Issuers Face Revenue Hit as DraftKings Drops Credit Cards

The online gambling operator, DraftKings, will no longer take credit card deposits on its casino and sportsbook platforms effective Aug. 25, creating new hurdles for issuers and payment networks.

The sports betting site made the move following a $450,000 fine in Massachusetts for processing prohibited credit card deposits, a sign of increasing regulatory tensions and changing priorities around consumer protection.

The bottom line for issuers is straightforward: less volume means less revenue. Sports betting and casino apps have long been a favored source of funding by credit cards, and significant amounts in revenue are at risk now that DraftKings is denying deposits across the country.

Even though the platform could have kept taking cards in most states, analysts suggest its preemptive exit is an indicator of where regulation is going and a conscious effort by the platform to stay a step ahead of more global mandates.

“This decision underscores the heightened regulatory sensitivities around gambling-related charges,” said American Banker analysts. Massachusetts’ move could pressure other states to follow suit and prompt issuers to take compliance risks more seriously.

The Massachusetts penalty illustrates a broader pattern: Gambling-related payments are coming under increasing scrutiny. DraftKings’ national withdrawal may indicate the company is expecting more states to clamp down on credit card funding, and issuers need to respond in kind.

Other popular sports betting apps, including FanDuel, BetMGM, and Caesars Sportsbook, continue to allow credit card deposits in states that don’t prohibit the practice.

Compliance departments will reassess monitoring limits and merchant category exposure when the delicate balance of growth and risk is more challenging to sustain.

Credit card cash advances to gambling platforms have long had steep fees and interest rates. Restricting the practice protects consumers from escalating fees, while also limiting issuers’ exposure to disputes, chargebacks, and reputational harm tied to problem gambling.

But it also cuts off issuers from a lucrative interchange revenue stream that’s difficult to replace.

DraftKings still accepts debit cards, ACH payments, and digital wallets such as PayPal, Venmo, and Apple Pay. For issuers, that transition creates opportunities to pursue new collaborations and adjust product offerings to align with where consumer spending is heading.

This is also a reminder for issuers to sharpen their merchant risk strategies. Gaming and online betting have always carried elevated regulatory and reputational risks, and DraftKings’ move signals that scrutiny will only increase.

Others who aggressively rethink underwriting and monitoring procedures may find new opportunities as they adjust to shifting risk dynamics.