Wanna Bet? PSCU Finds More Members Are Answering 'Yes'

Credit union members don’t wager much, but their betting is contributing to the growing wave of gambling, according to a PSCU study released Tuesday.

The payments CUSO based in St. Petersburg, Fla., found gambling accounted for 0.18% of total credit purchases and 0.48% of total debit purchases in February. That was up from just 0.06% of credit and 0.10% of debit purchases in February 2020.

The American Gaming Association reported last month that 2021 set a new record as the highest-grossing year for commercial gambling, reaching $53 billion in revenue. The total was up 21% from $43.6 billion in 2020.

PSCU found gambling spending in February, which included Super Bowl LVI, rose 25% by credit card and 59% by debit.

“As more states have begun to legalize online gambling over the past few years, merchants such as FanDuel and DraftKings are driving accelerated growth in this segment through sports betting activity,” Karen Postma, vice president of risk analytics, said. “This growth also presents an opportunity for credit unions to provide their members with education on financial wellness, as legal online sports betting is most appealing to younger demographics.”

PSCU’s latest Payments Index examined spending by four gambling-related merchant category codes established in 2015 by Visa and Mastercard. The codes were within the Entertainment sector of PSCU’s Payments Index.

The largest merchant category was Government-Licensed Internet Gambling (7801), which included sports betting activity and represented 0.15% of overall credit purchases and 0.33% of overall debit purchases. That was up from 0.04% of credit and 0.05% of debit spending in February 2020.

From February 2021 to February 2022, spending rose in each category:

Government-Owned Lotteries (7800) bets grew 32% by credit and 37% by debit. Merchants in this category include grocery stores, gas stations and state-run lottery entities.

Government-licensed internet gambling rose 60% by credit and 71% by debit. Merchants include FanDuel, DraftKings, BetMGM and BetRivers. Within sports betting, leagues include MLB, NFL, NBA, NHL, PGA Tour (golf), ATP Tour (tennis), NASCAR, Premier League and UEFA Champions League Football (soccer), UFC (MMA), XFL and NCAA Basketball.

Government-Licensed Horse and Dog Racing (7802) bets rose 22% by credit and fell 3% by debit. The top merchant in this category, with over half of credit and debit purchases in this category, is the TVG Network, a digital cable and satellite television network owned by FanDuel.

Gambling and betting (7995) fell 4% by credit and rose 37% by debit. The full name of this catch-all category is “Gambling and Betting — Including Lottery Tickets, Casino Gaming Chips, Off-Track Betting, and Wagers at Race Tracks.” The wagers are governed by rules for monitoring and blocking of illegal gambling transactions related to Regulation GG and the Unlawful Internet Gambling Enforcement Act (UIGEA).

For the 7995 code, the acquirer must register all high-brand-risk merchants with the associations because merchants are unable to distinguish a betting transaction from other transactions.

During the initial weeks of the COVID-19 pandemic, results for the 7995 code came to a virtual stop. For the month of February 2022, credit purchases were 0.004% of overall credit purchases and 0.015% of overall debit purchases. That’s down from 0.007% of credit and 0.034% of debit purchases in February 2020.

Most betting was dominated by the middle-aged and elderly: Gen X (42 to 55) and baby boomers+ (56 and older). Gamblers ages 43 and up accounted for 90% of credit bets and 79% of all debit bets for Lotteries, Horse and Dog Racing and the catch-all 7995 category.

The bets were generally more evenly distributed by age for Internet Gambling. However, those ages 56 and up accounted for just 15% of credit purchases and 10% debit purchases in the category in February.

“It does appear that baby boomers+ (56 and older) have not caught on to sports betting as much as the younger demographics have and they continue to choose Lotteries, Horse/Dog Racing and in-person visits to casinos as their preferred gambling venues,” the study said.

This month’s Payments Index was based on data from credit unions that have been processing payments with PSCU since January 2020. It encompassed 2.6 billion transactions valued at $130 billion of credit and debit card activity in the 12 months ending Feb. 28.