The gambling industry is a growing sector. According to Statistica, the current size of the market is almost $59 billion, which is expected to double in 2023 to more than $92.9 billion.
The online gambling market has seen tremendous growth since the advent of the internet. Innovations in technology and digitalization have further contributed to the higher trust of online gamers. Users can just log onto various websites or even download apps available on their smartphones or tabs
There was a sizable dip in a sizable dip in gambling revenue during the Covid-19 pandemic as most of the brick-and-mortar casinos were closed under lockdown. Ironically, the online casino businesses picked up some of the slack from their on-the-ground counterparts as habitual gamblers turned to online gambling during the lockdown.
A study by the University of Bristol found that regular gamblers were 6 times more likely to resort to online gambling under lockdown while occasional gamblers were twice as more likely to gamble online.
The Gambling Sector in the UK
Gambling in the United Kingdom is regulated by the Gambling Commission on behalf of the UK government. Therefore, it is important that gambling businesses and the service providers facilitating them take necessary measures to ensure legal compliance
The UK Gambling Commission reported gambling sales of £5.9bn for the period Apr-Sep, 2020. This number is expected to grow in proportion with the increase in global sales mentioned above.
Types of gambling merchants accepted by CutPay
- Games of Skill
- Games of Chance
- Prize Draws (UK & Ireland)
Why is the gambling industry considered high-risk?
Although there are many legal gambling businesses that follow all rules and regulations by the book, the taboo and stigma attached to the gambling industry make it difficult for the players in the market to open a merchant account. Therefore, banks classify these businesses as high-risk.
Here are some of the factors that contribute to this phenomenon:
Most banks are conservative and highly concerned about their reputation. They do not want to be associated with any controversy. Gambling products and services might be perceived as questionable by many financial institutions. There have also been cases of some businesses partaking in illegal activities like fraud, money laundering, etc. Most ‘respectable’ institutions would be prejudiced against gambling businesses no matter how legitimate they are.
High Volume Turnover
Gambling businesses usually have a high volume turnover. This contributes to the overall risk when the business is being assessed by an acquiring bank. A higher sales volume increases the likelihood of liability, especially in the case of credit card payments.
Gambling businesses are prone to high refunds or chargeback rates. Consumers may dispute charges after suffering a loss or changing their minds – a phenomenon that is known as ‘friendly fraud’. Chargebacks can also occur due to customer confusion. Customers opt-in for monthly billing for their credit card and then dispute the charges either because they forgot about them or because they do not intend to pay them. The latter is another example of ‘friendly fraud’.
Fraud and money laundering
Most gaming businesses are based offshore. It becomes difficult for financial service providers like banks or merchant service companies to conduct the necessary KYC and AML checks. This increases the risk of gambling products being misused by gamers colluding with one another/or with the gambling house. Important financial information of clients might be compromised online during a CNP transaction. There are numerous fraudsters hacking bank accounts, skimming credit card information and stealing identities. Crimes like money laundering, fraud and identity theft are synonymous with the gambling industry.
New gambling businesses or start-ups have little experience. Financial service providers are sceptical of working with a new entity in an industry that carries a huge stake for all parties involved. These young companies might be open to working with consumers with a bad credit history which could expose them to the risk of these customers defaulting on payments, filing for bankruptcy and claiming chargebacks or refunds.
The gambling industry is heavily regulated since it is exposed to crimes like fraud, money laundering or even exploitation of children and vulnerable individuals. According to regulations in most countries, the onus of not providing merchant services to illegal businesses lies with payment providers, which exposes them to greater risk. Further, some gambling products and services might be banned in certain areas. In the eyes of merchant service providers, these laws limit their ability to sell to a wide, diverse audience. Opening a merchant account is also a complex and tedious process for gambling businesses. Merchant service providers might not want to engage in these long and complicated procedures.
Lack of infrastructure
Most online gambling businesses do not provide clients with appropriate levels of customer support and lack policies and procedures in place to deal with their complaints. In the event of a dispute, disgruntled clients may turn to banks or merchant service providers for refunds or chargebacks.
Why Choose CutPay?
CutPay specializes in processing payments for gambling businesses. We are one of the best merchant service providers for gambling companies in Europe and the UK.
With our extensive network of various acquiring banks, we can help you diversify the processing of your payments among multiple banks to mitigate risk as well as expand your business globally.
CutPay offers high-risk businesses a host of fraud and chargeback protection features as well as a secure payment gateway that provides gambling businesses with long-term, reliable payment processing solutions.
|Industry Account Experts
|Fast Account Approval
|Relationships with Leading Acquiring Banks
|Large Merchant Case Studies
|E-Commerce and Retail Options
|B2B Vendors Supported
|Multiple Payment Solutions
|Multiple E-Commerce Gateway (Mobile apps or website)
|B2B-Level II/III Data Discounts
|3D Secure Frictionless Checkout
|Level 1 PCI-DSS Merchant Gateway
|Support & Guidance
|International Merchant Accounts
|Gateway Recurring Billing
|E-Commerce Cart Plugins
|Developer API /SDK/ Docs
|POS/Terminals (Virtual or MOTO)
|Dedicated Account Managers
|Superior Customer Service
Ready to Get Started?
So are you a gambling business that wants to open a high-risk merchant account? Don’t know where to start? Fear not – CutPay is here to solve all your problems!