With the continued advancement of sports betting in the United States, the Consumer Financial Protection Bureau has issued a warning to sports bettors: they should avoid using their credit cards for funding, as the industry sees it as a cash advance, not as standard charges.

With the state of Missouri all set to join the growing list of states offering legal online sports betting in 2025, the US gambling landscape is poised for further expansion. By the end of next year, assuming no other states enter the market, approximately 30 states (along with Washington, DC) will offer mobile sports wagering that eliminates the need for in-person visits to brick-and-mortar casinos.

As mobile wagering becomes the dominant form of sports betting - currently accounting for 80% to 90% of all wagers placed in the US - consumer advocates are raising concerns about the financial implications of funding online betting accounts with credit cards. In turn, the Consumer Financial Protection Bureau has issued a warning to bettors about the potential pitfalls of using credit cards for mobile wagering.

The hidden costs of convenience

A new CFPB report reveals that most sportsbook operators treating credit card deposits as 'cash advances' could be adding significant costs to bettors' transactions. Unlike standard credit card purchases, cash advances incur higher fees and interest rates, making them an expensive option for funding betting accounts.

For instance, cash advance fees typically start at a minimum of $10, even for small transactions. This means that a bettor depositing $20 might face the same $10 fee as someone withdrawing $200 from an ATM. These fees are compounded by high annual percentage rates, which average 30% for cash advances. Unlike standard credit card purchases, these fees start accruing interest immediately, further increasing costs.

Cash advance fees often act as another form of vig, noted the CFPB. A vig, short for vigorish, is the built-in fee or 'juice' that sportsbooks charge on wagers. For a standard -110 bet, a bettor risks $110 to win $100, with the $10 difference serving as the bookmaker's profit. Adding credit card cash advance fees can make betting significantly costlier, diminishing the appeal of mobile wagering for budget-conscious consumers.

Adding to the frustration, cash advances do not count toward credit card rewards such as cashback, points, or miles. This lack of rewards removes a key benefit of using credit cards for transactions, further eroding their value for sports bettors.

An industry trend

The practice of treating gambling-related credit card transactions as cash advances is not new. It has been a standard policy for years among the seven largest US credit card issuers, all of which include stipulations in their cardholder agreements regarding the treatment of legal wagering services.

However, the CFPB's warning comes at a time of explosive growth in the US sports betting industry. Since the Supreme Court struck down the federal ban on sports betting in 2018, the market has rapidly expanded, with operators heavily promoting mobile platforms.

The CFPB analyzed data from Iowa and Kansas to understand the financial impact of legalized sports betting on credit card usage. In both states, there was a marked increase in cash advance activity immediately after online sports wagering became legal. This trend demonstrates a potential over-reliance on credit cards among bettors, despite the associated risks.

Consumer awareness needed

For sports bettors, the temptation of convenience often overshadows the potential downsides of using credit cards. The CFPB is urging consumers to consider alternative methods for funding their accounts, such as debit cards linked to checking accounts or cash deposits at physical sportsbook locations.

By avoiding credit cards, bettors can sidestep cash advance fees, high APRs, and the financial strain that often accompanies these charges. As the sports betting industry continues to grow, operators may also need to explore more transparent practices regarding transaction fees and offer more user-friendly payment options.

Missouri's entry into the mobile wagering market will only accelerate the national trend toward online betting, with the state likely to see a surge in activity upon launch. While the convenience of mobile wagering has been a game-changer, it comes with financial challenges that bettors must navigate carefully.