Fantasy Sports Merchant Account and Payment Processing
- Nathan Beck
- April 25, 2024
Fantasy Sports Merchant Account And Sports Forecasting Payments
How Did Fantasy Sports And Forecasting Companies Become Considered High Risk ?
Fantasy sports and forecasting companies are considered high-risk merchants mainly due to regulatory uncertainties, financial risks like high chargebacks, fraud potential, reputational concerns linked to gambling, market volatility, and unpredictable customer behavior. These industries operate in a complex legal environment, face significant challenges in maintaining consistent revenue streams due to the unpredictable nature of their outcomes, and are prone to high levels of fraud and disputes. Additionally, their association with gambling, even if indirect, and the competitive landscape contribute to the financial institutions’ wariness, leading to stricter requirements and higher processing fees for these companies. For more detailed about the challenges and solutions we can help offer please read on, but first let us introduce ourselves.
Who is Durango Merchant Services?
Durango Merchant Services strives to be a source of expert advice, honest brokerage with partner banks and stable payment processing for fantasy sports and forecasting companies, offering the credit card processing support they need to tackle risks, keep payments smooth, and focus on growing their game.
What Sets Durango Merchant Services Apart from the Rest?
- Deep understanding of the high-risk sector
- Robust network of banking relationships
- State-of-the-art payment processing software
- Customer specific consulting to help get approval
- Omni-channel payment support
- Recurring billing capabilities
- Focusing on the growth and stability of our clients
- Personal account manager with 10+ years of experience
- eCheck Processing through ACH
- Solid reputation in the payment industry
- Ten's of thousands of merchants placed
- Premium service for the high-risk sector
Why are Fantasy Sports and Sports Forecasting Companies Considered High Risk?
Challenges and Opportunities in Securing a Merchant Account for Fantasy Sports Companies
Challenge 1: Regulatory Scrutiny in Fantasy Sports & Forecasting Merchant Accounts
Fantasy sports and sports forecasting companies navigate a complex regulatory landscape that impacts their payment processing contracts. The main issue banks have is whether they’re seen as games of skill or gambling, which varies by region and dictates the level of regulation. Fantasy sports and forecasting companies deal with a mix of state and federal laws, making compliance a resource intensive endeavor to track. There’s also the need to meet strict anti-money laundering and customer verification rules, adding operational challenges.
Opportunity
Durango Merchant Services helps fantasy sports and sports forecasting companies navigate complicated payment processing and regulatory landscapes. With a deep understanding of high-risk industries, Durango brings invaluable expertise in working through the challenges these companies face, from a variety of potential legal classifications to the high potential for fraud and chargebacks. While we are not lawyers, Durango Merchant Services can consult with companies to help them understand compliance with stringent anti-money laundering and customer verification laws, which is required for securing a merchant account for fantasy sports companies.
Challenge 2: Financial Risks Processing Payments for Fantasy Sports Businesses
Opportunity
Durango Merchant Services account managers are experts in the strategies, tools and technologies to manage and mitigate chargeback rates. Our gateway has cutting edge tools that allow you to easily track and respond to chargeback claims coupled with fraud prevention measures. Your experienced account manager can help coach you on steps to take to help decrease chargebacks on your account.
Challenge 3. Higher Risk of Fraud
Opportunity
We have spent decades servicing thousands of merchants and have strong relationships with banks that trust we will do our best to bring credible businesses to their door. We strive to pass that trust to our clients and help them prepare for the inevitable skepticism banks may have. Everyday we wake up we have the opportunity to do some good. The more ethical your business, the more it contributes to the credit repair industry recovering it's initial reputation for helping people find financial security.
Challenge 4. Reputational Concerns
Even though Fantasy Sports companies aren’t exactly casinos or online betting platforms, they’re close to raise some eyebrows. This blurry line means they often get lumped together with actual gambling operations in the eyes of financial partners, who might worry about the implications of being connected to them. The concern here is all about the image and the potential legal and ethical questions that come with handling money in an industry so closely related to gambling. Because of this, banks and payment services might be extra cautious, applying more checks and balances before jumping into a partnership.
Opportunity
Our experts can't dictate the course of the credit repair market, but we can help you prepare for it so that banks are more willing to approve you for payment processing. Businesses are often built over many years, so the more you get to focus on getting new clients, with the confidence the rug won't be pulled out from under you, the more time you can spend on marketing and outstanding service.
Challenge 5. Customer Loyalty and Behavior
The high level of competition and the chase for better odds or returns can lead to erratic customer behavior, including high churn rates and inconsistent spending patterns. This unpredictability in revenue and customer loyalty further contributes to their high-risk classification.
Opportunity
Our experts can't dictate the course of the credit repair market, but we can help you prepare for it so that banks are more willing to approve you for payment processing. Businesses are often built over many years, so the more you get to focus on getting new clients, with the confidence the rug won't be pulled out from under you, the more time you can spend on marketing and outstanding service.
