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buying lotto tickets with credit card

Why states like S. Carolina, New Jersey and Iowa ban lottery ticket purchases with credit cards

Between the Mega Millions and Powerball jackpots, there’s a combined $2.2 billion up for grabs. If you win, here’s some things you must have! Reviewed.com

epa07103113 A woman holds Mega Millions lottery tickets she just bought from a machine in Washington, DC, USA, 18 October 2018. Mega Millions, a 44-state lottery, has a record jackpot of nearly one billion US dollars. Friday’s Mega Millions drawing will be the second largest lottery jackpot in US history. EPA-EFE/MICHAEL REYNOLDS ORG XMIT: MRX04 (Photo: MICHAEL REYNOLDS, EPA-EFE)

Many Americans who hoped to fund their dream of winning the $1.537 billion Mega Millions jackpot by buying a 6-number lottery ticket with their credit card had to pay with cash instead.

And that includes the unidentified newly minted mega-millionaire from South Carolina who held the single winning ticket in this week’s drawing.

The reason: buying lottery tickets using plastic – the go-to form of payment for most Americans – is banned by roughly two dozen U.S. states, according to an analysis from CreditCards.com.

The rules and laws pertaining to lotteries are determined at the state level. And 23 states plus Washington, D.C., forbid the use of credit cards, says Ted Rossman, industry analyst at CreditCards.com.

Adding to the confusion, he says, is that 10 states – including Indiana, Maine and New York – leave the decision up to the retail outlets or stores that sell lottery tickets to millionaire hopefuls.

The main reason some states prohibit lottery players from using their credit cards is they fear some people could get themselves into financial trouble by gambling on the lottery with money they may not have, Rossman explains.

Lawmakers in these states are trying to minimize the risk of Americans running up credit card debt and paying exorbitant interest rates if they carry a balance at the end of the month. The bans are also a way to minimize the number of people that develop gambling addictions.

“States don’t want consumers to rack up credit card debt buying lottery tickets, especially when the odds of winning the Mega Millions jackpot is slim to none,” says Kimberly Palmer, credit card expert at NerdWallet, a personal finance site. “In California, lotto tickets have a disclaimer at the top that says, ‘Remember, keep it fun. Play responsibly,’ which is something that all consumers should keep top of mind.”

Playing the lottery is a vice for many Americans, with the most frequent players and biggest spenders coming from U.S. households in the lowest income brackets, a Bankrate.com survey found. Twenty-eight percent of U.S. households with annual incomes below $30,000 play the lottery at least once a week, versus just 18 percent of American households that earn $75,000 or more.

Financially strapped households, the Bankrate survey found, spend $412 per year, on average, on lottery tickets – nearly four times the amount that the highest-earning households admit to spending.

An American with low income and a low credit score could pay as much as 25 percent in interest on a credit card, says Rossman. And if that person carried that $412 lottery ticket balance for a full year, he or she would pay more than $100 in interest.

“Unless you are someone that makes an occasional purchase of lottery tickets with a credit card that you pay off at the end month, it’s a bad idea to pay for your lottery tickets with plastic,” says Rossman.

The winning Mega Millions ticket was purchased with cash in South Carolina, one of nearly two dozen states that ban credit card purchases of tickets.

5 Smart Reasons Not to Buy Lottery Tickets with Credit Cards

Buying Lottery Tickets on Credit Is a Bad Idea. Here’s Why.

While it may be tempting to put a few lottery tickets on your credit card while making a purchase at a convenience store, it’s important to note that buying lottery tickets with credit cards is often a bad idea. Here are five smart reasons to only pay cash (or use your debit card) for your lottery purchases.

1. Charging Lottery Tickets Is Illegal in Most U.S. States

Lottery ticket laws aren’t simple in America. Depending on where you are, you might not be allowed to buy your lottery tickets with plastic. Over 40% of the U.S. states have laws against using a credit card for tickets. The federal government enforces broad lottery regulations within the United States, but individual states have jurisdiction over the finer points of buying and selling tickets.   Whether or not you can charge tickets to your credit card is one of those finer points.

21 states plus the District of Columbia and the U.S. Virgin Islands prohibit lottery ticket sales on credit. However, research indicates that the following states allow credit purchases in (at least) some cases:  

  • Arizona
  • California
  • Delaware
  • Indiana
  • Idaho
  • Illinois
  • Kansas
  • Kentucky
  • Louisiana
  • Maine
  • Michigan
  • Missouri
  • Nebraska
  • New York
  • Ohio
  • Oregon
  • Pennsylvania
  • Rhode Island
  • South Dakota
  • Vermont
  • Washington

So unless you’re making your purchase in one of those states, you can leave your credit card in your wallet when you go to make your picks.

If you’re in one of the states that allow you to charge lottery tickets, you still need to double-check your state lottery’s policies. Some of the listed states allow credit card purchases only at certain retailers or under specific conditions.

Remember that lottery laws apply to the state where you buy the tickets, not your state of residence.

2. Other Obstacles to Buying Lottery Tickets With Credit

Even when states allow you to use credit cards for lottery purchases, many merchants refuse to accept them. For example, the Pennsylvania Lottery website says that there are no laws against charging your lottery tickets in that state, but that most retailers don’t allow it.  

And there’s another hurdle: Even if the state and the retailer are okay with it, some credit card issuers won’t let you use your card to gamble, including buying lottery tickets.

To find out if this is the case, you’ll need to check your card’s terms and conditions.

3. Charging Your Lottery Tickets Incurs Additional Fees

When retailers let you buy your lottery tickets with your credit card, they don’t treat them like other types of purchases. Rather, they handle lottery ticket sales as quasi-cash purchases.  

A quasi-cash purchase means that instead of charging something directly, you’re actually getting a cash advance for the amount your tickets cost. And cash advances are a bad idea. Most credit cards charge additional fees for cash advances, and unlike with regular purchases, interest starts accruing immediately, not at the end of your billing cycle. Furthermore, those interest rates are usually higher than the rate for other purchases, which means buying your lottery tickets with credit cards can cost you significantly more than paying with cash or debit cards.

4. You Won’t Get Credit Card Rewards for Lottery Ticket Purchases

Some people pay for as many things as possible with their credit cards so that they can rack up rewards points. But those people will be disappointed if they think that the additional fees will be worth it, due to the points they accrue.

Most credit cards have restrictions about which types of purchases accrue points, and gambling purchases like lottery tickets don’t count.

5. Buying Lottery Tickets with Credit Cards Can Lead to Debt

Even if you were able to buy lottery tickets on your credit card legally and without any financial disadvantages, it would still be a bad idea. It’s too easy to get carried away and run up significant debt. For people who have (or who are vulnerable to) a gambling addiction, this is an obvious risk. But even if you haven’t had a problem with addiction in the past, gambling on credit is an unnecessary risk.

This risk is exactly why many states prohibit charging lottery tickets, especially since the people who are most likely to buy lottery tickets are also least likely to be able to pay off their credit cards.   Furthermore, if you’re buying online lottery tickets with your credit card, you run the risk of being scammed. Your credit card, or even your identity, might be stolen.

Bottom Line

If you are going to play the lottery, make sure that you abide by a strict budget. It’s a good idea to put cash aside for your purchase every month, and spend no more than you plan to. Leave your credit card at home and use cash to try to become a jackpot winner.

Want to buy lottery tickets with your credit card? Charging your lottery tickets is a terrible idea; read this article for 5 solid reasons why. ]]>