Digital Payments

NJ Online Gaming Payments Rollout Shows Mixed Results

It’s a good time to be a sports gambler: Football, hockey, baseball playoffs.

The upcoming Netball 2018 Sunshine Series featuring Jamaica vs. England. (You might not know what netball is, but its basic form is likely familiar to you, and some 20 million people in 80 countries play it, according to estimates. Besides, it sure beats the snooze fest that is golf on TV.)

But what about payments?

This year brought a wide open door from the U.S. Supreme Court for the spread of sports gambling if a particular state wants it. Payment availability is making progress, but the effort is slow.

PayPal Progress

Among recent developments is the addition of PayPal to the sportsbook operated by DraftKings in New Jersey. According to one industry overview, that makes at least four online sports betting providers that accept PayPal in that state, with another “coming soon.”

New Jersey is among the most advanced states when it comes to sports betting, so it serves as a reasonable canary-in-the-coal-mine model when judging the progress of digital, online and mobile payments for gamblers in the wake of that Supreme Court decision (the Garden State, in fact, was ringleader of the suit that led to the reversal of the gambling ban, which involved 17 other states). “Payment processing has been among the chief dampeners of performance in New Jersey’s regulated online gambling market,” observed Legal Sports Report.

But things are changing in that state, the report said — and had been before that Supreme Court decision from earlier this year.

Card Decline Rates

“At launch, New Jersey’s legal online casino sites struggled with credit card decline rates exceeding 75 percent,” the report said. While decline rates have softened in the five years since launch, they still (reportedly) hover near the 50 percent mark.” That situation, the reported added, signals “a pressing need for alternative payment options that can rival the relatively friction-free experience of depositing by credit card,” especially now that legal sports gambling is on the rise.

Credit card providers still seem to be casting a cautious eye on sports gambling, given the risk of defaults from bettors and other concerns. But as gambling “volumes continue to increase, it will be increasingly hard for payments companies to ignore this segment. As in any market, the first movers will have the biggest advantage,” said Brian Misasi of Mercator.

The stakes are significant.

U.S. consumers annually wager about $150 million on sports events, according to the American Gaming Association. The NHL, whose season just started, provides a look at all the money involved. According to data provided by the trade group, “legal sports betting could help the NHL generate an additional $65 million in revenue as a result of spending by betting operators and data providers.” Revenue streams include advertising, sponsorships and other areas — and legal sports betting could also, the report said, encourage gamblers to buy more league and team merchandise thanks to what the group called “greater fan engagement.”

More Payments Needed

But taking full advantage of those commerce opportunities will require a better, more efficient and varied payment infrastructure for the sports gambling industry.

According to a recent PYMNTS research report, players’ need for speed means that gambling platforms cannot afford to slow down customers in the process as they register, deposit funds, place wagers or withdraw winnings. That’s pushing companies like casino site 888.com to invest in automated authentication processes, according to Russell Medley, 888’s director of fraud and risk management.

“If there are more hurdles that we put in their way or more things that might prevent them or delay them from playing, it creates a drop off,” he said. “So it needs to be an immediate thing, and that’s where we need to be able to get people to go through our processes as quickly as we can behind the scenes, with minimal intrusion.”

Observers of the sports gambling industry aren’t exactly pleased with payments progress so far, however. “Despite the deals with PayPal (in New Jersey), getting money on and off online betting sites isn’t as seamless as gamblers and operators would like,” reads a recent column in The Lines.

Other payments players are trying to edge their way further into the sports gambling ecosystem. Earlier this week, Mazooma said that its eCheck Select product had processed its “very first regulated online sports betting transaction in New Jersey,” according to a statement. The ACH tool has “real-time ability to verify bank-level data.”

New Jersey shows some of the progress and shortfalls of payments for sports gambling. You can be sure that more experiments and launches are coming as your favorite teams keep on playing.

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