Credit Card Revenue at Risk as Lawmakers Eye Strict Gambling Rules

Lawmakers in Illinois are moving to prohibit gamblers from using their credit cards to fund bets they place on sports and games of chance, according to recent reports.

The bill that Representatives Curtis Tarver and Marti Deuter, both Democrats, have proposed aims to crack down on gambling, regardless of whether a cardholder is looking to use their card to place a bet online or in person.

If it passes, the bill, could force gamblers to think things over a little longer before placing their next bet. It could also likely cause credit card issuers to suffer collateral damage in the form of revenue losses.

Gambling is big business in the U.S., with commercial gaming revenue topping $72 billion in 2024. The Supreme Court opened the doors for legalized sports betting in the country in 2018, and the majority of states now allow people to place wagers on sports. Furthermore, 30 states permit people to place bets from their mobile phones.

But if Representatives Tarver and Deuter have their way, people in Illinois will have to fund their bets on sports and games of chance with something other than their credit card. 

People can legally place bets on sports in most states across the U.S.

States including New Hampshire, Tennessee, and Vermont have already taken steps to remove credit cards from the gambling equation. In other parts of the world, such as the United Kingdom, have had restrictions on the use of credit cards in gambling in place for years. 

“Accessing gambling funds through credit creates an unnecessary layer of risk,” a lawmaker who is familiar with the issue said, according to iGamingToday. “This proposal is about responsibility and transparency.”

The bill from Tarver and Deuter also aims to stop people from using their credit cards at ATMs within casinos for cash advances.

People in many casinos can use their credit cards at ATMs for cash advances today as a way to essentially gamble on credit.

The Consumer Financial Protection Bureau (CFPB) recently looked at credit card cash advance fees in the wake of the legalization of gambling on sports. 

Cash advance fees can be a significant source of revenue for credit card issuers. The CFPB reported that major issuers charged people $717 million in cash advance fees in 2022. 

Issuers of all sizes should task their data analytics teams with estimating how much their companies stand to lose if lawmakers in the regions where an issuer operates ban people from using their credit cards for cash advances in casinos. 

Sizing the potential loss ahead of time can give issuers time to figure out how to make up for any decreases in revenue.

The measure from Tarver and Deuter, if it passes, won’t impact issuers across the entire country at once. But other states may consider proposing laws that ban credit card use for gambling purposes.

Issuers can also proactively take steps to dissuade cardholders from using their cards to fund gambling. That strategy may leave money on the table for issuers, but it also may allow them to gain favor in the eyes of people who value responsible lending from credit card companies.