PayPal Makes a Quiet Return in U.S. Online Gambling

September 20, 2015 •

new-paypal-logoThe Online Payment Processing Giant, Paypal, has quietly emerged in the industry, which is predicted to buffer the fledgling industry.

Over the past few days, a couple U.S. online gambling websites posted that they have begun accepting PayPal payments. This is their first move toward the gambling industry in over a decade. But Paypal has kept it quite on the down low, initially only releasing a very limited amount of information on the new development. WSOP.com and DerbyGames.com, (Caesars Interactive Entertainment (CIE) is the owner of WSOP.com), have posted on their site that they now accept Paypal transaction. WSOP offers branded online poker, where as Derby Games is a start-up that offers regulated online gambling in the U.S., mostly on horse race betting.

Paypal now seems to have re-entered the American online gambling market, through these two new partnerships. CNBC reported that PayPal was last involved with online gambling in the U.S. in the early 2000s, way before the enactment of the 2006 Unlawful Internet Gambling Enforcement Act. The UIGEA made it illegal for banks, credit card companies, and payment processors like PayPal to transfer funds from gamblers to online casinos, and vice versa.

They reported that PayPal does not want any PR or publicity on the issue. This is probably due to the fact that online casino gambling is only legal in three U.S. states, and currently in an election year, is a very controversial issue in many state legislatures.

This development of getting back into online gambling comes after only a few months after PayPal split with its former parent company eBay. Since stopping all gambling transactions back in the early 2000s, PayPal shifted it’s focus with online gambling houses in Europe from which it has profitted greatly. PayPal is currently worth $49 billion USD.

In the U.S., PayPal instead has been involved with the ever popular daily fantasy sports industry, which many consider real-money gambling. Several U.S. states are reviewing DFS legislation to make a decision on it’s legality.

In a statement to CNBC, Paypal said: “PayPal is launching a pilot program to support four leading real-money gaming (RMG) operators to offer PayPal as a way for gamers to fund their online accounts with these merchants. We are launching this pilot now that we are able to fully comply with the evolving laws surrounding RMG in the United States as well as the requirements of our payment partners. As a global payments provider, PayPal’s goal is to give people safe and simple ways to pay for the things they want, so long as we can comply with applicable laws.”

According to research and analysis recently conducted by Morgan Stanley, the size of the real-money online casino gambling market in the U.S. could be worth over $2.7 billion by 2020, that’s if California and Pennsylvania regulate the industry and permit its legalization. Paypal wisely has taken a small step toward getting involved in that market and reserving a small piece of that pie.