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By the end of the 2023 NCAA tournament, an estimated one in four Americans will have wagered $15.5 billion in bets on the various games, according to the American Gaming Association. Last year, Matt Cappelen — a 34-year-old firefighter from Elk Grove Village, Illinois — would have been in the middle of the action. For this year’s dance, though, he’ll be sitting on the sidelines of the betting game.
“I've always been a die-hard sports fan,” Cappelen said. “Pretty much anything that involves a winner and a loser, I loved.”
Since legal online sports betting was first made available in Illinois in 2020, the fun of sports had only gotten that much bigger for Cappelen. “I was able to combine making money, or so I thought, and sports,” he said. “What better way to do that than with gambling?”
But in the three years since, Cappelen built up $83,000 in gambling debts on sites like Bovada and FanDuel. Up to 90% of that, he says, was done on credit cards. “You feel like you're playing with fake money or play money. Monopoly money,” Cappelen said.
Each month, he used gambling winnings to make the next minimum payment on his credit cards, never worrying about how he would repay the debt. “I legitimately thought that I was going to start to get on a hot streak and win it all back.”
That hot streak never came, though, and the credit card debt piled up. Finally, after a crushing late-night loss on a particularly big bet, Matt confessed it all to his wife. He knew he needed help, and has since joined Gamblers Anonymous and registered for a debt recovery program. But because online sports betting has become so accessible, many more may walk the same road.
Fewer regulations, more risks?
Since the 2018 overturn of the Professional and Amateur Sports Protection Act, which lifted a 26-year federal ban on online sports betting, more than 35 states have legalized the practice in some form. Of those, only a handful specifically prohibit the use of credit cards to fund bets.
Of the $15.5 billion total expected wager on this year’s March Madness, it’s unknown what fraction will be placed using credit cards, though betting operators argue that it’s a relatively small percentage.
“Using a credit card for gambling is definitely higher risk,” said Keith Whyte, executive director of the National Council on Problem Gambling. Yet he stopped short of noting any specific correlation between problem gambling and credit card use, citing a lack of research.
Because legal online sports betting in the U.S. is so new, data is scarce on the exact impact of credit card use for American gamblers. But in a 2021 study on general credit card spending, MIT’s Sloan School of Management found that by reducing the pain of payment, “[credit cards] ‘step on the gas’ by driving motivation to spend.”
And in Great Britain, where online sports betting has been legalized and widely available for much longer, the use of credit cards was banned in 2020. This ban came after a 2019 study by the United Kingdom Gambling Commission found “22% of online gamblers using credit cards [were] problem gamblers, with even more suffering some form of gambling harm.”
Hidden costs of credit card gambling
Even if you’re willing to accept the risk of sports betting with your credit card, spiraling spending isn’t the only potential downside. Other forms of gambling harm, Whyte explains, “might just include losing more money than you planned.”
When those losses are incurred on a credit card, interest and fees can far surpass the initial bet. And if you're not careful, late payments or spikes in credit utilization can have a long-lasting negative impact on your credit score.
Plus — because gambling policies vary widely by credit card issuer, payment processor, and betting site — fees can be unpredictable and add up quickly. These can include transaction fees, cash advance fees and even foreign transaction fees if the betting site happens to be offshore.
Sites like FanDuel do offer tools for gamblers to self-limit deposits, wagers and time spent. But in most cases gamblers have to opt into — not out of — such guardrails, and the options aren’t prominently displayed. Representatives from FanDuel did not respond to multiple requests for comment on this story.
Rough road to victory
Online sports betting is changing quickly, and researchers, payment processors, and state and federal regulators will haggle for years to come over the appropriate credit card guardrails. Instead of chasing bets on this year’s road to the Final Four, Cappelen is beginning the long trudge to recovery.
To tackle that $83,000 debt, Cappelen sought help through Take Charge America, a nonprofit organization that works with debt holders to close problematic credit card accounts, negotiate interest rates and consolidate payments.
“The plan itself is going to take four years and eight months to pay off,” Cappelen said. “It's going to be tough, but it's doable. And at least there's an end in sight.”
If you or anyone you know has a gambling problem, resources are available through the National Council on Problem Gambling. Call or text 800-522-4700 for assistance.