Fantasy Sports Merchant Accounts: Why Your State Decides the Code

A fantasy sports operator usually describes its business as a game of skill. Payment underwriters start from a different question: is this contest legal for the player who is entering it, in the state where that player is sitting? The answer decides which merchant category code the transactions carry, whether the card networks have to approve your registration before a single entry fee is processed, and whether a bank will underwrite the account at all.

This guide is for daily fantasy and pick'em operators, season-long league hosts that charge entry fees, and platforms adding paid contests to a free game. It covers how Visa and Mastercard classify fantasy contests, what each network makes your acquirer register before processing, why state law now moves faster than any processor's policy, and what to have ready before you apply. Card network rules are cited from the Visa Core Rules and Visa Product and Service Rules of 24 October 2026, the Visa Merchant Data Standards Manual of October 2026, and Mastercard's Security Rules and Procedures, Merchant Edition, of 4 August 2026. State law is as reported through October 2026, and it changes often, so confirm the current position in every state you serve.

How Visa codes a fantasy sports merchant

Visa's Merchant Data Standards Manual assigns games of skill to MCC 5816, Digital Goods – Games, which it describes as games, including games of skill but excluding games of chance, delivered in electronic format. The manual names fantasy sports as an example of the code, with a qualifier that does most of the work: fantasy sports in jurisdictions where they are not considered gambling.

Gambling has its own rule. Under the same manual, a merchant that conducts online gambling transactions must use MCC 7995, the betting code, for all of its transactions, even if gambling is not its primary business. Read together, those two entries mean the code follows the legal status of the contest. Where a fantasy contest is lawful as a game of skill, it belongs on 5816. Where a state treats it as betting, it is not a 5816 transaction, and running it as one misstates what the cardholder is paying for.

A 5816 code does not make the account ordinary. Visa lists MCC 5816 as a high integrity risk code for card-absent transactions involving skilled game wagering, and gives daily fantasy sports as the example. It sits on the same list as online gambling, dating services, adult content and negative-option subscriptions. If you run more than one line of business at the same location, the manual requires the high integrity risk line to carry the high integrity risk code and the other lines a different one.

What Visa requires before your first transaction

Because the code is high integrity risk, Visa's rules put the obligations on your acquirer before any entry fee is processed. Under section 1.9.5.1 of the Visa Core Rules, an acquirer must itself be approved by Visa for high integrity risk acquiring, which includes a financial review, and must register each high integrity risk merchant with Visa before submitting its transactions.

Monitoring continues after approval. Section 10.4.5.2 requires the acquirer to keep daily data on your gross sales volume, average transaction amount, number of transaction receipts and number of disputes, to build a baseline of your normal activity over at least a month, and to begin daily monitoring against that baseline from the 31st calendar day after your first deposit. On request, the acquirer has 7 calendar days to give Visa your original underwriting package and the reports it used to monitor you. Under section 10.4.5.4, Visa may disqualify a high integrity risk merchant that reaches a critical level of dispute activity or acts with intent to circumvent Visa programs.

In practice, a jump in deposits in the first week of the football season is something your acquirer is required to notice. Tell it about seasonal peaks and promotions before they happen.

Mastercard's skill games registration

Mastercard is more specific still. Section 9.4.5 of its Security Rules and Procedures treats fantasy sports as a subcategory of skill games, which it defines as games where the outcome is determined by the skill of the participants rather than by chance. An acquirer may use MCC 7994 for the transactions of a skill games merchant located in the United States or a U.S. territory, or of a merchant elsewhere that accepts U.S.-issued cards, and must register the merchant with Mastercard. Mastercard must approve the registration before the acquirer processes any skill games transactions for it.

The registration asks for six things:

1. An acquirer intake form.
2. Evidence of legal authority: a copy of the merchant's license, issued by the appropriate government authority such as a state or tribe, that expressly authorizes the merchant to conduct the particular type of skill game for which it wants to accept cards.
3. A merchant attestation, completed by you, about the legality of your skill games.
4. Certification from a qualified independent third party that your systems include effective age and location verification and are reasonably designed to keep the business within legal limits, including for interstate transactions. Screenshots of the relevant processes, such as age verification, must be included, and certifications from interested parties such as the acquirer, an ISO or the merchant are not accepted.
5. The acquirer's commitment to notify Mastercard within 30 days of any change to the information provided, including changes in applicable law, in your activities and in your systems.
6. The acquirer's affirmation that it will not submit restricted transactions from you for authorization.

Mastercard also requires the acquirer to provide every website URL from which these transactions may arise, and the skill games registration expressly covers a U.S. operator proposing to conduct what Mastercard calls Gaming Payment Transactions, which are governed by its separate gaming and gambling payment program standards.

Two of those items deserve attention before you apply. The license requirement is written around a license that expressly covers your type of contest; if a state where you operate has no fantasy licensing regime, ask your acquirer at the outset how it intends to satisfy that item. And the 30-day notice rule means a new contest format, or a new state law, is not only a compliance question for your lawyers. It is a change your acquirer has to report.

