Online gambling cannot hope to thrive as an industry without an adequate payment processing system for operators and consumers alike.

Payments are at the heart of online gambling, from gamblers to bookmakers and vice versa—and while some payment processors have risen to the occasion and continuously deliver outstanding results for the industry, there is plenty of work to be done among banks, credit card issuers, and the processors themselves.  

Challenges for operators

Securing credit card processing in the online gambling industry is quite difficult, especially if you are required to obtain a high-risk merchant account. Most payment facilitators expect prior processing history with acceptable levels of refunds and chargebacks, as well as proof that you have been able to scale despite the inherent challenges. 

Given the legality of online gambling varies from state to state, these businesses and their associated payment processing accounts are typically labeled as high-risk. With this label comes a host of complications, such as higher fees and tighter regulations. 

Beyond the high likelihood of an operator needing to open a high-risk merchant account, demand for processors themselves has boomed as online casinos have grown in popularity. The need for ample processors continues to grow in newly legal states, and the Covid-19 pandemic drove interest in online gambling across the country as the majority of gamblers were routinely confined to their homes for virtually months at a time.  

To compound these challenges for gambling operators, many processors have indicated a lack of interest in dealing with the complexities of federal and state laws and regulations governing sports betting.  

As regulators continue to improve upon the existing framework of legal gambling, I am optimistic that more payment processors will embrace the gambling industry—but for now, many challenges remain for gambling companies. 

Profile of a great payment processor 

With so many inherent challenges to identifying a suitable payment processor, what should gambling companies look for?  

Given the difficult operating environment, online gambling merchants benefit from partnering with payment processors that specialise in high-risk processing. Ideally, such a payment processor will have experience in the gambling industry, which will enable them to navigate through the difficult regulatory terrain.  

Processors should also be dedicated to heavily monitoring transactions for potentially fraudulent activity, which is crucial to ensuring the long-term success of the industry, as well as focused on helping businesses get (and stay) approved for processing. At this time, companies like Fiserv and Global Primex are leading the way in processing payments for the legal, regulated global gambling industry. The importance of utilising a processor with the size, scale, and stability that these companies offer cannot be overstated. 

Credit card processing for consumers 

For a gambler to place an online bet, they must first fund their associated account. Credit cards remain one of the most common ways to fund mobile betting accounts, yet despite the widespread legalisation of online sports betting and gambling, it is not uncommon for customers to have problems with credit card deposits.

Some issuing banks may still automatically decline credit card deposits related to online gambling due to anti-gambling policies employed by the bank, though this is becoming an increasingly uncommon issue. Additionally, not all credit card brands work equally well for online sports betting, and some issuers treat online gambling transactions as cash advances, which can be subject to higher interest rates and fees. 

While most legal sportsbooks accept credit card deposits, a handful of states prohibit funding betting accounts with any form of credit: namely Iowa, New Hampshire, and Rhode Island. Responsible gambling organisations like Entain Foundation US have expressed the main problem with this type of limitation: while well-intentioned, it disincentivises gamblers from using legal, regulated platforms, and encourages re-entry into the black market.  

ACH warranty 

ACH payments, a type of electronic bank-to-bank payment, are emerging as a favoured transaction method for the gaming industry. These payments are made through the banking system, rather than through card networks such as Visa or Mastercard, which simplifies the transaction process.  

Fiserv, for example, allows customers to process and deliver ACH transactions through their choice of deployment models, regardless of the transaction volume or size of your preferred financial institution.  

 Through their ACH Warranty offering, Fiserv also helps eliminate costly manual processes while expanding business services and offerings for gambling operators.  Further, and perhaps most importantly, their ACH Warranty solution mitigates risk across their customers’ ACH payment processing system. 

Moving forward

The importance of payment processing in online gambling cannot be overstated. For the industry to thrive, consumers and businesses alike need easy access to safe, highly efficient, reasonably priced payment processing. It is my hope that as the United States continues to embrace gambling, both culturally and politically, payment processing will improve, and ultimately enable this industry to flourish.  

William J. Pascrell III, Esq. (BP3) is a Partner at Princeton Public Affairs Group, the largest statewide lobbying firm in the country; a Trustee for Entain Foundation US, a nonprofit dedicated to promoting responsible gambling, sports integrity and corporate compliance in the U.S.; and a globally-recognised gambling expert. 

On August 5 of last year, New Jersey Governor Phil Murphy signed Bill A-4909 into law, authorising fixed-odds betting on horse racing in the Garden State.

