Online gaming in New Jersey has the support of many players, companies, and government officials, but the longtime ambiguity over Internet gambling in America has led to the unwillingness of some companies to become involved. Banks and credit card issuers are integral for the success of the gaming industry, yet conflicting laws and state regulation being incongruent with federal law is keeping those companies from processing online gaming transactions.
Some banks that participated in online gaming transactions before Black Friday, which was when PokerStars and Full Tilt Poker departed the United States market, had funds seized and audits performed. Their willingness to process transactions before that time – some miscoded and others in vague violation of the 2006 Unlawful Internet Gambling Enforcement Act (UIGEA) – brought trouble from the federal government, and they are not ready to welcome that same scrutiny again.
Which Banks are Out?
Bloomberg reported that credit cards like Visa and MasterCard issued by Bank of America, Wells Fargo, and American Express will not be permitted to process online gambling transactions in the United States. In addition, eBay’s PayPal will also stay out of the industry. The companies have stated that the rejections are a result of their current policies.
Smaller banks are rejecting such betting transactions in New Jersey and Delaware as well. The same problem has not been reported by Nevada online poker players, but the player base is much smaller and the industry is restricted to poker only.
Visa and MasterCard must allow the individual banks and card issuers to make their own policies. A Visa spokesperson told Bloomberg that Visa “updated its procedures to code newly legalized Internet gambling transactions so that financial institutions can identify and process them in states where they are allowed.” However, many banks are simply choosing not to do so. PayPal said that its “acceptable use policy” specifically does not permit its services for use with any online gambling companies.
Fears and Concerns
Steve Kenneally of the American Bankers Association put it very succinctly: “There’s still the uncertainty over Internet gambling and the liability that could fall on a bank.” He refers to UIGEA, which prohibits businesses from accepting online gambling payments. While the state laws should be a separate issue, the UIGEA is broadly written, and there is no precedent set as to how the federal government will view the issue.
State officials, like those in the Delaware Lottery, are in the process of meeting with the Delaware Bankers Association, and the same discussions are happening in New Jersey. However, the banks are wary and may not choose to change policy until the industry grows and establishes a friendly relationship with federal law.