Online casinos: The digitization of gambling is advancing, also thanks to PayPal

For quite some time now, the ongoing digitalization has not been limited exclusively to the industrial or private sector. Other subject areas are also being “revolutionized” by digitalization, including gambling. The former extremes between gambling dens and noble casinos are gradually disappearing. In the Internet age, online casinos are increasingly coming into focus.

For a long time, gambling was frowned upon and had a certain “dirty image”. However, if you look at the development of the gambling industry in recent years, it has long since ceased to be a marginal social phenomenon. Current studies show that gambling is moving more and more into the center of society and that, in the meantime, it has also created a genuine job market. According to the Handelsblatt Research Institute (HRI), almost 190,000 people in the country are employed in the gambling industry. In addition, more than 75 percent of citizens have already had direct contact with the topic of gambling and participated in a commercial game of chance. Online casinos in particular enjoy a very high level of popularity. Just under 35 percent of respondents to the HRI study “The digitization of gambling” said they had taken advantage of a corresponding offer.

Current trends in online casinos

The demand for digital gambling is increasing more and more. In addition, an ongoing liberalization of the gambling market is taking place in parallel in many European countries, which is inevitably reflected in an ever-increasing range of offers. Whereas in the past you had to go to a casino to “gamble,” “mobile gaming” in particular has become a real boom factor for the industry. Gaming apps and casino game for mobile devices are becoming increasingly important for a generation that has grown up with the Internet and smartphones. The major app store providers such as Google and Apple have also already recognized this trend and are opening up their digital app markets more and more for gaming apps. The ease of use of such apps also plays a crucial role. Thanks to e-wallet providers like PayPal, the virtual account is topped up with just a few clicks. The number of PayPal-enabled online casinos is growing more and more.

In addition to mobile gaming, the topic of eSports is also playing an increasingly important role and is another growth factor for the industry. For a long time now, numerous online casinos have included bets on the outcome of tournaments for popular gaming titles such as “League of Legends” or “Dota 2” in their program. A new business segment has just opened up here, which may well reach the status of Sports Betting Canada in a few years’ time.

Although supply and demand are steadily increasing, there is still a lot of catching up to do in terms of policy and, above all, regulation. Currently, most operators operate under licenses issued in other EU countries and can therefore operate in our market as well. Nevertheless, we do not have a unified legal regulation of the gambling market in accordance with EU law. Experts hope that the expiring licensing practice can serve as a model for new national regulation. Decisions made in Denmark and Great Britain can also serve as an example.

A few years ago, PayPal began to leave many online casinos – but why?

The bad news for online gambling enthusiasts has begun: PayPal, the payment service most sought after by online casino players, has become less and less used as a deposit or withdrawal method. 

The popular payment service provider PayPal has begun to turn away more and more online casinos. First of all, it affected 888 Holdings and the giant of the industry GVC Holdings. So, in addition to 888 casinos, for example, Party Casino no longer has the PayPal option either. Other major players in the industry, such as online casino Poker Stars, are now also deprived of PayPal as a payment service provider. It is still unclear the exact reasons that caused PayPal to back out.

PayPal is increasingly disappearing from PayPal casinos, although there are still quite a few providers with a corresponding option. The company, which was founded in 1998 and now has 18,700 employees, has already disappeared from the following major online casinos:

Players from all over the world regret the withdrawal. With the help of PayPal it was possible to make real-time transactions, either to the player’s account or back to his PayPal account. The payment method worked without forwarding sensitive bank data to the online casino, was free of charge and had just established itself as the number one payment option with quite a few providers.

Withdrawal due to unclear legal situation

A recall as massive as PayPal’s raises many questions. Although PayPal itself never gave any official reason for the recall, the industry assumes two main reasons:

• Legal regulation of online casinos 
• Excessive use of unreasonable buyer protection

One of the reasons is the unclear legal position of online casinos. In this respect, the State Gambling Treaty states that the organization of public gambling on the Internet is prohibited, but many of the most popular providers come from abroad and have licenses, such as Gibraltar. There is also freedom of service in the EU, so we can talk about a legal gray area, which also negatively affected payments processed through PayPal. On the other hand, there has also probably been an unwarranted overuse of PayPal’s buyer protection for lost bids, which has probably led to a huge amount of verification work for the company. More recently, however, money spent on gambling has been explicitly excluded from buyer protection under amended terms and conditions. 

PayPal accounts around the world

From the first quarter of 2017 to the fourth quarter of 2021, the number of active PayPal accounts has steadily increased. Source of statistics: PayPal.

PayPal alternatives to online casinos are thinking more and more

PayPal’s departure from the online casino business is especially tragic against the backdrop of the fact that there has been a steady growth in active PayPal accounts globally recently. While there were 205 million active accounts in the first quarter of 2017, that number rose to 229 million in the fourth quarter of that year. As 2018 began, that value was already at 237 million accounts, according to statistics, and even 267 million accounts in the fourth quarter of 2018. After the blocking of the PayPal payment method in popular online casinos, the growth of accounts stopped growing so rapidly every year.

In addition, alternative payment methods that combine all the benefits of PayPal are rare at online casinos

The payment method that most closely combines the convenience and speed of PayPal is Sofort. With this, the player logs into their online banking account via the online casino and performs the transaction from there.

However, the two methods are not comparable one to one, so obviously PayPal’s departure from the online casino sector would be a tragedy, especially since many people now gamble online and try to increase their wealth away from traditional methods. However, there remains a small consolation: after all, payments are still made to the player’s PayPal account with the provider Poker Stars, for example, if the player has used this payment method in the past, but has deposited his account through Sofort. And there are also a number of reliable and trusted online casinos that continue to use PayPal as a payment method.