iGaming payments in the United States

The 2006 statute never banned placing a bet. 31 USC 5363 makes it a federal offense for a gambling business to knowingly accept credit, electronic fund transfers, checks, or their proceeds in connection with unlawful internet gambling; the bettor and the bank commit no crime. State-licensed iGaming lives in the carve-out at 5362(10)(B), which requires the bet to stay inside one state, expressly authorized, with age and location verification. Every geolocation ping and KYC flow in American iGaming descends from that clause. The Wire Act adds a sports-only federal layer, though its confinement to sports rests on one circuit's 2021 ruling and a Rhode Island judgment protecting a single company, and the 2018 opinion that briefly said otherwise has never been formally withdrawn.

On the card rail the enforcement instrument is the merchant category code. Generic gambling is MCC 7995, and since 2015 the networks have reserved three US-only codes for the legal market: 7800 for government lotteries, 7801 for state-licensed online casinos registered with the network, 7802 for licensed horse and dog racing. Visa's April 2026 manual routes daily fantasy and skill wagering to 5816 as digital goods, and closes the crypto loophole in the other direction: a card purchase of cryptocurrency made to load a gambling wallet must be coded 7995, gambling, not 6051, crypto. Mastercard double-flags the category by requiring transaction code U on gambling MCCs. Coding is destiny here, which is why the sharpest questions in a US integration are about who codes what, not who processes what.

The CFPB checked the card agreements of seven top US issuers in December 2024 and found every one treats online gambling as a cash advance: fees around the greater of $10 or 5%, interest from day one at roughly 30%. Its Kansas natural experiment showed what that means at launch: the month mobile sports betting went live, about 8,000 additional Kansas credit card accounts incurred a cash advance fee. American Express does not participate at all; its own merchant regulations list gambling among prohibited transactions. So even where credit cards are legal at the cashier, the money arrives pre-taxed by the issuer.

The statute books are catching up unevenly. Massachusetts, Iowa, Tennessee and Vermont ban credit-card funding of bets by statute; Maine banned it in April 2026 for a tribal online-casino market that has not even launched; Illinois and New Hampshire got there by regulator action; Ohio has a repeal of card funding in rulemaking. New Jersey, the oldest and biggest iGaming state, still expressly permits credit cards by regulation. The strictest and loosest cashiers in America are twenty minutes apart by ferry.

What replaces it is bank money in three costumes. VIP Preferred e-check, the default gambling ACH network, reaches 350-plus properties and around three million enrolled players, and enrolling creates a real consumer-report file: the CFPB lists it as a specialty consumer reporting agency under FCRA. Pay-by-bank is the growth rail: Trustly sits behind the online-banking button at major operators and reports more than $25 billion in instant payouts over RTP, FedNow and same-day ACH, while AeroPay holds its own state gaming-supplier licenses. Instant rails are production plumbing here, not a pilot: Pavilion and betPARX launched an RTP and FedNow payout product in October 2024, and Sightline answered the prepaid era by issuing bank debit directly, live on BetRivers since September 2025. One design note survives every integration: geolocation gates the wager, not the cashier. New Jersey checks where you bet, not where you deposit.

• ACH / eCheck (incl. VIP Preferred)dominant

  bank transfer

  Core deposit/withdrawal rail; VIP Preferred (Pavilion Payments) reaches 350+ properties with ~3M enrolled players. Enrolling creates a real consumer-report file: the CFPB lists it as a specialty consumer reporting agency under FCRA.

• Play+ (prepaid)major

  local cards

  Sightline's gaming-specific prepaid, widely embedded; Sightline's next act is bank-issued debit (with Cross River), live on BetRivers since September 2025.

• PayNearMe (cash + multi-rail)major

  other rail

  Cash-at-retail + ACH/cards/wallets orchestration for US operators.

• Online banking / Trustlymajor

  instant bank transfer

  Pay-by-bank at licensed operators (the online-banking button at FanDuel and peers); Trustly reports 5B+ in instant payouts over RTP, FedNow and same-day ACH. Declines run lower than on cards because it sidesteps the issuer-side gambling block entirely.

• Debit cards / Apple Pay / Google Pay / PayPal / Venmomajor

  local cards

  Debit works but approval varies by issuer policy; all seven top issuers code gambling deposits as cash advances per the CFPB, and Amex prohibits gambling outright. Credit is exiting: DraftKings (Aug 2025) and BetMGM (Mar 2026) dropped it nationwide, and MA/IA/TN/ME plus others ban it. US-only MCCs 7800/7801/7802 separate licensed play from generic 7995.

The dual-currency model was a payments construct from birth: the customer never deposits or wagers, they buy non-redeemable Gold Coins and receive redeemable Sweeps Coins free as a bonus, so the card transaction reads as a digital purchase and the whole machine lives on an opinion letter. The 2025 and 2026 bans attack exactly that seam. California's AB 831 extends criminal liability to any financial institution, payment processor or geolocation provider that knowingly supports an illegal sweepstakes game. New York's ban likewise reaches the payment and platform layer, and it took effect the day it was signed, with no wind-down.