How Do I get a Fantasy Sports or Sports Forecasting Merchant Account
The difficulty in obtaining a fantasy sports or sports forecasting merchant account comes not from any problem with the business of generating and selling sports forecasting tips, but from the fact that customers who buy these tips and picks are generally doing so for the purpose of gambling. Gambling is one of several industries, along with adult entertainment, cigarettes and e-cigarettes, and collectibles and antiques, that banks and payment processors view as inherently high risk, and those institutions will generally not offer accounts to companies that deal even tangentially with any aspect of those industries.
Businesses that offer products or services under the umbrella of any of those industries need to turn to a processor that specializes in high risk merchant accounts in order to accept payment card transactions. For sports forecasters and fantasy sports merchants, this is true despite the fact that the transactions processed through a sports forecasting or fantasy sports merchant account are not themselves more vulnerable to chargebacks or fraud than those of any other business, assuming the website is updated frequently and the tips and picks provided are reasonably accurate. Simply having a connection to gambling means that sports forecasting is perceived as high risk, and rather than trying (unsuccessfully) to change a financial institution’s decision on that score, seeking a sports forecasting casting merchant account through a high risk processor is the best approach.
Your choices for high risk merchant account providers largely fall into one of two categories: domestic high risk processors and offshore high risk solutions. For a sports forecasting business just starting up or looking to move away from third-party payment processing for the first time, a domestic high risk processor is likely to be the better choice for a number of reasons. Many offshore banks and payment processors prefer to deal with companies that expect a high volume of transactions, at least $50,000 per month. Several offshore processors are payment aggregators, meaning that your transactions will be processed alongside those of other high risk businesses, with the potential that their chargebacks and problems may impact your ability to process credit transactions. Domestic high risk processing institutions are much more welcoming to small businesses and start-ups, and you will get the individual attention and personalized terms of a direct merchant account.
Your choices for high risk merchant account providers largely fall into one of two categories: domestic high risk processors and offshore high risk solutions. For a sports forecasting business just starting up or looking to move away from third-party payment processing for the first time, a domestic high risk processor is likely to be the better choice for a number of reasons. Many offshore banks and payment processors prefer to deal with companies that expect a high volume of transactions, at least $50,000 per month. Several offshore processors are payment aggregators, meaning that your transactions will be processed alongside those of other high risk businesses, with the potential that their chargebacks and problems may impact your ability to process credit transactions. Domestic high risk processing institutions are much more welcoming to small businesses and start-ups, and you will get the individual attention and personalized terms of a direct merchant account.
When applying for your sports forecasting or fantasy sports merchant account, you will need to provide your social security number to the payment processor for the necessary credit check. As part of the application process, be sure that your sports forecasting website is up and functioning completely, as the underwriter in charge of your account will need to access the members’ area to ensure that everything is working and that the tips and picks you offer are readily available and regularly updated. If all goes well and your application is approved, you should be able to get your sports forecasting merchant account set up and ready to accept transactions within a week or two. Despite fantasy sport businesses being lumped into a high risk industry, it’s still possible for you to accept credit and debit transactions without paying unreasonable processing fees.
Table of Contents
- Discount rates that range between 1.95% and 4.95%
- Authorization fees ranging from: $ 0.15 to $0.25
- Monthly installments: rates ranging from $15.00 per month to $60.00 per month
- Free Application Processing
- Rolling reserve requirements that range from: 0% to10%
- Variable contract lengths including availability of month to month
- Direct financing with regular deposits
- Minimum processing: $5,000 minimum for US accounts, $50,000 for international accounts
Dive Deeper Into Payment Processing for Fantasy Sports Companies
How Do I Open a Fantasy Sports and Sports Forecasting Merchant Account?
Durango Merchant Services has created a detailed and digestible guide to help our potential clients understand and prepare for what to expect when trying to get approved to process credit card in the fantasy sports industry. As always our sales team and account managers are experts in all things payments and are here to help guide and clarify the process.
How Do I Integrate Durango Pay Gateway into My Business?
Durango Pay Gateway is truly a modern marvel. If you can think of it, it can likely be done. Some of the features include integration with more than 150 shopping carts from woocommerce to shopify. Our gateway is omni-channel ready out of the box, boasts powerful fraud detection and prevention tools, and chargeback management features.
How do I increase my credit card processing limits?
Looking to increase your credit card processing limits? Here’s how it’s done: show off a solid history of steady and reliable transactions, and make sure your business finances are in great shape. Keeping those chargebacks to a minimum and increasing your bank balance can really help paint your business in a good light to the folks handling your transactions. We invite you to talk openly with your account manager about your growth plans—it could help you negotiate better terms.
Fantasy Sports Companies Defining the Industry
DraftKings, FanDuel, and Swish Analytics have significantly shaped the fantasy sports market through their innovative approaches. DraftKings and FanDuel pioneered the daily fantasy sports (DFS) format, expanding the market by offering fast-paced, high-engagement games that complement traditional season-long fantasy sports. This model has not only attracted millions of users but also influenced how fantasy sports are integrated with real-time data and analytics. Swish Analytics has contributed by enhancing the predictive and analytical capabilities available to players and sportsbooks, improving decision-making and offering a more dynamic and interactive fantasy sports experience. Together, these companies have driven technological advancements and market growth in the fantasy sports industry.
