that allow sports betting have banned the ability to use credit cards (including Connecticut, Iowa, New York and Tennessee).

If the state technically allows credit cards to be used for gambling purchases, many credit card issuers still won’t approve these transactions (due to the risks of disputes, overspending, not getting paid back, etc.). One of the largest online sportsbooks, FanDuel, lists Bank of America, Chase, Capital One, Wells Fargo, Huntington Bank and Union Bank as financial institutions that have been known to decline deposits for online wagering companies. They’re surely not alone.

Finally, even if the state and the bank allow you to use a credit card, additional fees can apply. If your credit card issuer permits gambling transactions, there’s a good chance they’ll treat them as cash advances. That generally means an upfront fee (typically $10 or 5%, whichever is greater) plus a higher-than-usual interest rate (probably in the neighborhood of 25%) that starts accruing immediately. It’s safer to stick with another payment method.

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How to fund a sports betting account

Many gambling sites allow instant, fee-free funding via debit cards. You might also be able to initiate an ACH transfer from your bank account (although there’s a good chance this will take at least a day to process). Either option will prevent you from going into debt while betting on sports. Of course, even if you have the money in your bank account, you shouldn’t gamble more than you can afford to lose. It’s a good idea to set daily, weekly or monthly limits on your wagers.

PayPal is another option for depositing funds (although it’s best to pull the money from your bank account or your PayPal balance since using a credit card to fund your PayPal account incurs a fee of 2.9% plus 30 cents). Cryptocurrency is sometimes another possibility.

Recently, I saw DraftKings (a prominent online sportsbook) gift cards on sale in a grocery store. You might be able to buy these gift cards with a credit card, earning rewards and avoiding cash advance fees. Tread carefully, however. You could be guilty of “manufactured spending” if you take it to the extreme, especially when you’re trying to hit a credit card’s sign-up bonus spending threshold or racking up a lot of rewards. It would essentially be money laundering if you used a credit card to buy a bunch of gift cards to deposit money into a gambling account, earning rewards and then withdrawing your own money.

Where can you bet on sports?

Some form of sports betting is currently legal in 32 states plus the District of Columbia, according to NJ.com. Mobile sports betting is live in D.C., Arizona, Colorado, Connecticut, Illinois, Indiana, Iowa, Louisiana, Michigan, Nevada, New Hampshire, New Jersey, New York, Pennsylvania, Tennessee, Virginia, West Virginia and Wyoming.

Bottom line

For the most part, credit card rewards chasers won’t be able to earn rewards from their gambling purchases. You could say that’s a missed opportunity, but honestly, it’s probably for the best, given the associated risks.

Have a question about credit cards? E-mail me at ted.rossman@creditcards.com and I’d be happy to help.