Building Compliant Payment Rails for a Skill-Based Gaming Platform
A skill-based gaming startup needed to accept payments without getting flagged as gambling. We built a framework that satisfied acquirers, networks, and state regulators.
The Challenge
Our client built a mobile platform where users compete in skill-based games for cash prizes. Think chess, trivia, or puzzle games — not slots. Legally, they weren't gambling. But try explaining that to a payment processor.
They'd been rejected by three processors and terminated by a fourth mid-application when underwriting flagged them as "unlicensed gambling." The founder was running out of options.
The core problem:
Even legitimate skill-based gaming platforms get caught in anti-gambling filters. The burden is on the merchant to prove they're not gambling — and most can't.
Our Approach
1. Legal Foundation
First, we worked with the client's gaming counsel to document the legal basis for skill-based gaming in their target states. We created a jurisdiction-by-jurisdiction matrix showing:
- Statutory definitions of gambling vs. skill gaming
- Relevant case law and AG opinions
- Any registration or licensing requirements
- Prohibited states where they wouldn't operate
2. Game Mechanics Documentation
Acquirers need to understand why the games are skill-based. We documented the game mechanics to demonstrate that outcomes are determined by player skill, not chance:
- Mathematical analysis showing skill correlation with outcomes
- Matchmaking algorithms that pair players of similar skill
- Practice mode data showing improvement over time
- Third-party skill certification from gaming experts
3. Risk Controls Framework
Even with legal cover, acquirers worry about operational risks. We implemented:
- Geo-blocking — Automated enforcement of state restrictions
- Age verification — Identity verification for all cash players
- Responsible gaming controls — Deposit limits, self-exclusion, cooling-off periods
- AML program — Transaction monitoring, source of funds for large deposits
- Fraud prevention — Collusion detection, multi-accounting prevention
4. Acquirer Package
We prepared a comprehensive underwriting package that preemptively answered every question an acquirer would ask:
- Executive summary of business model
- Legal opinion letters from gaming counsel
- Skill-based gaming documentation
- Compliance program overview
- Sample user flows and screenshots
- Projected volumes and chargeback estimates
The Outcome
- ✓ Approved by a top-10 US acquirer within 45 days
- ✓ Clean MCC classification (not gambling)
- ✓ Launched in 38 states on day one
- ✓ Zero compliance-related processing interruptions in first 18 months
- ✓ Framework used to onboard second processor as backup
Key Insight
The difference between getting approved and getting rejected often comes down to presentation. Acquirers aren't gaming law experts — they're looking for red flags. A well-organized, proactive underwriting package that addresses concerns before they're raised signals that you're a sophisticated operator who understands the risks.
We've since used variations of this framework to help other skill-based gaming clients, fantasy sports platforms, and prediction market operators establish compliant payment rails.
Operating in a gray area?
High-risk doesn't mean impossible. Let's build a framework that works.
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