DraftKings, founded in 2012, rapidly emerged as a leader in the fantasy sports industry by offering daily and weekly fantasy sports contests across a variety of sports. The company was at the forefront of the daily fantasy sports (DFS) innovation, providing fans the opportunity to win prizes based on individual player performances in single-day events. This model was distinct from traditional season-long fantasy sports and helped to fuel widespread interest and engagement in fantasy sports. DraftKings’ growth has been instrumental in expanding the overall market, blending sports betting elements with fantasy sports to attract a larger audience.
FanDuel Group, established in 2009 and a major player in the fantasy sports industry, transitioned into a strong contender in the U.S. sports betting market following the acquisition by Flutter Entertainment in 2018. This transition coincided with the legalization of sports betting in the U.S., allowing FanDuel to leverage its existing fantasy sports platform to rapidly expand into online sports gambling. By 2022, FanDuel led the market with a significant share, heavily promoting its sportsbook and forming partnerships with major sports leagues like the NFL, NBA, and NHL.
Financially, FanDuel has seen robust growth, with its revenue reaching $3.23 billion in 2022, representing a 62% increase from the previous year. This growth was driven by a doubling of the total money wagered on its platform to $29 billion, showcasing the brand’s expanding influence and reach in the market (Business of Apps) (Legal Sports Report).
Swish Analytics, established to harness the power of data-driven sports analytics, has become a significant player in the U.S. sports betting industry. The company specializes in providing odds origination, risk management, and trading software tailored for major American sports. By focusing on real-time analytics and predictive models, Swish Analytics supports sportsbooks with tools for bet lifecycle management, including innovative products like real-time player propositions and automated parlay offerings. This technological edge has helped them secure a strong position in the rapidly growing market for sports betting in the United States.
What should you do to help secure a Fantasy Sports Merchant Account?
To secure a merchant account suitable for high-risk industries like fantasy sports, it’s important to partner with a provider familiar with the sector’s unique challenges. Although the rates for fantasy sports payment processing might not be as favorable as those in less risky industries, they reflect the need for greater caution. By maintaining a low incidence of chargebacks and other issues, you can demonstrate lower risk levels over time. This may help you negotiate more favorable terms with your provider, easing the burden on your business.
International Options for Fantasy Sports Payment Processing:
Durango Merchant Services works with several gateway processors and suppliers with sponsor banking relationships that provide both US based national and international credit card processing solutions. We can provide credit repair merchant accounts in the European Union, United Kingdom, Canada, US & UK Territories as well as Puerto Rico.
Additional benefits of our payment processing service for sports analytics and fantasy sports businesses:
If you get approved for a merchant account for your sports analytics and fantasy sports company with Durango Merchant Services, then you will also be eligible for other benefits that we offer, we can set you up with electronic commerce and recurring billing via our online portal. Businesses can receive the following additional benefits:
- Competitive Rates
- Accept Multiple Currencies & Deposits
- Accept Payments from Visa, MasterCard, Discover, American Express, Diners Club, China UnionPay and JCB
- Accept Google Pay and Apple Pay
- Integration with 150+ Shopping Carts
- Robust Chargback prevention and Management tools
- eCheck Processing through ACH
- Industry Leading Fraud Detection & Prevention Tools
- Dedicated Account Manager with a Decade or more of experience in the payment processing industry.
Durango Merchant Services is here to help secure your sports analytics and fantasy sports Merchant Account:
Our dedicated team has negotiated on behalf of more than 35,000 clients. We understand the back and forth and give and take of negotiating processing accounts for high risk merchants, including hundreds of credit repair merchant accounts.
We know that there aren’t always easy answers. But remember, there is almost always a way forward and if you can make it through the first 3 years with a good track record, life will become much easier and your business will be better for it. Read our guide to how to apply for a credit repair merchant account below.
How to Apply for Fantasy Sports Merchant Services?
Applying for sports analytics and fantasy sports merchant services, given the high-risk status of the credit repair industry, requires careful preparation and attention to detail. Here’s a step-by-step guide to increase your chances of approval:
Required Documents:
Ensure Regulatory Compliance
Detailed Roadmap for Opening a Credit Repair Merchant Account:
Be Responsive: In some cases, our representatives may ask you to provide additional information or clarification. The faster and more thoroughly you respond to our requests quicker we can begin to negotiate with banks to secure credit card processing for your business.
Frequently Asked Questions (FAQ)
What kind of fees can I expect with a high-risk merchant account for sports betting?
High-risk merchant accounts typically have higher fees due to increased risk factors associated with sports betting and fantasy sports. These can include transaction fees, monthly fees, and potentially higher chargeback fees.
How do I ensure my payment processing complies with legal regulations?
Compliance involves adhering to the licensing requirements of each jurisdiction, implementing robust age and location verification systems, and ensuring data protection practices meet industry standards. Regular audits and updates to security measures are also crucial.
What are the challenges of securing a merchant account for a sports betting business?
Challenges include the inherently high risk of chargebacks and fraud in the betting industry, which can make banks hesitant to offer merchant services. Businesses need to demonstrate strong fraud prevention strategies and financial stability to mitigate these concerns.
Call to talk to one of our account managers today!
