PayPal and the Future of Online Gambling

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Thursday, May 26th, 2016 | Written by Stephen Smith

PayPal is the most widely used e-wallet service in the world with 150 million users, and it continues to grow in popularity. Nowadays, you can use PayPal to purchase almost anything that you can imagine online, and you can also use the service to send money to friends and family members in seconds. While you can easily find retailers who accept PayPal and let you purchase almost any product or service you might care to mention, there’s one area where PayPal payment processing is noticeably absent; online poker and gambling.

PayPal and Poker

During the early 2000s, PayPal readily accepted payments from many online poker sites, making it easy for players to withdraw funds from their accounts. Even after Black Friday when the U.S. began cracking down heavily on online poker, PayPal still continued to process gambling payments, thus forcing the U.S. government to launch a civil lawsuit against the company. PayPal was subsequently hit with a $10 million fine, and ever since has restricted payments from online gambling sites.

At the present time, the site will only accept payments from poker sites that are allowed to legally operate in the player’s country. For example, the site 888Poker can make PayPal payments to players in the UK where online poker is legal, but cannot deposit funds into the PayPal accounts of Australian players since their site is not legal there.

Some people attempt to get around the restrictions in creative ways. If PayPal is alerted to this in some way, the service will suspend the users’ accounts.

PayPal and Poker Sites in the U.S.

In the United States, poker regulation is done at a state rather than a federal level at this time. As a result, PayPal will only process payments for poker sites that are licensed to operate within specific states. There are three states that have legalized online poker:

– Nevada. In Nevada, players at WSOP.com can transfer money to and from their accounts via PayPal. It is the only site currently accepting the service at this time.

– New Jersey. New Jersey players who want to fund their accounts through PayPal can play at Poker Stars NJ, 888 Poker or WSOP.com.

– Delaware. Although online gambling is legal in Delaware, no online poker sites in the state accept PayPal at this time.

The Future of PayPal and U.S. Online Poker

Due to PayPal’s policies, the future of the e-wallet service and online poker will depend on how laws regarding iGaming advance. Currently, a number of states, including Pennsylvania and California, are considering bills that would make online poker legal. If these bills are signed into law, poker sites that are launched in the state would have the option of using PayPal as a payment service. At this time, there is no real effort to legalize iGaming at the federal level; however, it stands to reason that should the U.S. ever pass a law that allows players in any state to gamble online that PayPal would be an acceptable payment process for any licensed site operating in the country.

Further PayPal Restrictions For Gamblers

PayPal recently announced that from June 25th it would be updating its User Agreement, with the new list of ‘ineligible items’ that will not be covered by Purchase Protection to include crowdfunding platforms, as well as “gambling, gaming and/or any other activity with an entry fee and a prize”. The decision was made on account of the “high risk” nature of such transactions, and will initially apply to the countries of Australia, Brazil, Canada, Japan and the US, which have a combined population of more than 715 million people.

As a PayPal spokesperson recently explained, it was the company’s User Agreement that governs the terms of its relationship with customers, and that PayPal would continue to keep account holders regularly informed of any other policy changes in the future. Meanwhile, the gaming world has naturally reacted negatively to the development, and as TotallyGaming.com explained in a recent article:

“This is a strange move by PayPal, which seems happy to take money from customers but not give them the protection they would receive for other leisure pursuits. It is also badly timed for Brazilian consumers, with potentially millions of perfectly legal online transactions set to take place when new gambling legislation is passed later this year.”