Mastercard and Visa online gambling crackdown

Credit cards Mastercard and Visa have recently imposed restrictions on online gambling transactions to US customers, in preparation for the implementation of the anti-gambling legislation in June this year.

The following was reported by eGaming Review:

Mastercard crackdown leaves US players unable to pay

US-facing operators have been hit by an overnight crackdown on online gambling payments by credit card giant Mastercard. The US company is believed to have toughened its stance on the widespread practice of operators coding egaming transaction as other kinds of online commerce, which will all (sic) its US customers from using their cards to gamble online.

Rival US card giant Visa is rumoured to have taken a similar measure, although this could not be confirmed at the time of writing.

The action is a sign that banks and payment companies are preparing for implementation of America&#8217-s Unlawful Internet Gambling Enforcement Act (UIGEA), which bans the facilitation of online gambling by payment companies. This was originally supposed to have been enforced from 1 December 2009, although the US treasury later approved a delay allowing companies until 1 June 2009 to comply&#8230-(more)

In the followup article, it was established that Visa was also implementing the restriction on US customers:

Visa declining US egaming payments

The crackdown on US online gambling credit card payments that began on Wednesday is being operated by Visa as well as rival US credit card giant Mastercard, EGRmagazine has now confirmed, with tens of thousands of US online gamblers likely to have been affected.

As reported yesterday, US-facing operators were hit by an overnight tightening of restrictions on the use of credit cards for egaming transaction ahead of the implementation of America&#8217-s Unlawful Internet Gambling Enforcement Act (UIGEA) law on 1 June, which bans the facilitation of online gambling by banks and other payment companies.

The action was at the time of writing confirmed as applying to US-registered cards issued by Mastercard, but rumours that a crackdown had also been launched by Visa had not been substantiated. However eGaming Review has now confirmed that these too are subject to the ban. Repeated attempts to use a US-registered Visa card by an eGaming Review reporter on PokerStars last night were declined, with the American poker giant sending an email in response that read:

&#8220-Status: DECLINED.

Your credit card transaction has been declined. If your credit card information was entered correctly and you have sufficient funds, your transaction was probably declined due to Internet gaming restrictions set by your credit card issuer&#8230-&#8221- (more)

So:

In order to better avoid of the USA anti-gambling radar, some gambling operators accepting US customers have been coding their Visa and Mastercard transactions in a manner as to not appear as gambling-related. The correct &#8220-internet gambing&#8221- merchant code is 7995- some operators have been putting their transactions through thus, and taking a chance as to whether or not the deposit goes through- others have not.

To put it another way: they&#8217-ve been trying to cheat the system.

Since the February crackdown appears to have been applied retrospectively to January, players now face the prospect that their deposits &#8211- with which they will have had plenty of time to play, and lose or win on accordingly &#8211- will now almost certainly not be honoured by Mastercard and Visa, resulting in an effective chargeback. This may have a knock-on effect when it comes to winning players receiving their payments.

And while the general tone of the internet discussion on this matter has been one of condemnation of the US administration in the wielding of its prohibitionist axe, I would personally like to ask this question: why should we not lay the blame for this squarely at the door of the online gambling operators, still dealing to US customers, who tried to cheat the system in the first place?

Their motives were purely profit-driven in attempting to stay below the radar. But it is the players, who committed no wrongdoing, who may suffer as a consequence.

It is of course also the case that not all operators have been trying to cheat the system. Some, such as Pokerstars, have been coding their transactions upfront as &#8220-internet gambling&#8221– in fact, in another EGR article they made a point of distancing themselves from the practice:

PokerStars does not, nor ever has engaged in the practices of mis-coded credit card transactions. We have therefore been unaffected by any crackdown by Visa or MasterCard to close down such mis-coded processing accounts.

So, all well and good for the folks who&#8217-ve behaved honestly.

But the casinos and sportsbooks that have been trying to put one over Mastercard and Visa, whatever the ultimate cost they pay as a result of this matter may be, do not deserve any sympathy.

They particularly do not deserve any sympathy from those players who may end up seriously inconvenienced, and possibly out of pocket, as a result of their duplicity.

There&#8217-s been, predictably enough, quite a lot of discussion of this move that has such potential sweeping effects on the industry: see the No more Mastercard article at Bookmakers Review, and the Mastercard blocks US poker discussion at 2+2 Poker (&#8220-Intentionally mis-coding a CC transaction is a crime in many places around the globe.&#8221- &#8211- I quite agree)- also my own Mastercard and Visa online gambling crackdown article, and one tiny piece of mainstream media coverage, the Timesonline online gambling comment &#8211- actually, quite funny, so I&#8217-ll quote it:

Operators including PokerStars which continue to defy the US ban have been hit by a crackdown on internet gambling payments by Mastercard and Visa, the credit card companies.

