- Legal and Regulatory Uncertainty: The legal status of fantasy sports can vary across jurisdictions. In some places, it may be considered a form of gambling, and the regulatory environment can be complex and subject to change. This uncertainty can make financial institutions more cautious about supporting fantasy sports businesses.
- High Chargeback Rates: Fantasy sports involve a degree of skill and chance, and participants may dispute charges if they are dissatisfied with the outcomes or feel misled. High chargeback rates can be a concern for payment processors, as they can lead to financial losses and administrative burdens.
- Subscription-Based Models: Many fantasy sports platforms operate on a subscription-based model, where users pay a fee to access premium features or content. Subscription-based businesses are often considered higher risk due to the potential for customers to dispute recurring charges or forget about ongoing subscriptions.
- Potential for Money Laundering: The large transactions and movement of funds associated with fantasy sports platforms could attract the attention of regulators concerned about money laundering or other illicit activities. Financial institutions may view these platforms as having an elevated risk of being used for such purposes.
- Online Transactions: Fantasy sports are primarily conducted online, and online transactions are generally considered riskier than in-person transactions due to the higher likelihood of fraud and identity theft.
- Market Volatility: The fantasy sports industry can be subject to market volatility based on factors such as changes in user preferences, legal developments, or the performance of professional sports leagues. This volatility can make financial institutions more cautious.
