In this digital age, consumers are embracing fantasy sports as they provide spontaneous satisfaction through socialization, intense competition, and great rewards. Companies and entrepreneurs are tapping into this emerging interest to support the growth of their ecommerce business. However, it can be difficult for fantasy sports companies to accept credit cards as a payment method as they are considered a high-risk industry. Fortunately, T1 payments specialise in high risk payment processing and can provide merchant accounts for fantasy sports companies to accept credit card payments.
T1 Payments benefits for fantasy sports companies
- Experience and understanding of the fantasy sports industry to help you to quickly open a merchant account and start accepting credit card payments from customers.
- Secure payment gateway and cart integrations fully compliant with PCI DSS Statements.
- Collect payments in over 160 currencies and settle in 27 currencies.
- Help prevent chargebacks with the latest technology and maintain good standing for your business with the card networks to ensure your merchant account longevity.
Why are fantasy sports companies considered high risk?
In the eyes of many payment processors, fantasy sports are a high-risk industry. The aspect of money being wagered within daily fantasy leagues and an element of chance playing a role in determining a customer’s winnings, result in a perception of gambling.
Businesses that operate in the gambling space are more likely to be faced with excessive chargebacks, fraud, and instances of money laundering, all of which can increase liability for a payment processor. This increase in potential risk means that most payment processors will automatically refuse to work with fantasy sports companies.
Important terms
- Daily Fantasy Sports – A subset of fantasy sports games that are played across shorter periods of time.
- Entry Fee – An amount of money a customer is required to pay to enter a league.
- Pool Betting – A form of gambling in which people pay a fixed price to enter and the total funds from all entry fees are shared amongst those who have made correct predictions.
- Guaranteed Prize Pool (GPP) – A contest which has a minimum prize pool of a certain amount regardless of the number of entrants.
How do fantasy sports work?
Fantasy sports involve customer is creating virtual rosters that consist of real players, which are then used to compete against rosters made by other customers. The success and outcomes of these contests are based on the performance of individual players in the real sport. For fantasy sports companies, revenue is made through competition entry fees, advertising, and partnerships with other sports companies.
The most popular fantasy sports include:
- Baseball
- Basketball
- Football
- Golf
- Soccer
- Hockey
Types of fantasy sports leagues
Fantasy sports are comprised of two types of leagues: private and daily. Private leagues involve year-long seasons, typically between a group of friends. Whereas daily leagues provide a more fast-paced, short-term alternative, with contests being played across a single day or week.
Daily fantasy sports sites can consist of hundreds of thousands of competitors and tend to involve a form of pool betting with fixed stakes. These contests are played between strangers and can require a few dollars to enter. The customers then have a chance to either win a progressive pay out of the total money pooled or even receive the total winnings.
Are fantasy sports a game of skill?
There is an ongoing debate as to whether a customer’s success in fantasy sports is based on skill. According to an MIT study conducted in 2018, researchers found that fantasy sports games reward skill, rather than luck.
The study outlines that the skill in fantasy sports comes from a customer’s knowledge in statistics, rules of the game, player injuries, effects of weather and a variety of other factors that can help in picking better players for a virtual team. However, the outcomes from the real sports can often see unpredictable moments, which can greatly influence the outcomes of their fantasy sport counterparts.
The conclusion of the study was that while success in fantasy sports games are mostly determined by skill, there will always be some element of luck involved.
A snapshot of the fantasy sports business opportunity…
Daily fantasy sports have become a multi-billion-dollar industry, covering a wide range of popular sports. In the US and Canada alone, there are now more than 59.3 million fantasy sports players.
According to Business Wire, the launch of various fantasy sports apps is one of the key driving forces behind the growth of the industry and will cause it to grow by $9.34 billion between 2020 and 2024.
- https://www.sciencedaily.com/releases/2018/11/181107093816.htm
- https://thefsga.org/
- https://www.businesswire.com/news/home/20200217005350/en/Global-Fantasy-Sports-Market-2020-2024-Launch-Apps
Get in touch with T1 Payments today to start accepting credit card payments from your sporting customers! Apply Now