5 things to know about using a credit card for online gambling

Gambling is something of a U.S. pastime, about as American as apple pie and rum-running. Almost half of all American adults (49 percent) participated in some form of gambling in the past calendar year, according to a 2023 report from the American Gaming Association (AGA). Of those who gambled, 20 percent placed a sports bet. In fact, since the Supreme Court struck down the Professional and Amateur Sports Protection Act (PASPA) in 2018, Americans have legally wagered $220 billion nationwide, according to another 2023 AGA report on betting trends post-PASPA.

It should come as no surprise that consumers are increasingly gambling from the comfort of their own homes. But before you drop your credit card info into a sports betting site, you should know this: Most credit cards aren’t acceptable forms of payment for online gambling.

This isn’t the fault of the gambling sites — nearly all gambling sites accept credit cards as a form of payment. Instead, it’s the card issuers who have cold feet about pulling the lever on allowing these purchases. These five facts can help you understand how issuers view these sorts of transactions and what could happen when you try to use your credit card for online gambling.

1. Most large issuers don’t allow online gambling purchases

The most significant roadblock to your ability to use a credit card to fund your online gambling is the card issuer. Many major issuers in the United States, such as Wells Fargo and Citibank, specifically address online gambling in their card terms, whether to prohibit it and other “illegal activities” or to outline how it will be handled.

The exact language regarding illegal activities differs from issuer to issuer. For example, Chase no longer explicitly lists online gambling as an illegal activity, but that doesn’t mean the bank is routinely approving those purchases, either.

Issuers are free to accept or reject transactions at their discretion, and many would sooner reject an online gambling transaction than risk wading into legal waters.

2. Issuers often classify online gambling purchases as cash advances

Even if your card issuer doesn’t strictly prohibit online gambling purchases, there’s another concern that can make using your card risky. Some issuers will classify online gambling and similar “cash-like” purchases as a cash advance.

Chase, for example, states in its sample cardholder agreements that:

“Cash-like transactions will be treated as cash advances. Cash-like transactions include, but are not limited to…purchasing lottery tickets, casino gaming chips, race track wagers, and similar offline and online betting transactions.”

This is problematic for the cardholder for a few reasons:

• You’d have to pay a cash advance fee: Most issuers charge a fee on cash advances, typically the greater of 5 percent or $10 per transaction. Depending on how often and how much you’re gambling with your card, this fee can add up quickly.
• Your cash advance could be capped below your card’s limit: Issuers also tend to cap the amount you can withdraw as a cash advance to a certain percentage of your maximum credit limit. Depending on how much you intend to bet, you might not have a high enough limit to fulfill your transaction.
• Your transaction would be subject to a cash advance APR: Cash advances carry separate and often higher annual percentage rates (APRs) than the traditional purchase APR. Adding insult to injury, cash advances begin accruing interest the moment you make the transaction. If you don’t pay off these cash advances shortly after performing them, your card balance will start racking up interest quickly.

And, if your card offers a payment plan option, your gambling charges may not be eligible. American Express, for instance, categorizes online betting the same way Chase does — as a cash advance. Amex also specifically excludes “purchases of cash or cash equivalents,” meaning cash advances, from its Pay Over Time payment plans.

3. You probably won’t earn rewards

Because most issuers aren’t eager to allow online gambling purchases on their credit cards, you’ll be hard-pressed to find a card that also earns you rewards on these purchases. Even if your issuer does process an online gambling payment as a cash advance, these transactions (and others like it, such as balance transfer payments) are ineligible to earn cash back or other rewards.

Gambling purchases are also unlikely to count toward your spending requirement for earning a welcome bonus. That’s why even the best credit cards for online gambling won’t really provide you with any benefits other than processing your gambling transaction as a cash advance.

4. Some states outright forbid online gambling

Even if you do find a credit card that suits your needs for online gambling, you may reside in a state that forbids the act altogether. According to gambling.com, the following states prohibit online casinos, poker or both:

• Arkansas
• Arizona
• Colorado
• Illinois
• Indiana
• Iowa
• Kansas
• Kentucky
• Louisiana
• Maryland
• Massachusetts
• Nebraska
• New Hampshire
• New York
• North Carolina
• Ohio
• Oregon
• Rhode Island
• Tennessee
• Virginia
• Washington, D.C.
• Wisconsin
• Wyoming

Some of these states allow for other forms of gambling, such as sports betting and horse races, though you’ll find that issuers may treat these activities with the same gloves as online poker or casinos. The issuer will either deny the transaction or treat it as a cash advance.

5. Your credit score is on the line

You’re not just betting your money when you use a credit card for online gambling — you’re betting your credit score. Ballooning interest, late fees and cash advances can all accumulate in your card balance.

Regularly gambling with your credit card may also raise your credit utilization ratio if you carry a balance. Your credit utilization ratio is the percent of credit you’re using versus your total available credit, and it plays a significant role in determining your credit score. Ideally, you want to keep that percentage at 30 percent or less.

Once these factors start adding up, you may find it difficult to keep up on your payments and pay down your debts. This will eventually harm your credit score and make it more difficult to borrow in the future.

The bottom line

So, why do people want to use their credit cards for online gambling? It comes down to card security and ease of use. Credit cards remain one of the safest methods of making online purchases, thanks to the robust protections offered by issuers. And since most consumers already make many online purchases using their credit cards, it’s only natural to continue that practice with another form of online payment.

But given the restrictions set by issuers and the potential harm online gambling with a credit card can cause to your credit score and finances, your best bet is to stick to a debit card if you want to gamble. And if you’re worried about whether your card use and gambling is becoming a problem, check out available resources like the National Problem Gambling Helpline for help.