The liability is sticking to payments companies in court, not just in statutes. Worldpay was sued as VGW's processor in Knapp v. VGW, its motion to dismiss failed in November 2024, and the case was transferred to federal court in Delaware in 2025, where Worldpay remains a defendant. A reported August 2025 class action names Trustly and Yodlee alongside VGW. And the largest verdict against coin-purchase gaming so far came through a payment-recovery statute: a Washington jury awarded about $24.9 million against social-casino operator High 5 Games in February 2025 under the state's money-lost-at-gambling recovery law. Those chips were not even redeemable, which is exactly why the verdict matters to dual-currency models that do pay out. A Kentucky class action had already extracted an $11.75 million settlement from VGW under that state's loss-recovery statute on the theory that coin purchases are recoverable gambling losses.

Kalshi self-certified sports event contracts with the CFTC in January 2025 and no federal stay ever came. Crypto.com had certified the first Super Bowl contracts a month earlier and later retreated; Polymarket bought a CFTC-licensed exchange for $112 million and relaunched onshore in late 2025. At the 2025 peak, nearly 60% of Kalshi's volume arrived through Robinhood brokerage accounts; by mid-2026 that share was down to roughly 12%, as Kalshi's own app grew and Robinhood began routing flow to its co-owned Rothera exchange. The structural point survives the shuffle: a parallel cashier for the same sporting outcome, running on brokerage rails that none of the gambling payments machinery touches.

The court map is genuinely split. The Third Circuit affirmed Kalshi's injunction against New Jersey in April 2026, two to one. Maryland went the other way at first instance and sits with the Fourth Circuit, argued in May 2026 and undecided. Ohio denied Kalshi relief and moved to fine it $5 million. Arizona filed a twenty-count criminal indictment against Kalshi's corporate entities in March 2026, and a federal judge permanently blocked the prosecution within weeks. Minnesota became the first state to ban prediction markets by statute, a felony effective 1 August 2026, and the CFTC sued Minnesota. The CFTC has in fact sued several states, withdrawn the prior administration's proposed event-contract ban, and put out a June 2026 rule proposal; forty-four attorneys general filed against it in July. New York's attorney general sued Kalshi on 31 July 2026. Nevada extracted the concession that matters for payments: under a stipulation filed in July 2026, Kalshi adopts GeoComply multi-source geolocation in Nevada, under a $120,000-a-day penalty exposure. The gambling-compliance stack is being rebuilt around the product that denies being gambling.

Michigan runs the closest thing America has to offshore enforcement: over one hundred cease-and-desist orders since May 2024, including a single wave of forty-five announced in April 2026, each letter reminding the recipient that unlicensed gambling in Michigan is a felony worth up to ten years. The campaign's only lever is voluntary compliance, and it cleanly split the offshore market. Bovada folded everywhere a letter landed, growing its own excluded list from five jurisdictions to roughly nineteen states plus DC by mid-2026 without paying a cent in fines. The crypto-first books BetOnline and SportsBetting.ag were named in April 2025, named again in the April 2026 wave, and kept serving Michigan in between. A letter beats a server only when the server's owner wants a future in regulated markets.

What no state has ever done is order payment blocking against an offshore casino. Washington has carried a felony statute against internet gambling transmission since 2006 and has never used it against a player. FinCEN issued no gambling-payments advisory in 2024 through 2026; its only adjacent actions target Cambodia's Huione Group. The period's biggest gambling-payments forfeiture hit a licensed casino instead: Wynn Las Vegas forfeited $130.1 million in September 2024 for moving patron money through unlicensed money-transmitting networks. And Visa's April 2026 coding rule on crypto purchases made to fund gambling wallets quietly asserts network jurisdiction over the offshore cashier's favorite on-ramp. The pressure on offshore flows in America is real, but it runs through networks, prosecutors and survey-armed lobbyists, not through a blocking statute.

The 2025 budget season raised rates almost everywhere at once: New Jersey to 19.75% on internet casino and sports from July 2025, Maryland to 20%, Louisiana to 21.5%, Illinois with the per-wager excise on top of its brackets. Pennsylvania still taxes online slots at 54% and grew 27% anyway to $2.78 billion, which operators lobbying against high rates prefer not to mention. The counterexample is Missouri, which launched sports betting in December 2025 at 10% with promotional deductions of up to a quarter of all wagers: two months and $928 million in bets produced under $700,000 in state tax, and the market leader legally paid zero. Promo-deduction design, not the headline rate, decides what a state actually collects. Michigan wrote that lesson into statute: its iGaming promo deduction phases from 10% of gross down to zero by an operator's sixth year.

Two federal changes land on players from tax year 2026: the loss deduction is capped at 90% of losses, so a break-even bettor owes tax on phantom income, and the slot reporting threshold finally rose from the $1,200 set in 1977 to $2,000. The repeal bill for the 90% cap has gone nowhere. At the state layer, the cashier rules worth engineering time are quieter. New Jersey requires patron funds fully covered in a segregated account, Pennsylvania recalculates reserves quarterly, and Michigan mandates a reserve securing account balances. Connecticut alone gates the wallet: once lifetime deposits pass $2,500, all wagering hard-blocks until the player completes an acknowledgment, and the gate repeats every six months. Expansion, meanwhile, went nowhere in 2026: New York's bill died with the governor against it, Massachusetts shelved its own eleven to nothing, Maryland missed its deadline, Virginia's chambers never reconciled. The eighth legal state, Maine, granted its market to the Wabanaki Nations and banned credit cards before a single site launched.