Betting on the Right iGaming Payment Solution

iGaming is an umbrella term for various online gambling activities, such as sports betting, fantasy sports, poker, slots, and lotteries. In essence, it refers to any online money wager made on the outcome of a game or event.

Where is online gambling legal?

More than 30 states have legalized online sports betting, in large part due to the Supreme Court’s decision to strike down the Professional and Amateur Sports Protection Act in 2018. While online casinos and lotteries have only been adopted by a handful of states, it’s predicted that the majority of states will follow suit as popularity and demand grow among players.

The popularity of iGaming has surged in recent years thanks to rapid technological advancements and regulatory changes. Players can now participate from anywhere at any time, creating a broader audience for gambling and sports betting compared to traditional gambling methods.

While in-person gambling remains the bedrock of the industry, the U.S. online gambling market is expected to hold a 33% market share and exceed $33B by 2028 (Statista).

Top revenue by iGaming category

While popularity varies by region, sports betting brought in the most iGaming revenue in 2023 with $7.62B. Online casinos followed closely at $6.29B and online lotteries at $5.23B (Statista).

Who are the major iGaming platforms?

FanDuel and DraftKings are dominating iGaming in terms of revenue right now. DraftKings captured 31% of the market share in 2023, edging out FanDuel by 1% in gross revenue for online betting and casinos combined.

For sports betting on its own, FanDuel still holds the largest share at 39.3%, with DraftKings hot on its heels at 34.1%. Other popular iGaming platforms include Fanatics Sportsbook, BetMGM, Caesars, and Bet365.

There are nearly 5,000 casinos and online gambling businesses worldwide, with Europe leading the pack and the U.S. a close second. As more regions legalize online gambling activities, competition will only grow more fierce.

For platforms looking to be more competitive and increase their margins, payment processing could be the answer. Let’s take a look at some of the key payment features iGaming platforms need to increase their odds of success.

Online gambling platforms are presented with a unique set of hurdles when it comes to financial transactions. Below are the biggest concerns:

Difficulty securing a merchant account for payment processing

While every business needs a merchant account to process payments, iGaming businesses need to get approved for a high-risk merchant account. This typically comes with a lot more "red tape" than a regular merchant account as the underwriting process is more complex and requires additional personal and business-related documentation to gain approval.

However, specialized payment processors like Finix understand the industry's unique needs and can help streamline the process and set a foundation for more profitable business outcomes.

Player churn

Attracting new players is one thing. Keeping them is another. The average churn rate for gaming falls between 20-40%. Players want to deposit funds, place bets, and cash out quickly and effortlessly at every visit.

Inconsistent payment experiences, slow API response times, and low authorization rates can increase player churn rates. This makes the reliability and speed of your payment partner critical to providing a stellar gaming experience.

Another challenge online gambling companies face is managing risk. iGaming payment risk management involves identifying potential liabilities, such as chargebacks, fraud, and money laundering, and implementing strategies to mitigate these risks.

Effective risk management not only protects your business from financial losses but also ensures compliance with regulatory requirements, safeguarding the reputation of your iGaming platform.

Chargebacks

Online gambling sites have a higher likelihood of chargebacks, and this is one of the biggest reasons they fall into the high-risk category. Common reasons for chargebacks in this industry are:

• When players believe a game was rigged or fraudulent

• They were charged for a game or service they didn’t order

• They didn’t receive a service

• The service they did receive wasn’t what they expected

However, online sports betting platforms and casinos also face fraudulent chargebacks. For example, it’s not uncommon for some players to attempt to recoup their losses by initiating a chargeback through their credit card company after a game.

Fraud: A bad beat for iGaming companies

The rapid growth of online gaming comes at a price: increased cybercrime. Some of the most common fraud threats for iGaming are credit card fraud and multiple account fraud, such as gnoming, chip dumping, and bonus abuse.

Credit card fraud in online gambling entails cyber criminals using stolen or unauthorized cards to place bets or make purchases.

Gnoming is when a player creates multiple accounts at the same sportsbook to either influence game outcomes or bypass bet limitations.

Chip dumping is when someone controls multiple accounts at one gaming table to manipulate the game in their favor.

Bonus abuse is when a criminal sets up several fake accounts to get new customer specials or promotions and then abandons them as soon as they’re used.

Learn more about iGaming fraud attacks from our partners at Sift.

Compliance

The online gambling industry faces ever-changing regulations. iGaming platforms must be vigilant with staying up-to-date on new rules and laws and remaining PCI compliant. This area is especially challenging for platforms that operate in multiple states, as laws and regulations vary by state.

Learn more about Finix’s payment solutions for Gaming

A critical component of running a successful iGaming business is the ability to process payments efficiently and securely. As online sportsbooks and casinos are considered high-risk for credit card processing, it’s vital your platform partners with a payments company that not only includes a secure payment gateway but also comes with rich features that allow you to scale and manage your online gambling business efficiently.

Finix not only provides a fast and secure payment gateway for online gambling companies, but we’re also a payment processor with a comprehensive suite of tools designed to help you increase your bottom line and efficiently manage your business. With Finix you get:

• Payments and payouts on one platform: Process payments, accept winnings, and payout winnings to players via card or bank account with a fast, single integration.

• Transparent and competitive pricing: We offer pricing that lets you maximize revenue.

• Fast, expert customer support: Don’t go all-in with a payment processor that doesn’t go all-in with you. We provide first-class support every step of the way—whether you’re a new customer or have been processing payments with us for years.

• Real-time fraud detection and prevention: Finix Fraud protects your online gambling business with carefully defined rulesets, AI, and adaptive machine learning that constantly monitors transactions for suspicious activity.

• Dispute management: Track and manage disputes and upload evidence to fight chargebacks right from your dashboard.

• Embedded compliance: Finix’s payment solution comes with embedded compliance out of the box, reducing your PCI scope, and making compliance easier to manage.

• Reporting and analytics: Gain deep insights into player trends and buying behaviors, easily spot discrepancies, and analyze all your transactions in one place, including payments and payouts.

• Multiple payment methods: Accept all major credit and debit cards and digital wallets.

Make your bets on the right provider

Navigating the complexities of high-risk credit card processing requires a thorough understanding of the challenges and solutions specific to the iGaming industry. With the right payment provider, you can ensure the success and sustainability of your online gambling platforms while thriving in a competitive landscape.