To those unfamiliar with horse racing, this news represents a minor shift in betting procedures. To those familiar with fixed-odds betting, however, the passage of A-4909 marked a transformative moment in American horse racing.

With the passage of this bill, New Jersey became the first state in the country to legalise fixed-odds horse betting, additional proof positioning NJ as a leader in the American gambling industry.

What is fixed-odds betting?

The United States largely utilises a “pari-mutuel” system for horse betting since 1927. The term, which originated in France, translates to “to wager amongst ourselves,” and it’s quite fitting: under a pari-mutuel system, gamblers place bets against each other and pay a small fee to the race track for handling the bets.

The most important component of this system, however, is that the odds are not finalised until after all pre-start bets have been tallied. As such, larger players are able to dominate the movement of odds in a given market, which can result in late odds fluctuations.

Fixed-odds horse betting, meanwhile, allows bettors to place a wager on a horse at a set price, alleviating concerns that the odds may fluctuate before the race. This system also places a bettor’s wager against the track or bookmaker, rather than another bettor. 

Fixed-odds betting is tremendously beneficial to the sport of horse racing. It helps everyday gamblers to place secure bets at a fixed price; it simplifies the betting process; it introduces an innovative product to horse racing; and a fixed-odds bet on horse racing is classified under NJ law as a horse bet, not a sports bet, so it isn’t taxed.

These factors make the act of horse betting much more enticing for gamblers, which unlocks new revenue that ultimately flows back to stakeholders, while growing an exciting sport. 

The state of horse betting in New Jersey

Fixed-odds in New Jersey are available online through BetMakers Technology Group, the only managed trading services company offering a fixed-odds platform licensed to serve the state. In this role, BetMakers devises odds, manages risk, and secures deals with horsemen’s associations and tracks to offer fixed-odds on their cards.

The group, through the stellar Leadership of their CEO Todd Buckingham and their SVP for international operations Dallas Baker, also has a fixed-odds management and distribution agreement with Monmouth Park, New Jersey’s only thoroughbred racetrack, and the New Jersey Thoroughbred Horsemen’s Association. 

Fixed-odds horse betting is launching in the Garden State thanks in great part to Dennis Drazin, president of Darby Development, Monmouth Park’s track operator. Mr. Drazin executed a unique, first of its kind agreement between the track, the Thoroughbred Horsemen and BetMakers, starting with exclusively on-track betting.

All relevant stakeholders will benefit from this fixed-odds offering i.e. the track, The Horsemen and the betting operators who love the additional content. Bettors’ options also include online fixed-odds betting with the state’s sportsbook operators now able to take fixed-odds horse bets.

A model for the country

New Jersey’s rollout of fixed-odds horse betting serves as a model for the rest of the US. This past March, the Colorado Limited Gaming Control Commission approved a change to the state’s sports betting rules, allowing for an 18-month trial of fixed-odds wagering on horse and greyhound racing. Colorado and New Jersey are currently the only states to allow fixed-odds horse betting as a legal alternative to the standard pari-mutuel model. 

Looking ahead 

With the introduction of fixed-odds horse racing, the future of horse racing in the US is bright, and it has limitless potential. It is far more consumer friendly and will attract younger punters more familiar with sports betting type wagers, giving the industry a much needed shot in the arm for the future.

Fixed-odds betting represents the most exciting and transformative change to horse racing in the last 50 years. We are witnessing tremendous innovation in the sport with Entain’s recent launch of a world-first, virtual reality horse racing experience in the UK. Horse racing continues to grow in popularity, largely through the industry’s embracement and promotion of fixed-odds betting. 

Perhaps most importantly, bettors around the world are slowly but surely finding themselves with new and exciting means of recreation—and we’re only getting started. It’s my hope that elected officials, regulators, industry leaders, and bettors choose to support fixed-odds horse betting in the months and years to come, as a means of promoting organisation, efficiency, profitability, and fun for all involved.  

William J. Pascrell III, or BP3, is a partner at Princeton Public Affairs Group, an internationally recognised gambling expert, a Trustee for Entain Foundation US, and a strategic adviser and lobbyist for BetMakers Technology Group. The Entain Foundation US is a nonprofit organisation dedicated to promoting responsible gambling, sports integrity and corporate compliance in the US. The organisation, led by BP3, gambling regulatory affairs expert Martin Lycka, and former New York Giants wide receiver Amani Toomer, sponsors a variety of information and education programmes on problem gambling for professional athletes, collegiate athletes, coaches and teams at 40 US colleges and universities and several associated leagues.