Even though online gambling is now legal in three states, several major credit card companies in the U.S. are refusing to be a part of the process. Representatives from American Express, Chase, and Wells Fargo all recently said that holders of their credit and debit cards are unable to deposit money into online gambling accounts using the cards. American Express spokeswoman Sanette Chao shed some light on the issue, saying that gambling-related credit transactions typically involve more customer losses and service disputes than other types of transactions. As such, it is too much of a risk for these credit card companies to permit online casino transactions at this time.
Risky in Other Ways
Enabling online gambling transactions could be risky for these companies in other ways, as well. The Unlawful Internet Gambling Enforcement Act of 2006 forbids banks to be involved in the exchange of money in online gaming. Large corporations like Wells Fargo don't want to put themselves in a position in which they could face consequences for breaking the law. Wells Fargo representative Natalie Brown said her company prohibits the “use of consumer credit cards for Internet gambling” for “compliance” reasons.
A Conservative Response
Ultimate Gaming CEO Tobin Prior refers to the credit card industry's policy as a “conservative response . . . to the legalization of online gambling.” He calls their stance “frustrating,” saying the online gaming industry's growth is being stunted by refusals from American Express, Wells Fargo, and the like. Online casinos aren't without recourse, however; Prior says his company is willing to help customers "find alternatives" for depositing their money with online casinos. These alternatives include in-person cash deposits, electronic checks, and wire transfers.
Visa and MasterCard: Braving the Waters
In spite of some companies' fears, Visa and MasterCard have announced that they will allow online casino transactions in states where the activity is legal. Spokeswoman Rosetta Jones indicated that Visa has come up with a code that identifies gaming transactions and flags those that occur in non-legal states. By scrutinizing customer activity and whereabouts, Visa is able to avoid putting itself at risk while simultaneously satisfying customer needs.
Bank of America may follow in Visa and MasterCard's footsteps some day soon. Spokeswoman Ann Pace said the company plans to consider allowing online casino transactions in the future.
Fears of Breaking the Law
Companies like Wells Fargo are afraid that processing transactions of this nature would be illegal according to the Unlawful Internet Gambling Enforcement Act. They also fear that they could inadvertently break the law by processing payments from underage gamblers. In the U.S., the act of wagering for money is forbidden for younger people of a certain age. In some states, the legal gambling age is 18. In others, it is 21.
Yet another fear is that the companies might unwittingly process transactions initiated by gamblers who are not within the physical boundaries of Nevada, New Jersey, and/or Delaware. U.S. law specifically states that online gamblers must be physically present within the state in which they bet online (read more).
CG Technology: Finding Alternatives
Nevada bookmaker CG Technology has accepted credit and debit cards from people wishing to open an account since the company's inception in March of 2013. A representative from CG Technology said that, although they do not accept credit cards for actual gaming transactions, they employ a vendor payment processing program that makes use of credit card cash advances. Interestingly, the number of credit and debit card transactions processed by the company is low. The representative explained that his company is largely a “cash business.”
One way around the credit card dilemma is for online gamers to make use of e-wallets when depositing and receiving money. E-wallet transactions are virtual and instant, making it easy for gamers to take care of business quickly and get on with the fun. Because e-wallet companies are not banks, they are not bound by the same laws as Wells Fargo, Chase, and other financial institutions. Three popular e-wallet choices are Neteller, Skrill, and Click2Play. A fourth popular e-wallet, PayPal, does not participate in online gaming transactions at this time, according to spokesman Jeff Rutledge. We must not forget a new virtual currency called Bitcoin that is becoming increasingly popular in the online gambling environments.
Wire transfers through Western Union is another possible way to conduct financial business with online casinos. Because these companies are not banks, they can enter into financial transactions with online casinos without breaking the law. Unlike e-wallet transactions, wire transfers usually take several days, making the method less convenient for some people. Note: It is important for bettors to realize that some offshore casinos do not accept deposits through wire transfer. Casino guidelines should be read thoroughly before gaming commences.
Using Credit Cards at Offshore Sites
American credit cards are more likely to be accepted at offshore casino sites than home-based online casinos at this time. To protect card holders' security, credit companies often require verification that the transaction at hand is legitimate. This can be accomplished through the use of a special password or a personal phone call to the company.
People who use credit cards to deposit money at online casinos should be aware that these transactions are often regarded as “cash advances.” A cash advance typically costs more than a regular credit card transaction. Online bettors should be aware that it is often easier to deposit money via credit card than to receive winnings via credit card. To collect winnings, e-wallets are a good alternate choice.
Joe Pappano: Change Will Come
Vantiv Gaming Solutions VP Joe Pappano believes that major credit cards will eventually become receptive to transactions with online gaming companies. He reminds impatient critics that the U.S. online gambling industry is still in its infancy. Bankers and politicians simply need more time to iron out the kinks that inevitably accompany a ground-breaking industry. Until then, those that are determined to play online games in Nevada, New Jersey, and Delaware are sure to find ways around the restrictions that exist.