How Safe Is Your Online Sportsbook Account If Operators Go Belly-Up?

The expansion of Betfred and other UK operators into the US market begs the question: How safe are funds in an online sports betting account?
In regulated markets, the answer is: not always as safe as you’d hope.
That’s according to bettor’s rights group HBF, which recently published its updated Register of Protection of Funds. The charter lays out how well UK-facing sportsbooks protect their customer funds, ranging from not protected to high protection.
Of course, there is a crossover between US and UK operators, meaning the findings could be significant for US bettors.
Different levels of protection
Here’s how the HBF categorizes protection within terms and conditions:

Not protected: Money in customer accounts would be seen as part of the business if it went bust, and could, therefore, be used to pay off creditors.
Medium: There are arrangements (like insurance) in place to make sure the money in separate accounts goes to customers if the company goes bust.
High: Customer money is held in an account that is legally and in practice, separate from the rest of the company. An external person or auditor controls this account.

Who falls into which category?
HBF notes eight UK sites have high protection, including FanDuel sister brands Paddy Power and Betfair. BetStars, the sister brand of Fox Bet, also has high protection, as does Smarkets.
In the medium bracket are bet365, 888 and William Hill. 
Meanwhile, the unprotected bracket includes Betfred, which is pushing into several US states.
Is a US sports betting account protected?
In New Jersey sports betting, however, there is no such risk for players. Operators are required to separate bank accounts, with the balance equivalent to customer funds and a minimum of $500,000.
Companies are required to file a monthly attestation with the state Division of Gaming Enforcement (DGE) that the funds are present.
Similarly, operators are required to have enough funds on account to pay all open bets.
Funds segregation a key benefit of regulation
It’s a similar story over in Nevada and Pennsylvania, where customer funds need to be fully segregated. And indeed, the Nevada/NJ model appears to have been copied across other regulated states.
It’s a question currently being asked of the UK Gambling Commission (UKGC) following the recent bankruptcy of Moplay. The operator went into liquidation in February, with customer funds frozen.
Fortunately, Betfred stepped in and acquired the customer base, agreeing to cover the balances in a deal thought to be worth around $370,000.
Should customer funds be better protected?
So, why doesn’t the UKGC insist sports betting accounts are truly protected? The answer, unfortunately, is money. The commission reviewed this issue in 2013, but operators suggested that true segregation under an external auditor would be too expensive. And the commission feared that cost would be passed on to the consumer.
A UKGC spokesperson told industry outlet EGR recently:
“Instead, we ensure customers can decide for themselves whether to risk their money with an operator that offers low or no protection, or whether they wish to incur the potentially higher costs of gambling with an operator that offers higher levels of protection.”
In other words, it’s on bettors to trawl through terms and conditions to find out if their money is truly at risk. US regulators, it seems, are more willing to help players.
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