SPORTS BETTING PAYMENT ISSUES EXPLAINED
This article will try to answer some common questions people tend to have about methods of payment in online sports betting. More so than other forms of online gambling, sports betting experiences a peculiar relationship with American authorities necessitating the use of certain techniques by online sports betting establishments to keep their operations from being closed down. American authorities tend to go for the money, that is their first step in shutting down companies taking and paying out money to people betting on sporting events online. This has led to online sports betting companies having to conceal their sources of revenue from prying eyes. This is also why if you have ever tried to make a withdrawal from a sports-betting site you have probably found that process to be far more complicated than when they actually took your money for the bet.
Sport betting sites tend to set up dummy companies with which to conduct their billing. So a site will register a number of companies outside of the U.S, open a merchant account, and begin charging their customers under the name of one of those companies they have opened. If the U.S authorities should ever clock on to what they are doing and attempt to shut them down, they will typically have several more companies and merchant accounts on standby so that they can continue processing payments. This constant cycle of companies, coupled with the sheer volume of payments made to online vendors nowadays, makes it almost impossible for US authorities to keep on top of online sports betting sites.
Now, what sets online gambling sites apart from other online vendors is the fact that they are constantly paying back money to their customers, which just isn’t the case with other types of online business. Indeed, credit card processors tend to look unfavourably on refunds and especially chargebacks, so the very nature of the way online gambling works tends to be a red flag for anyone snooping into the financial dealings of a gambling website. As you can understand, a business constantly withdrawing and depositing into customers accounts will stand out like a sore thumb. Compared to other online businesses that only withdraw and very rarely refund.
As an attempts to bypass this tricky situation with credit card payouts, cheques have been regarded as a middle way that is both pleasing to the customer and the gambling website, however even this is not as simple as it would first seem. One of the first steps US authorities took in trying to stop online gambling is to make it illegal for any American banks to have any relationship with companies involved in online gambling. So say you have won your wager and now would like your winnings, as already explained the site won’t be able to deposit the money in the account you used to make the wager, or even send you a check from their offshore bank account. The reason being: it is exceedingly easy for an employee of the US government who has been charged with investigating a certain sports betting website, to make an account, place a wager, win some money, get paid with a cheque, and then trace that cheque back to whatever bank issued it.
This has made online gambling sites, especially those involved in sports betting, extremely wary of jeopardizing their relationships with the banks they have developed relationships with. The typical way of working in the online gambling industry is to develop a relationship with a bank that has been willing to allow you to open an account with them (and many refuse nowadays as if caught it may prevent them being able to conduct business with US banks in the future) and keep this relationship clean and as free from strife as is humanly possible. To this end, this is where payment processors come in. The third party in this convoluted chain.
Cheque processors are simply companies that concern themselves solely with the processing of cheques. They are the intermediary between the bank and the gambling business and if their dealings are swift and above board the chain works smoothly and everyone is happy. However even these processors are liable to getting cornered by U.S authorities from time to time and getting shut down. In this kind of situation all pending payments will essentially be lost, not even the sports betting website owners will be able to retrieve information about which cheques went through and which not. This does happen from time to time and when you hear of sports betting sites not paying out, this has probably been the culprit. To make things even more complicated there are also less that honest cheque processors out there who will take as much money as they can from online gambling companies and then disappear, claiming that they have been shut down. This happens rarer but is not unheard of.
Typically it is the visibility of sites that leads to them experiencing such problems, a multimillion dollar operation that constantly advertises on national TV will be seen as rubbing its activities in the faces of US law makers. On the other hand a relatively unknown site may not be thought of as being reputable. So what can you, the prospective online sports bettor do? Our advice is that be prepared for the eventuality that you may loose money at some point if you are a regular user of online sports betting services. This may occur only once in a blue moon, and generally gambling sites will try everything in their power to keep loyal customers, but just be prepared for worst should it happen. This will probably involve many back and forth communications with the site in question and long delays, but as long as you are prepared to wait, and are mentally prepared for this eventuality, you should be okay. Also it is probably prudent to use sites that are exploring alternative payment options as there are still more difficult for authorities to trace. Trusted sites that use bank wires and e-wallets should be explored as a viable and perhaps safer alternative to credit cards and cheques. People are generally reluctant to go for methods other than those they are used to purchasing products online with, seeing these methods as tried and tested and safe. But its useful to bear in mind that online gambling is not your traditional product and as such will require flexibility and willingness to try alternative approaches to payment on behalf of the customer. Right or wrong, US authorities still consider these websites as conducting illegal activities and this is why payment and payout can often be a bewildering process to customers that are new to the game. It is likely that things will change in the near future, the financial crisis has led to authorities to look to new sources of tax revenue and this may play a role in the future legality of online sports betting, either that or the perceived benefits to the economy that these sites generate may be thought to outweigh, their downsides, hastening authorities to turn a blind eye. As with everything else in the online gambling industry, it all remains to be seen, so for the moment play as safely as you can, check what other gamblers have to say about their experiences with sites that have had their processors shut down, and also what their experiences have been with alternative payment options.
Sports Betting Tips of the Trade 01 September 2009View all articles