Federal law sets the definition, not the permission

Mastercard's definition of fantasy sports is taken almost word for word from the Unlawful Internet Gambling Enforcement Act of 2006. At 31 U.S.C. 5362(1)(E)(ix), the Act excludes from its definition of a bet or wager a fantasy or simulation sports contest that meets three conditions:

• Prizes are established and made known to participants before the contest, and their value is not determined by the number of participants or the amount of fees they pay.
• Winning outcomes reflect the relative knowledge and skill of the participants and are determined predominantly by accumulated statistical results of the performance of individuals in multiple real-world sporting events.
• No winning outcome is based on the score, point spread or performance of any single real-world team or combination of teams, or solely on any single performance of an individual athlete in any single real-world event.

That exclusion is often read as making fantasy sports legal under federal law. It does not. Section 5361(b) of the same Act says nothing in it may be construed as altering, limiting or extending any federal or state law prohibiting, permitting or regulating gambling. The carve-out keeps a qualifying contest out of the Act's payment restrictions; whether the contest is lawful is still a matter for each state.

The Act is also why acquirers code carefully. Under Regulation GG, 12 CFR 233.6(d), the policies of a card system operator, merchant acquirer or processor are treated as reasonably designed to block restricted gambling transactions if, among other things, they provide either for due diligence when opening a commercial customer's account or on a merchant category code system that lets the card system or issuer identify and decline transactions that may be restricted, with testing to check that codes are applied correctly. An account coded to look like something it is not undermines exactly the control the regulation relies on.

State law is moving in both directions

Because legality is decided state by state, an operator's map can change in the middle of a season. Three recent developments show how far apart the states have moved.

California: an attorney general's opinion that daily fantasy is sports wagering

On July 3, 2025, California Attorney General Rob Bonta issued Opinion No. 23-1001, concluding that California law prohibits the operation of daily fantasy sports games with players physically located in California, regardless of where the operator and its technology are located, because such games constitute wagering on sports in violation of Penal Code section 337a. An attorney general's opinion is not a court ruling, but an underwriter weighing a California-facing fantasy business will read it, and it is the clearest example of a state treating both draft-style and pick'em contests as betting.

Illinois: a licensing framework

Illinois went the other way. Its fiscal 2027 budget legislation, Senate Bill 3019, signed on June 16, 2026, put fantasy contests under the Illinois Gaming Board for the first time, with licensing, a minimum age of 21 and a 15 percent tax on adjusted gross fantasy contest receipts. Law firm summaries of the bill report that it also requires know-your-customer, anti-money laundering and geolocation controls, and that operators already active in the state may keep operating for a limited period after the Board's rules take effect if they apply for a license.

Virginia: no more contests against the house

Virginia, which has regulated fantasy contests since 2016, rewrote its law in 2026 with House Bill 145. As reported, the law moves oversight to the Virginia Lottery, imposes a 10 percent tax on operators' fantasy contest revenue and requires every contest to include at least two participants, which ends player-versus-house contests in the state.

The format distinction in Virginia matters well beyond Virginia. A pick'em product where the player competes against the operator looks more like a sportsbook to a regulator than a contest where players compete against one another, and an underwriter will ask which you run, state by state.

What an underwriter will ask a fantasy operator for

Put together, the network rules and the state picture explain most of what a high-risk acquirer will want in your application:

• A list of every state and country where you accept players, and the legal basis for each, whether a license, a registration or a legal opinion.
• Copies of each state license or registration you hold, matched to the contest formats you offer there.
• A description of each format: salary-cap draft, best ball, peer-to-peer pick'em, player-versus-house pick'em, season-long leagues, and how prizes are set.
• Your age and location verification process, with screenshots, and the vendor or independent party that certified it.
• How player funds are held and how withdrawals are paid out, including whether you want to pay winnings back to cards.
• Deposit and withdrawal volumes, including seasonal peaks, and current dispute counts if you are moving from another processor.
• Your terms of service, contest rules and refund policy, live on the website you will register.

A general-purpose payment platform is rarely the right home for this. Stripe's list of prohibited businesses, last updated 22 September 2026, includes fantasy sports leagues with a monetary or material prize under gambling, alongside games of skill with a prize. Expect a fantasy business to need a merchant account from an acquirer that has chosen to underwrite skill games and has the Visa and Mastercard registrations in place to do it.

Keeping disputes winnable

Plan for three kinds of dispute: a card used without the cardholder's permission, including by a family member or a minor; a player who lost and disputes the deposit; and a player who entered from a state where the contest was not available and argues the charge should never have been accepted. Each is easier to answer with records you already keep for compliance.

• Log the identity verification result, the age check and the geolocation result for every deposit and contest entry, with timestamps.
• Keep the account history that ties a deposit to a verified account: prior deposits, logins and device data on the same account.
• Store contest entries, results and the version of the rules and terms the player accepted.
• Use a billing descriptor that names the brand players know, and answer customer service contacts quickly, since a player who cannot reach you is more likely to call the bank.

Your acquirer is watching dispute counts daily under Visa's high integrity risk monitoring, so a dispute you prevent is worth more than one you win.

The short version

A fantasy sports business can get a merchant account, but the account rests on the legal status of each contest in each state. Visa codes lawful fantasy contests as high integrity risk under MCC 5816 and treats contests a jurisdiction considers gambling as gambling. Mastercard requires registration, a license covering your format, independent certification of your age and location controls, and notice of changes within 30 days. The operators that keep their accounts are the ones that can show, state by state, why each contest is lawful where it is played.