Analysts from Citizens and Macquarie Capital have informed Gambling Insider that the recent ban on credit card payments by BetMGM is unlikely to significantly affect the company's long-term financial performance.
Last week, BetMGM, a prominent sportsbook operator in the United States, announced its decision to discontinue credit card deposits. This policy change was revealed during a public meeting of the Pennsylvania Gaming Control Board (PGCB) held on March 25, where the board imposed a $100,000 fine on BetMGM for inadequate know-your-customer (KYC) measures. The company's Chief Compliance Officer, Rhea Loney, and senior legal counsel, Joseph Caputi, represented BetMGM at the meeting.
In response to PGCB Chair Denise J. Smiley's inquiry, Loney confirmed that credit card payments would soon be phased out. “Starting March 31, we will no longer permit new credit cards to be added to accounts, marking a gradual end to credit card usage on our platforms,” she stated.
This proactive measure is seen as a positive step by advocates for responsible gambling, who have long pushed for such a ban. While it is uncommon for gambling companies to voluntarily adopt policies that may adversely affect their revenue, analysts are curious about the potential implications for operators. A recent Sports Betting Survey indicated that around 24% of participants had utilized credit card cash advances for their bets.
Jordan Bender, an equity research analyst at Citizens JMP Securities, commented via email that the overall impact of this change should be “minimal.” He noted that DraftKings had ceased credit card deposits in September, and there was no significant difference in betting volume in the months that followed. The company previously indicated that the positive effects of this decision, particularly regarding processing fees, were not substantial.
Bender emphasized that Citizens views this policy change as more of a headline issue than a real threat to business operations.
Macquarie Capital analyst Sam Ghafir echoed this sentiment in an email to Gambling Insider, stating that the long-term impact would likely be minimal. Several states, including Massachusetts, Illinois, and Oregon, have already implemented similar bans on credit card deposits. Both DraftKings and FanDuel have also followed suit, with Flutter reporting no significant effects from their removal of credit card payment options during their latest earnings call.
According to Macquarie's estimates, credit cards account for only 10% to 20% of deposits in US gambling accounts. Ghafir noted that these deposits often represent new users and casual bettors, typically resulting in smaller, more frequent transactions. He suggested that while there may be some short-term challenges (3-6 months) for casual bettors during the onboarding process, most of this betting volume is expected to transition to debit cards, ACH transfers, and digital wallets, which are more cost-effective for operators due to lower processing fees.
From BetMGM's perspective, this decision serves as a proactive measure to navigate regulatory discussions effectively.