Though real money online betting is now legalized in three states - Delaware, New Jersey, and Nevada - not all banks are willing to process the related financial transactions, this according to a report Friday by Bloomberg.
PayPal, American Express, and others denying transactions
Major banks like Wells Fargo, American Express, PayPal, and Bank of America are refusing transactions related to Internet-based betting, says Bloomberg, pointing to concerns about liabilities that could arise if underage bettors access the sites using bank-issued cards, for example, among other worries.
"There are still things that can go wrong even with controls in place. Does the revenue I get offset the potential downside?" asked Steve Kenneally, the vice president of regulatory compliance at the American Banking Association, a Washington D.C.-based industry organization.
"There’s still the uncertainty over Internet gambling and the liability that could fall on a bank," he said.
Players in Nevada and Delaware have had issues
So far, only two states have launched real money online betting websites - Nevada and Delaware. In both states, players seeking to access the sites have reported transactions being declined when they attempted to use their credit cards.
A Nevada gaming officials told Bloomberg that the state is attempting to work with banks to clear up the issues residents are having.
The burgeoning U.S. online betting market has been the subject of much attention this year, and with what is anticipated to be the most high-profile launch - the November 26 start of online wagering in New Jersey - the industry is apt to attract even more scrutiny.
New Jersey gaming regulators, and its long-struggling casino industry, are banking on a smooth launch of the state's brand-online betting market, and problems surrounding credit card transactions could make for a rocky start.
Though it remains to be seen which banks' customers, if any, will have trouble logging on in New Jersey, major providers Visa and Mastercard told Bloomberg that they will process transactions in states where such sites are legal.
Federal ambiguity also cited
Another issue for the banks is the fact that online gambling remains unregulated at the federal level.
The general ambiguity that that situation presents makes some banks wary to process transactions, even in states where Internet-based wagering has been legalized. Still, in the absence of federal regulation, we are likely to see continued reticence from financial institutions, even as access to Internet poker and other casino games becomes more widespread as state by state regulation proliferates.
As for federal action on the issue of online betting regulation, there are few who believe that there will be any movement anytime soon. With the well-known partisan chasm still causing gridlock and griping in the Congress, it is unlikely that support can be mustered to pass an online betting bill.
Though legislation continues to float in D.C., with an addendum to New York Representative Peter King's bill coming out this week, even staunch supporters of regulating real money online poker and other games at the federal level such as powerful Nevada Senator Harry Reid, don't see the current climate as being conducive to success. Reid has said many times this year that he even has doubts for federal movement in 2014.
