Can you use a credit card for gambling?

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Gambling activities can be addictive, and they can become a financial drain. That’s why the authorities prefer not to encourage this practice and there are many regulations regarding such sport. The term “gambling” encompasses activities as varied as gambling at casinos, sports betting and buying lottery tickets.

If you are thinking of engaging in such activities with financing from your credit card, you need to know that it’s not as easy as buying groceries, for instance.

Using a credit card for online gambling

Considering that you can buy everything nowadays without having to leave the comfort of your home, online gambling is a possibility, too. With the advancement of technology and virtual reality, gambling online may be even more enthralling in the future.

To do this, you would have to set up an account at the site you choose for your gambling activity. You would then have to use your credit card to deposit money into the account. Considering that the money borrowed against your card is a cash advance, it would come with hefty interest rates, typically around 25 percent. There’s also a cash advance fee, typically between 3 percent to 5 percent, to consider. On top of that, the site where you are depositing the money could take its own cut.

If this steep penalty still doesn’t deter you, you could use your Visa, Amex or Mastercard to finance the activity. Sometimes, your card issuer may not allow the transaction, since each one has its own policies. In that case, you could consider using a credit card to transfer the money to a mobile wallet, such as PayPal. You could then draw from that source to fund your gambling activity.

Which states allow online gambling?

Each state has its own laws on gambling, which could apply to activity online as well as at physical locations. In 2018, the Supreme Court overruled a 1992 law that outlawed sports betting and many states moved ahead to legalize this activity. And many others are in the process of contemplating whether to allow it.

When it comes to online casinos, it seems states are more resistant to allowing this activity online. New Jersey, Michigan, Pennsylvania, Delaware and West Virginia have been ahead of other states in legalizing online gambling. Even though Nevada is famous for its gambling industry, it seems it only allows a limited form of online gambling.

However, the state is looking into widening the scope of permitted online gambling. Other states that are in the process of contemplating opening up to online gambling include California, Connecticut, Indiana, Illinois, Massachusetts and New York.

Only two states (Utah and Hawaii) don’t allow any form of gambling whatsoever, due to religious and moral scruples.

Gambling at the casino

And what if you actually venture out to a casino location to try your luck? In this case, too, you won’t be able to use your credit card directly to gamble. You would have to get a cash advance using the card, and then use that money to pursue your gambling activity.

And even though New Jersey allows some limited use of credit cards to directly finance gambling, such as to buy poker chips, it seems it’s not a method favored by the casinos themselves. Since credit cards offer protections and consumers can dispute transactions, the house may not be willing to accept credit cards for gambling.

Such protections could come in handy if other purchases you make with your credit card at a casino, say at the casino restaurant, are wrongfully charged as cash advances because the payments system has coded the venue as a casino.

What about lottery tickets?

Buying lottery tickets is another way to gamble away your money. Sure, you could win a big payoff, but the odds of that are minuscule. That’s why many states see fit to regulate the purchase of lottery tickets using credit cards.

As of 2021, a mere 21 states permitted the use of credit cards to buy lottery tickets. Even then, if you drill down into the laws, you might find that your card could be refused for such purchases under certain conditions.

The bottom line

It is possible to use your credit card for gambling, but you may find that your card is not always welcome with open arms by card issuers and retail outlets. You should exercise caution in going down this route, though. In the excitement of the moment, you could ring up much more than you had intended to and end up losing a lot of money. And if you have trouble repaying this money, there could be negative repercussions for your credit score, too.

Contact me at pthangavelu@redventures.com with your credit card-related questions.