Skill gaming vs. gambling: regulations & payment processing challenges

Anastasiia Brener

Senior Alternative Payment Methods Manager,

Ikajo International


Plenty of businesses go online. And it’s no wonder. There are limitless opportunities, including GEO reach, customer acquisition, and retention, offering a variety of payment methods, and growing brand awareness.

Several numbers prove this hypothesis. According to Statista, the online gambling market accounted for $45.8 billion in 2017 and would grow up to $94.4 billion in 2024. Skill gaming volumes continue to grow since its creation in 2000. Everything seems pretty fine for these two industries if not one “but.”

Skill gaming representatives still face lots of troubles when it comes to payment processing. This comes from the constant confusion of this business type with gambling. Add to this unclear regulation and receive a hard nut to crack. Nonetheless, we want to help you get out of the maze. In this article, we are talking about particularities of the skill gaming merchants’ payment processing, legal questions, and main differences with gambling.

Taking a closer look at the definitions

skill gaming vs gambling

Skill gaming representatives still face lots of troubles when it comes to payment processing. Source: flickr.com

What is skill gaming?

Skill gaming is a type of online game a result of which is defined only by the player’s skills. It may include physical or mental skills of the participant. The end goal is winning a prize (usually, in the form of money).

What is gambling?

Gambling is a type of online game the outcome of which depends on the chance. That is why this activity is risky. The main goal to get a prize (commonly money).

These notions seem to be very close. Yet, players’ mastership and experience define the main difference. The more the gamer practices, the more skillful s/he becomes. So, the chances to win also grow. Unfortunately, that doesn’t make it any more clear from the legal perspective.

Legal peculiarities

payments for gambling and gaming

Most games of skills stay unregulated in the USA. Source: flickr.com

Skill gaming regulations

As Walters Law Group puts it, it’s hard to define where the chance ends and the skill starts. Moreover, most games of skills stay unregulated in the USA. The situation in Europe is somehow different. So, Malta introduced Skill Games Regulations in 2016 and they came into force in early 2017. Nonetheless, if we take a look at regulations in France, they seem to be pretty vague. There are four acts that regulate skill games.

Online gambling regulations

There are ten US states that offer online gambling legally. Regulations are made state-wise. It’s also country-specific across the EU. Yet it should comply with main regulations under TFEU. European Commission acts as a connector between countries’ gambling regulatory bodies. The regulations also cover some accompanying rules like, for example, Anti-money laundering and others.

And though there are differences in laws and regulations, skill gaming owners still face problems. Despite a bunch of rules and descriptions countries/states provide, opening an account in the bank stays tough. But why is it so?

Skill gaming and gambling payment processing

gambling payment processing

Skill gaming companies receive MCC7995, though it’s the one for gambling. Source: flickr.com

In this part of the article, we are going to share, perhaps, the main problems, the skill gaming merchants experience. That is getting an account in the acquiring bank and correct MCC.

Firstly, we need to mention that MCC does influence many things. Merchant category code has an effect on what fees the company pays and what restrictions (if any) it has to meet.

And it’s pretty widespread when skill gaming companies receive MCC7995, though it’s the one for gambling. This identifier defines betting with the following types – casino, lottery, wagers. This MCC results in the string of limitations country-wise, lower conversion rate, and other restrictions.

Skill gaming companies, in their turn, seek to receive MCC7994. That identifier specifies video game establishments or arcades. And it’s fair, as skill gaming types include fantasy sports, trivia and arcade games. Yet, many acquiring banks don’t seem to see the difference.

Here are some cases to show the situation from the bank’s and the merchant’s perspectives.

  • Case 1. An acquiring bank declines the application from the skill gaming company. Bank’s representatives explain the refusal the following way. It is impossible to mark the company with MCC7995. This is the gambling companies’ identifier and they work under the license. That means their activities flow under the industry’s laws and regulations. Skill gaming companies do not need to have a license. Then the conflict of interest arises. As the skill gaming company doesn’t have the license it doesn’t follow the industry’s regulations. The bank, in its turn, is afraid of the illegal activity. Mainly, because of the skill gaming firms don’t follow AML regulations.
  • Case 2. The merchant from Europe seeks to open an account. The company deals with two outcomes. In the first case, it receives a decline. Then, after another trial, the bank offers MCC7995 to the company. Yet, as the skill gaming company doesn’t have any licenses, the bank offers heighten rates and closed Europe. The company seeks to change this situation. It approaches the country’s gambling regulator to get the license. Nonetheless, the firm receives a decline as it is not from the gambling industry. As you can see, the acquirer sees the company as gambling, the regulator doesn’t issue the license as the skill gaming is not gambling.

It may seem there’s no way out. Yet, there are some solutions you may lay on. Commonly, payment processing happens involving the payment service provider. And it may become a merchant’s life-line.

Skill gaming payment processing

Skill gaming payment processing has not fully shaped itself. Source: flickr.com

Why so? Because, usually, payment service providers partner with a variety of acquiring banks worldwide. For instance, Ikajo International has a network of 60+ acquiring banks. That gives an opportunity to connect the merchant to the right bank. The acquirer will know the difference between the gambling and skill gaming merchant accounts and open the correct one. This factor ensures the merchant gets access to a variety of countries, has better conversion, and lower decline rate.

Conclusions

As you can see skill gaming payment processing has not fully shaped itself. There are decisions to question and improvements to make. Nevertheless, merchants that succeed in finding the right payment processor can eliminate misunderstandings. They will be connected with the correct banks and supplied with working payment solutions.


Ikajo International is a global payment service provider. For 16 years Ikajo caters to businesses’ processing needs. After years in payment processing, the company has created a range of payment solutions for various industries. Ikajo’s goal is to enable hassle-free transactions’ flow and offer top-notch services to clients.


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