U.S. Credit Card Companies More Likely to Allow Online Gambling Payments

When the UIGEA law was passed in 2006, the U.S. Congress believed it had found a way to scare payment processing companies away from the online gambling industry. That was the case for the first few years of the UIGEA’s existence, but the law has never acted as the deterrent most lawmakers thought it would.

American Credit Card Companies Gaining Confidence

These days, only PayPal’s owner, Ebay, seems to take the UIGEA law seriously. Most of the top domestic credit card companies, including VISA, MasterCard, Diners Club, and American Express, allow for payments to online gaming websites. Amex is still somewhat more reticent than the other companies, but all allow payments of some sort. Some allow withdrawals from the online gambling sites.

Why Credit Card Companies Have Gotten Bolder

Forbes published a Marc Edelman article recently which told why those companies are so bold these days. If a gaming website obtains an opinion letter from a lawyer stating the game’s legality, most of the credit card services will allow payments to and from those websites. Such an opinion letter provides a legal justification for allowing such transactions, while putting the onus on the business making the claims–and its lawyer.

The United States now has 1.2 million lawyers in it. According to Edelman, the number of legal experts is so great that gaming companies can cherry-pick their legal opinions. So many exist that you can always find one to render a summary judgment on your legal situation, says Forbes. Under those conditions, virtually any gaming company can get the legal justification to get around the UIGEA.

VISA and MasterCard More Accepting All the Time

The article suggested that more reputable companies like TradeSports and HotRoster had no trouble finding legal advisors who would write opinion letters. What is more remarkable is the fact that VISA and MasterCard have been accepting of letters from more marginal online gaming sites.

The longer such decisions go unchallenged by the U.S. Justice Department, the more likely the big credit card companies are going to loosen their own standards for gaming transactions. In the end, it’s all about processing fees and interest payments, so VISA and MasterCard are happy to handle the transactions, if they’re legal.

Justice Department Has a Choice

Under those circumstances, the Justice Department is faced with one of two stark choices. One, they can start to investigate transactions between the credit card companies and the online casinos and poker rooms, which would no doubt have a dampening effect on the process. Two, they could push to have the federal gaming laws repealed, thereby acknowledging they don’t have the will or resources to challenge millions of credit card payments to those sites. That would be an admission that gaming sites and credit card companies have effectively changed American laws, but that would only be a tacit admission of something that seems to have happened already.

US Credit Card Companies at Crossroads

As 2015 opens, American credit card companies stand at a crossroads when it comes to online gambling. Nothing is cut-and-dried just yet. Even in the licensed and legal online gambling market of New Jersey, MasterCard only approved about 75% of online casino deposits in 2014. With VISA, that number dropped to less than 45% of deposits. It’s clear that both credit networks want to work with the gaming industries, but local outlets still aren’t entirely certain whether they can trust the system.

At the same time, several states are considered legalizing online casinos and card rooms themselves: California, New York, Massachusetts, and Pennsylvania. New Jersey already lobbies the credit card companies to be more accepting of their gaming laws and more supportive of their Internet gambling industry. If more big states enter the gaming niche, those credit card companies are going to hear more and more arguments all the time. When it becomes a widespread and accepted form of gaming, then VISA and MasterCard should feel quite secure with federal laws.

Projections for Online Gambling

J.P. Morgan believes the country is on the brink of such a time. The finacial institution predicted that 7 U.S. states would have licensed online gambling by 2017, and California, Pennsylvania, and New York would be among those seven states. By 2020, the company predicted that the United States would have 20 states which have legalized, licensed, regulated, and taxed such activities. If so, then the credit card companies will be emboldened by that state of affairs, and push ahead with unfettered online gambling transactions.

About Cliff Spiller

Cliff Spiller has been an online writer for 14 years. He worked for Small World Marketing for a decade, where he covered topics like gaming, sports, movies, and how-to guides. Since 2014, he has blogged about US and international gambling news on BestOnlineCasinos.com, USPokerSites.com, and LegalUSPokerSites.com

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