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Unless we've approved the merchant, account holders may not use PayPal to send or receive payments for any form of gambling activities, including but not limited to: payments for wagers, gambling debts, and gambling winnings, whether conducted online, in person, or through any other means of communication.
If you want to use PayPal on FanDuel, you need to have your bank account linked to your PayPal account as the preferred payment method. You can link your bank account through the Wallet tab on PayPal's website, and you can set your preferred payment option from the same page.