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I was sad to learn that the “PayPal Mafia” had nothing to do with gangsters but was just a name given to various tech innovators and disruptors from Silicon Valley. Or has it?
Some of PayPal’s first employees went on to create some of the most important tech products of our century, such as LinkedIn, Tesla, YouTube, and Yelp.
PayPal was founded by Peter Thiel as a money-transfer service called Confinity in December 1998. Four months later, it was acquired by Elon Musk’s X. A name that, if I may, aged like milk.
The company, now going by the name PayPal, saw a surge in its product’s popularity between 2000 and 2002, when it went public and was quickly bought by eBay. Quite an impressive ascension, if you ask me.
I never questioned where PayPal’s wild success came from, but I can happily declare that I’ve cracked it, and you’re getting front-row seats to the entire story. Let’s get right into it.
My editor would really want me to answer this question right now, but this one time warrants a bit of a set-up. PayPal is a huge thing to try to talk down.
From PayPal’s T&Cs
PayPal allows approved gambling merchants to use our service in certain jurisdictions where gambling activities are legal. To be approved by PayPal, merchants must demonstrate to PayPal's satisfaction that they can block gambling activities for account holders in the U.S. and any jurisdiction where gambling activities may be illegal.
PayPal is reluctant to approve gambling merchants due to the strict U.S. online gambling laws. For an online casino to start accepting PayPal transactions, it must:
1. Be pre-approved by PayPal by demonstrating they only cater to players from jurisdictions where online gambling is legal.
This also means that if a U.S. online casino accepts British players (where online gambling is legal), it has to comply with the entire range of regulations provisioned by the United Kingdom Gambling Commission (UKGC), on top of local regulations.
These casinos must be spotless.
2. Sign the necessary legal agreements depending on their tax residence country.
These agreements include the kind of requirements you’d expect when working with a finance corporation the size of PayPal, such as:
This is great and all, we love rigid regulations for our operators, but only a few online casinos accept PayPal, from:
So, not a lot of them.
A lot less than all the casinos listed on our site. But why, though?
Between 2000 and November 2002, PayPal was used as a primary payment processor by offshore gambling sites that accepted U.S. players. It allowed the number of U.S. online casinos to jump from 650 to 1800 and witnessed the establishment of brands like William Hill and Ladbrokes.
Yep. You heard it here first. PayPal’s impressive growth could be attributed, in part, to its key role in the rapid expansion of (at the time, illegal) online gambling.
After a civil lawsuit settled in 2004, PayPal (but, actually, eBay) agreed to pay $10 million to the U.S. government, representing the company’s reported profits for these transactions. eBay also declared that, upon acquiring PayPal, it would stop providing intermediary payment services for online casinos.
It took PayPal 10 years to stop holding a grudge and accept gambling payments again after online gambling was legalized in Delaware and New Jersey.
I find it weirdly convenient how PayPal stepped back from a market generating $2.2 billion a year just as Caesars Entertainment started sponsoring what would become a very popular television series: the World Series of Poker.
Perhaps a hurting real-estate monolith trying to remind us of the glitz and glamour of land-based casinos (that they own a majority of)?
The PayPal Mafia.
If this was just a group of legit tech geniuses, why not call them the PayPal brigade? The PayPal squad?
The Agatha Freakstie Corner
I am by no means an investigative journalist, and it’s really difficult to find any information about PayPal’s activity between 2000 and 2002. Some details are mentioned in the Internet Gambling Funding Prohibition Act from 2003, but other than that, the Internet is awfully quiet about PayPal and gambling.
And then there’s an editorial photo from Fortune magazine, picturing the PayPal Mafia at the famous Tosca cafe in San Francisco. The group exudes Corleone energy next to stacks of poker chips. Coincidence?
For those of you who want to dig a little deeper into this case, a great place to start is a book by Sujeet Indap and Max Frumes called The Caesars Palace Coup.
Conspiracies aside, PayPal is weird about online gambling. This is no surprise, considering that this revolutionary product was propelled into its notoriety by illegal gambling transactions. Allegedly.
The online casinos that accept PayPal nowadays are 100% legit, secure sites, but this is one of the only times when the payment provider is more likely to rain on your parade. Here are a couple of reasons why.
There are plenty of complaints online from people who faced an arbitrary account suspension or block. It happened to me. And some of my friends.
PayPal has a habit of suspending accounts for seemingly no reason and then having you go through a lengthy process to unlock it. This usually requires many calls to customer support and a lot of time, during which you won’t have access to your PayPal balance.
Gambling transactions have enhanced chances of triggering a suspension on your account, as PayPal is hypervigilant with:
If you don’t already have a PayPal account with some payment history behind it, I would advise against creating one just to fund a casino balance.
I’ve got a ton of respect for people who actually read PayPal’s User Agreement, but the odds are stacked against you if you expect not to break any obscure rules during your first rodeo.
Let me put this into perspective. If you Google “PayPal account freeze,” you’ll get three times more results than when Googling “why do cats purr.”
Long-time PayPal users shouldn’t close their eyes, as the company has been sued by decades-long customers for wrongly seizing thousands of dollars from their accounts.
PayPal rose to popularity by offering free payments to merchants, meaning that you won’t have to pay any fees for depositing funds to online casinos accepting PayPal as this counts as paying for a service. Of course, these transactions aren’t free, as PayPal charges the merchants for every sale.
