Is that regulation or extortion?
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:
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’-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…-(more)
In the followup article, it was established that Visa was also implementing the restriction on US customers:
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’-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:
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…-”- (more)
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 “-internet gambing”- 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’-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 –- with which they will have had plenty of time to play, and lose or win on accordingly –- 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 “-internet gambling”– 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’-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’-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 (“-Intentionally mis-coding a CC transaction is a crime in many places around the globe.”- –- 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 –- actually, quite funny, so I’-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.
Bye bye UIGEA.
I asked Stern if it is in the best interests of his league to seek legalization of sports betting. He sighed with his head down, as if to emphasize the gravity of what he was going to say.
“-It has been a matter of league policy to answer that question, ‘-No,’- ”- he said. “-But I think that that league policy was formulated at a time when gambling was far less widespread —- even legally.”-
He went on to provide a brief lesson in history involving J. Walter Kennedy, the NBA commissioner from 1963-75. “-Walter Kennedy testified in Congress many years ago, probably over 40, that gambling —- any gambling, not just sports —- should not be allowed in Atlantic City, that gambling shouldn’-t be expanded,”- said Stern, who was a lawyer for the NBA at that time. “-I remember it because I wrote a statement. It was the U.S. association of attorneys general, the U.S. attorneys association, the association of chiefs of police, the clergy of all denominations —- all lined up to say that expanding [was wrong] …- and I don’-t think lotteries were legal back then.
“-So that was the sin. And that’-s the way sports grew up in their opposition.”-
What has changed, Stern acknowledged, is that the NBA can no longer oppose gambling on moral grounds.
“-Considering the fact that so many state governments —- probably between 40 and 50 —- don’-t consider it immoral, I don’-t think that anyone [else] should,”- Stern went on. “-It may be a little immoral, because it really is a tax on the poor, the lotteries. But having said that, it’-s now a matter of national policy: Gambling is good.
“-So we have morphed considerably in our corporate view where we say, Look, Las Vegas is not evil. Las Vegas is a vacation and destination resort, and they have sports gambling and, in fact, there’-s a federal statute that gives them a monopoly of types [on sports betting]. And we actually supported that statute back in ‘-92.”-
Stern has long maintained that he doesn’-t want the NBA to turn into a point-spread league, and he talked about how NBA games create little of the sports-betting handle in Vegas, and that the majority of NBA fans have scant interest in the spread. I responded by noting that the NBA has created a variety of constituencies, including fans who wear NBA clothing, who play NBA video games and who view Kobe Bryant and LeBron James as Hollywood-level stars, which is not to forget the fans from any number of countries who follow the NBA patriotically via Dirk Nowitzki, Tony Parker or Yao Ming.
Why not make room under the big tent for the minority of fans who like to bet on NBA games?
“-OK, but then you’-re arguing there may be good and sufficient business reasons to do that,”- Stern said. “-And I’-m going to leave the slate clean for my successor.”-
He smiled and added, “-But it’-s fair enough that we have moved to a point where that leap is a possibility, although that’-s not our current position.”-
There you have it. That is a breakthrough. You don’-t hear baseball commissioner Bud Selig —- and you surely don’-t hear NFL commissioner Roger Goodell —- saying that legalized betting on their games is a “-possibility.”- Sports betting is their third rail, and they’-ve long maintained the anachronistic appearance of having nothing to do with it. (Even though illegal sports betting has helped turn the NFL into the No. 1 sport in America.)
As Stern acknowledged, gambling has gone mainstream since the scandal of 1919. The gambling industry will continue to grow as more and more casinos are built throughout the nation, such as the casino now being planned by Cavaliers owner Dan Gilbert for downtown Cleveland nearby Quicken Loans Arena.
Without committing himself in any way, Stern acknowledged that sports betting could create a new stream of revenue for the NBA —- not unlike the interest that March Madness betting pools have created for the NCAA tournament.
“-You’-re right about the threat that we perceive, and we stay on it,”- said Stern of the menace of illegal gambling rings. “-I think the threat is the same legal and illegal —- the threat is there.
“-Gambling, however it may have moved closer to the line [of becoming acceptable], is still viewed on the threat side,”- he said. “-Although we understand fully why, buried within that threat there may be a huge opportunity as well.”-
[H.R. 2266, Reasonable Prudence in Regulation Act, and H.R. 2267, the Internet Gambling Regulation, Consumer Protection, and Enforcement Act]
Safe and Secure Internet Gambling Initiative spokesman Michael Waxman responds to a House Committee on Financial Services hearing on Internet gambling on December 3, 2009:
[H.R. 2266, Reasonable Prudence in Regulation Act, and H.R. 2267, the Internet Gambling Regulation, Consumer Protection, and Enforcement Ac
“-The United States’- War against Online Gambling”- –- An analysis of how the US sought and failed to stamp out internet gambling.
“-The road to nowhere –- European gambling law from Schindler to Bwin Liga and beyond.”-. An analysis of European Gambling Law by Niall O’-Connor
The journey from the European Court of Justice’-s ruling in Schindler to its most recent ruling in Bwin Liga has been a long one, during which, many lawyers have enriched themselves. Little has actually been settled to date, and many fear that under the leadership of Michel Barnier, that that is unlikely to change.