Great. The one piece of mainstream media coverage gets it completely wrong. :D

Betfairs Liability in relation to its software failing

As somebody who likes to &#8220-back and lay&#8221- on UK horse racing, I was more than annoyed, when having placed a bet on a UK horse race, Betfair&#8217-s software malfunctioned, meaning that I was unable to lay off my bet as was my intention.

To those of us that engage in backing and laying, the result of the race is irrelevant- we are trading on price movements and price movements alone.  It was my belief (mistaken) that the contract that I had entered into with Betfair, would ensure that at all times Betfair would provide me with the means to back and lay, and that where it was unable to do so, the company would rule that as a proper market had not been formed on the race, my bet would be declared void, and my stake monies would be returned.

Alas, this was not so, as the following reply from Betfair makes clear-

&#8220-As the site was not available to any customers between 2 &#8211- 4pm, no bets were placed during this time and as this was due to matters beyond our control, our terms and conditions (11.3) state that:

We are not liable for the failure of any equipment or software howsoever caused, wherever located or administered, or whether under our direct control or not, that may prevent the operation of our betting services, impede the placing of orders for bets or the matching of bets, or prevent you from being able to contact us. In particular you should be aware that if you place a bet with the intention of subsequently placing a separate bet to reduce the liability incurred by the initial bet, there can never be a guarantee that the Exchange will be available at the point you wish to place the subsequent bet.&#8221-

As it happens, the race concerned was the 2.45 at Fontwell, which somewhat contradicts Betfair&#8217-s statement that- &#8220-As the site was not available to any customers between 2 &#8211- 4pm, no bets were placed during this time.&#8221-

That aside it would seem that I have been snared by Betfair&#8217-s all encompassing exclusion clause, to the effect that-

&#8220-In particular you should be aware that if you place a bet with the intention of subsequently placing a separate bet to reduce the liability incurred by the initial bet, there can never be a guarantee that the Exchange will be available at the point you wish to place the subsequent bet.&#8221-

I do not accept that this exclusion clause is fair or equitable, and accordingly I shall seek legal advice as to its efficacy.  In the meantime, I will no longer use my Betfair account.

Betfair are rumoured to be lining up for a 1.5bn flotation- it is a disgrace that they do not have back up servers to prevent their site from crashing.  When such an occurrence does take place, it is in Betfair&#8217-s interest to return all bets.  Betfair, the revolutionary betting company, have much to learn about the concept of goodwill.

BetFair (via Right2Bet) are furious at the new French gambling laws.

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Right2Bet (operated by BetFair):

A Senate hearing on Tuesday looked at ways in which the French authorities could make it more difficult for operators not licensed in France from offering their products to French citizens.

They are now looking at adding wording to the new gambling bill, set to &#8216-open up&#8217- the market in time for the World Cup this summer, that makes it illegal for any French-based company from taking advertising or even simply linking to certain sites.

Those sites based inside France, including multi-nationals with French subsidiares, notably Google, found to be &#8216-aiding and abetting&#8217- (no pun intended) foreign operators could face fines of up to €100,000.

This is just another example of the French bill being a facade. They want to appear like they are liberalising their market, to fit in with EU rules, but clearly they are going to make it as hard as possible for foreign operators to offer their services to value-deprived French citizens, and are even looking to make it difficult for those who do apply for a French license.

At what point is someone going to wake up and say &#8216-enough is enough&#8217-? Don&#8217-t wait for someone else to do it, sign our petition today and add your voice to the thousands of EU citizens already calling for fairness in online gambling.

Our previous post

France = Communist China

France will soon block access to the BetFair and InTrade websites.

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Gambling operators that are not be licensed by France will have their web access blocked for the French public. The license would require that servers be located within French territory.

France = Communist China

Vernon Smith is bullish on event derivative markets (a.k.a. prediction markets).

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Vernon Smith (via):

So far as new applications of derivatives markets I think one possibility is we may see more people making, creating derivatives markets, betting markets on policy, public policy outcomes. We&#8217-ve already seen that with regard to the Federal Reserve. There is a market now in which people are able to make, take positions on the likelihood of a change in the Federal Reserve Bank policy at their next meeting of the Federal Open Market Committee, so and these markets are concerned with the question of what the Federal Reserve Bank rate will be set at. So I think we may very well see more of these kinds of markets and this could very well provide some indication of how the participants in these markets evaluate some of the policy proposals that governments are making.

Watch the video (download this post if your feed reader does not show it to you):

You cant have accumulator bets on the weather of neighboring regions…

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&#8230- because &#8220-if it snows in one city, it&#8217-s likely to snow in another city.&#8221- In other words, these weren&#8217-t independent events.

Via Barry Ritholtz (author of Bailout Nation)