In our case, online casinos typically take the charge for deposits, but not all of them. In many cases, you’ll still have to pay up to 5% of your deposit amount as a fee. Withdrawals, though, are always subject to fees.
PayPal will charge you 2.90% of the withdrawal amount plus the equivalent of $0.3 for each receiving transaction. If PayPal has to convert currencies for you (which it does automatically unless you maintain wallets in different currencies), it will charge another 3-4% of the transaction amount.
Now, with the funds in your PayPal balance, you can pay for goods and services or choose to transfer the funds back to your bank account or card. Standard withdrawals are free (and take up to three business days), while Instant withdrawals will set you back another 1.5%.
Now, as with anything, fees are always subject to change, and you can check the accuracy of these fees on PayPal’s official Consumer Fees page.
Let’s do some math, shall we?
Assume you’re withdrawing $25 from an online casino. By the time the funds are in your PayPal balance, you’ve got $23.97 ($25 - $0.72 - $0.31).
To withdraw these to your card and start spending them in a couple of hours, you’d be charged another $0.35.
You’ve paid a $1.37 fee to withdraw $25 from the casino.
What about buyer protection?
PayPal offers buyer protection for certain transactions, meaning they will issue refunds for some goods and services after an investigation.
However, since 2016, gambling-related payments are no longer protected, meaning that you won’t manage to get a refund if you run into any issues with online casinos that take PayPal.
Say, for some reason, your PayPal balance was charged for your deposit, but the funds never reached the operator. Well, sorry, PayPal can’t issue a refund for you. Or, not without a lot of fuss, anyway.
If you already have a PayPal account, you’ll be happy to know it’s not all bad. There are some upsides to using PayPal for gambling, and it would be unfair for me not to highlight them.
Jail-like security
PayPal takes user safety very seriously and has implemented rigid security measures against money laundering, phishing, or theft of personal information.
Transactions use 256-SSL encryption, one of the safest encryption methods, along with a firewall server that prevents attacks, even when you’re using public connections.
Moreover, with PayPal, you can add up to eight different e-mail addresses to your account, so you can add another layer of privacy to your transactions. You should remember that most casinos require your PayPal e-mail address to match the one you used to register your casino account.
Gamban
PayPal has partnered with Gamban to allow users in some countries to block gambling sites altogether. This is not necessarily a perk if you’re looking to gamble, but it could come in handy if you ever feel like you’re losing grip on this habit.
This partnership would allow you to quickly restrict your access to all gambling sites that require money deposits, as well as (optionally) affiliates or other sites promoting gambling products.
I would be more excited about this feature if it were something exclusive, but Gamban is available as a standalone app for a very small subscription fee.
Some other perks you might find interesting (although they’re not exclusive to PayPal):
And that’s about it. When we’re discussing e-wallets, we’re usually mentioning convenience, but it’s been a few years since PayPal stopped being convenient.
There are countless tabs and menus to keep track of, it takes a long time to set up transfers, and god forbid you ever want to cancel a subscription managed through PayPal.
I can’t just discourage PayPal use without providing some viable alternatives. Here goes.
|
Service |
Skrill |
PayPal |
| Free deposits | Yes | No |
| Free withdrawals | Yes | No |
| Daily deposit limits | $5,000 (verified account) | $1,500 (or $5,000 monthly) |
| ATM withdrawal limit | $1,000 (daily) | $400 (daily) |
Skrill is a comparable e-wallet service, accepted in a majority of online casinos around the world. A Skrill casino allows free-of-charge deposits and withdrawals, along with the same perks as a PayPal account, namely:
Plus, Skrill does not have the same reputation for freezing and banning accounts. Skrill still requires casinos to abide by local regulations, so Skrill casinos are great choices if you like playing with peace of mind.
|
Service |
Neteller |
PayPal |
| Free deposits | Yes | No |
| Free withdrawals | Yes | No |
| Daily deposit limits | No daily limit, $20,000 monthly limit | $1,500 (or $5,000 monthly) |
| ATM withdrawal limit | $1,000 (daily) | $400 (daily) |
Neteller and Skrill are operated by the same parent company, Paysafe Group, regulated by the Central Bank of Ireland. You can expect the same level of social responsibility, security, and data protection as with PayPal, but without the overly concerned and often annoying limits, verifications, and availability issues.
Neteller also offers you the possibility of a physical card, no charges for both deposits and withdrawals, and Neteller casinos are widely available worldwide.
So, after singlehandedly reviving the mystery genre, do I actually recommend PayPal casinos? In short, if you found a PayPal casino you’d like to play in and already have a PayPal account that you know how to handle well, there’s no harm in that.
The few PayPal casinos available are top-of-the-line regarding compliance, security, and data protection. They have to be.
But. If you’re explicitly looking for a new payment method and have other options, I would only use PayPal as the subject of a dirt-digging operation. Let us not forget that PayPal stirred ample controversy by blocking accounts of human-rights activists or blocking funds aimed to support “controversial” journalism, such as mentions of Syrian refugees.
Is PayPal a safe and quick way to make gambling transactions? Yes. But so are plenty of other e-wallets, with fewer skeletons in their closets.
