PayPal Considers Processing Legal US Online Gambling Payments

PayPal, the largest online cash transaction company on the planet, may extend services to regulated US gaming sites. PayPal already authorizes payments in select foreign jurisdictions, but previously has viewed American gaming transfers to be dangerous legal ground. If PayPal joins in the American online gambling industry, it’s a good sign for the future for the US industry.

Brand loyalty tends to be important in most industries, but none more so than the financial industries. When a company is being trusted with bank account and credit card account information, many average consumers are going to avoid anything but the companies they know the most. With that in mind, PayPal would be a gateway brand for many New Jersey and Nevada citizens who wouldn’t use a trusted brand like Skrill or Neteller. Therefore, PayPal’s inclusion in the market would be big news.

Major New Competitive Service

If the payment processor choosing to transact such business, it will become a major threat to the web wallets and e-vouchers which have operated in the market until now. The current rumors say PayPal is expected to okay US online gambling payments in the next few months.

The news would be positive for the gaming jurisdictions where it gambling is legal. Many residents might want to gamble, but don’t exactly trust a gambling-only payment processor like Neteller. While Neteller and Skrill are institutions in the gambling industry, average consumers might not know their names. Some gamblers don’t like associating their credit card with gaming, citing privacy concerns or fear of identity theft. Under those circumstances, if such people can use their PayPal account to fund their gaming hobby, they might sign up for an account and play for the first time.

Gamblers Affected by the Decision

If PayPal began accepting payments, it would affect players on regulated casino and poker sites in New Jersey, Nevada, and Delaware. At present, those are the only states which license and regulate gaming sites, though California and Pennsylvania continue to discuss the passage of such laws in their states.

The movement of some of the larger states might have a role in PayPal’s decision making. According to Chris Grove of the Online Poker Report, “PayPal has been looking at the issue for months.”

Top Competitors

At present, Skrill (once known as “Moneybookers”) is the top payment processor in the state of New Jersey. Neteller is the web wallet of choise for Nevada and Delaware. If PayPal got into any of these markets, it simply has a wider profile than those companies. It would be able to reach more paying customers–or potential customers.

Why PayPal Is #1

PayPal was bought by eBay in 2002. The owners of eBay made sure PayPal was integrated with their service. Anyone who has ever bought and sold on eBay knows that it is much simpler to use PayPal than any other payment service on the website. Many vendors will not sell to a person who cannot pay using PayPal.

Many American online consumers have PayPal accounts, because they want to use eBay. Over time, enough people had such accounts that most other US-friendly vendors prefer to use PayPal–though there are some holdouts (like Amazon). PayPal is the top US payment processor, though, and it represents a big opportunity for the various gambling jurisdiction.

Fewer Abandoned Applications

According to Steve Ruddock of NJ Poker Online, a PayPal-friedly gaming industry would draw in more customers. Ruddock says the lack of PayPal payments leads to a significant number of abandoned applications, as people learn they can’t use their standard payment method to gamble.

Pokerstars and PayPal

PayPal is already used on the Winamax software from PokerStars. The possible inclusion of PokerStars to the New Jersey market might be one more incentive for eBay’s semi-official payment processor to get involved in gambling. While the New Jersey rollout has been disappointing by most people’s standards, having the top companies in the market involved would no doubt help the numbers.

For PayPal to be a payment option in New Jersey, Nevada, and Delaware, the company would have to be licensed to do so by the gaming regulators in those states. That should not be a problem in any of those jurisdictions, but one never knows when dealing with officials.