Create A Merchant Account for Your Online Lottery or Sweepstakes Business
Once confined to gas stations and grocery stores, lotteries and sweepstakes have now moved online. Convenient and promising, online lottery is becoming one of the most popular forms of gambling. In 2021, the US online lottery market was worth $2.3 billion. As more states head towards legalizing the game, having an online lottery business can help you hit the jackpot.
While there’s plenty of money to be made, getting started in this industry can be an uphill battle. Banks consider this industry high-risk and refuse to provide merchant accounts for online lottery or sweepstakes businesses. If you don’t have a merchant account, you can’t process online card payments. This will make it almost impossible to run a viable online lottery business.
Specialists in high-risk industries, SeamlessChex can help you access the online payments system in no time. Check out our range of high-risk payment processing products for lottery/sweepstakes businesses to find the ideal solution for your needs:
Why are Online Lottery Businesses Considered High-Risk?
Offline lottery is legal in 45 states. Online lottery, however, is a different story. Only eight US states have legalized online lottery as of 2021. Due to the prevalence of lottery scams, the industry is heavily regulated by federal and state governments. If you operate in a state where online lottery is illegal or sell tickets across state lines, you can get into trouble with the law.
Avoiding legal quagmires is one reason why banks don’t offer merchant accounts for online lottery or sweepstakes businesses. In addition to compliance issues, the industry is plagued with many other problems that make it too risky for banks to work with. Here are some reasons why you need specialized high-risk payment processing for your lottery/sweepstakes business:
Online lottery businesses must process card-not-present (CNP) payments to fulfill transactions. CNP transactions are more vulnerable to fraud than in-person payments. Accepting CNP payments exposes you to more chargebacks, making your business high-risk to banks.
Another reason why you’re struggling to get a merchant account for your online lottery business is the high rates of dissatisfied customers in the industry. It’s common for people that lose lotteries or sweepstakes to dispute the online payment so they can get their money back.
Online lotteries can process thousands of transactions per month. More transactions increase the likelihood of fraudsters using stolen card data to make online payments. Once the real cardholder discovers the unauthorized transaction, they will contact their bank to reverse the payment.