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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.
You can indeed use PayPal for gambling. The best legal online casinos, sportsbooks, racebooks and poker rooms accept PayPal deposits, and they also offer quick withdrawals.