Colorado’s Move to Ban Credit Card Funding for Gambling Accounts Raises Questions on ‘Indirect’ Use of Gift Cards

Colorado is removing all language that allows credit card funding to gambling accounts from its regulations. The change complies with a new responsible gaming law passed in May.

Colorado Division of Gaming Deputy Director William Hiserodt reiterated the plan at an emergency rulemaking session. The prohibition takes effect August 12.

The legislature’s SB 26-131 bans credit card funding for gambling accounts. It also increases the number of daily deposits from five to six, bans push notifications, and explicitly bans ads that target those who are underage.

This prohibition of credit cards as online gambling funding sources is a growing trend. At least a dozen U.S. jurisdictions have a ban in place. Most major operators no longer allow such funding.

Virginia lawmakers passed a law prohibiting credit card funding in April. That law goes into effect this week.

Hiserodt said the regulator was holding the emergency rulemaking session ahead of the August 12 effective date of the new law as a “courtesy” to operators. A traditional rulemaking process will follow later this year to address other changes related to the new law.

The Core Change and Timeline

The emergency session addressed the credit card ban directly. Regulators moved quickly to align rules with the statute before the deadline.

Operators now face a hard cutoff. No account may be funded, directly or indirectly, by a credit card as of August 12, 2026.

This language mirrors statutes and regulations in other states. Yet its practical application is not always straightforward.

Gift Cards Present the Real Compliance Challenge

A key question for operators in Colorado and elsewhere is how to determine if a gift card was originally purchased with a credit card.

Fanatics Betting & Gaming State Compliance Manager Megan Otieno asked for clarification about what the word “indirectly” in the proposed rule change means.

The added language is clear on its face. Yet operators may not be able to easily determine how a gift card was originally funded.

Mia Tsuchimoto, sports betting program manager and western regional director for the Division of Gaming, acknowledged that determining how a gift card was originally purchased is tricky.

She said she believed that payment processors could determine this information. Operators would have to work with suppliers on this issue.

This “indirect” framing creates operational friction. Gift cards have become a common workaround in restricted funding environments. If a consumer buys a gift card with a credit card and then uses it to fund an account, does that count as indirect funding?

From my perspective after decades observing regulatory shifts in gaming, this is precisely the kind of ambiguity that tests compliance systems before they are fully built.

Operational Implications for Processors and Operators

Payment processors hold the technical keys here. They can often trace the original funding source of a prepaid instrument.

Operators must therefore integrate tighter controls with their suppliers. Real-time validation at the point of deposit becomes essential ahead of the August 12 deadline.

Fanatics Sportsbook has not allowed credit card funding since its launch in 2021. That head start may give it an edge in refining gift card screening.

DraftKings and FanDuel have since banned credit card funding on their platforms. Earlier challenges in Massachusetts, where DraftKings was fined for allowing bettors to use funds put into their account via credit cards in other states, underscore the enforcement risk.

Colorado operators cannot afford similar missteps. The emergency rulemaking signals that regulators expect proactive compliance, not after-the-fact fixes.

Risks, Counterarguments, and Limitations of the ‘Indirect’ Approach

The gift card loophole exposes a limitation in the rule. Without reliable processor-level data, enforcement could become inconsistent across operators.

Some may argue the burden falls too heavily on suppliers. Payment processors already manage complex compliance stacks. Adding real-time gift card origin checks increases cost and technical debt.

There is also the risk of over-compliance. If operators simply block all gift cards to avoid doubt, they limit legitimate customer choice. That could push players toward unregulated channels.

Conversely, lax screening invites regulatory penalties. The Massachusetts precedent shows how cross-jurisdictional funding flows create exposure even when local rules are followed.

These tensions highlight why the traditional rulemaking process later this year will be critical. It offers an opportunity to refine the “indirect” standard with industry input.

The Bottom Line

Colorado’s credit card ban, effective August 12, reflects a broader national push toward responsible gaming measures that restrict easy access to credit-fueled wagering. The “indirect” language targeting gift cards is the provision that will demand the most attention from operators and their payment processors. Success will hinge on rapid collaboration to operationalize verification without unduly restricting legitimate funding methods. What remains to be seen is whether processors can scale these controls efficiently across multiple states with similar rules. Operators that treat this as a strategic compliance investment rather than a checkbox exercise will be best positioned as more jurisdictions adopt comparable restrictions.