Will Paypal Re-Enter the Regulated iGaming Market in the US?

Last week, a tweet from Chris Grove, a known consultant to some parties with interests in the online gambling industry, conveyed that in the coming months ahead, PayPal would start processing payments for a handful of operators in the U.S. regulated online gambling market. Although PayPal has yet to confirm the information, many in the U.S. regulated iGaming industry have expressed hopes that the tweet will soon progress into a solid news report.

After all, most North American consumers rely on PayPal for online payment solutions, as the payment processor’s services have been proven as unfailing during the past decade. PayPal became the mainstream payment processor in the U.S. ever since eBay purchased the e-wallet provider in 2002, and subsequently integrated the payment platform into the online auction site’s e-commerce systems.

Accordingly, PayPal’s erstwhile reluctance to provide alternative payment processing services in the online gambling states of Nevada, New Jersey, and Delaware is regarded as one of the impediments that prevent the growth of the Internet gambling industry in those jurisdictions. As it is, financial institutions are still wary of being entangled in fund transfer activities that could violate federal laws pertaining to the Wire Act, Anti-Money Laundering Act (AMLA), and the Unlawful Internet Gambling Enforcement Act (UIGEA).

Although other alternative online payment processors such as Neteller and Skrill (formerly MoneyBookers) already offer their services and technologies in the States of Nevada and New Jersey, they have not gained the same level of traction that PayPal has achieved through the years. Neteller, for one, re-entered the North American market only recently, after its exit at the height of the 2011 UIGEA crackdown. Former Neteller parent company Neovia Financial had to pay the U.S. Department of Justice $136 million, as settlement for the anti-money laundering charges filed by the U.S. Attorney General’s office.

Inasmuch as PayPal has been around to provide uninterrupted reliable and convenient e-wallet and online payment solutions and services for online buying and selling, many of the potential customers targeted by the U.S. regulated iGaming industry have developed an inclination to rely only on PayPal, especially for online gambling activities.

Moreover, while PayPal’s reputation continued to soar, the leading payment processor went on to develop other e-commerce payment solutions in order to broaden its services. Aside from offering an e-wallet payment system, PayPal’s payment processing platform also handles credit card transactions, which enables credit card users to transact payments directly with credit card companies such as Visa and Mastercard.

In addition, PayPal also has an e-check feature that serves as a verification system that benefits vendors, suppliers, and online gambling operators, as the e-check provides extra support in case their own authentication system becomes ineffective due to technical glitches.

Presently, the leading online payment processor and e-wallet provider maintains a continuing presence in the U.S. iGaming market, albeit not for real-money gambling transactions. Online poker room operators PokerStars and Winamax, include PayPal in their roster of banking options that U.S. play-for -fun poker players can use when purchasing virtual poker chips.


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