PayPal Close To Making US iGaming Return

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Thursday, August 21st, 2014 | Written by Stephen Smith

Rumours of PayPal’s triumphant return to the United States took a step closer to becoming reality after a number of reports concerning the online cash transaction company have appeared across various media outlets, including EGR and Online Poker Report, where reporter Chris Grove announced:

“Paypal plans to announce a foray into processing regulated online gambling payments in the coming months, according to a source with knowledge of the company’s plans.”

Now Chris Krafcik from GamblingCompliance has revealed further details about the exciting development, after tweeting:

“#NewJersey DGE confirmed yesterday it was in licensing discussions with PayPal. #Nevada GCB said PP is not currently a license applicant.”

The New Jersey iGaming market has been plagued by payment processing problems since first launching in November last year, and so the return of a swift, trusted payment processing option would undoubtedly have a significant impact on NJ’s local market, and in the long run for the US iGaming network as a whole.

Major threat to web wallets

Not all credit cards accept transactions with online gambling sites, and up until now, the USA’s three regulated gambling states have been dominated by web wallets and e-voucher processing companies such as Skrill or Neteller. However, these payment processors are not so well known outside of the their own specialized field in the gambling industry, and so are not automatically trusted by players looking to deposit funds onto sites.

In addition, gamblers which are able to transfer funds onto sites via their credit cards often cite privacy concerns, such as identity theft, and so PayPal’s inclusion in the market could not only encourage such players to deposit online, but also attract a whole legion of players to sign up for new accounts and play on a New Jersey site for the very first time.

PayPal most popular online payment service

Back in 2002, eBay bought PayPal in a deal valued at $1.5 billion, and the electronic payment system has since grown to become the world’s most popular online payment service with more than 150 million worldwide users. PayPal has the advantage of being a lot easier to use than any other payment service on eBay, and so eBay has naturally ensured the service is now a fully integrated part of its own systems, with many sellers insisting Paypal as their preferred payment method.

Needless to say, a huge number of US online consumers use eBay regularly and so already have PayPal accounts, while other big companies, such as Amazon, too, prefer to use the payment processing system, making PayPal by far the top payment processor in the United States.

Less abandoned applications

According to industry reports, a large number of gaming applications are abandoned by potential gamblers as they discover their standard payment method are not accepted on iGaming sites. This high refusal rate has often been cited as a reason why the US market has thus far failed to live up to revenue expectations, and so introducing PayPal as a payment method is seen as having the potential to draw in more customers and open up the country’s market considerably. As Paypal recently stated in a Global Attitudes study:

“While we’re not yet in the business of solving gridlock, we know that wherever we can shave time from the payments process for our 148 million active account holders, we’re giving them back one of life’s precious resources.”

Boost to US iGaming market

In spite of regulation, financial institutions such as Bank of America, Wells Fargo, and American Express have continued to prohibit iGaming transactions inside of the USA. At the time, Paypal, too, adopted a similar policy but did at least indicate the situation could change in the future.

Outside of the US, however, Paypal is used by the world’s biggest poker room PokerStars, whose daily cash game traffic is regularly above 20,000 players according to PokerScout, with sites such as 888poker (2,100), iPoker (1,900), PartyPoker (1,600) and Full Tilt Poker (1,450) a long way behind. PokerStars is currently in the process of negotiating a return to the New Jersey marketplace, therefore, allowing American players the ability to deposit and withdraw using PayPal on PokerStars gives some indication as to the huge impact PayPal’s return would have in the US market.

Nevertheless, Paypal would still need to be licensed by gaming regulators in the three regulated states of New Jersey, Delaware and Nevada before it becomes a viable payment processing option for all US online poker players.