Signing up for an online round of Texas Hold’em used to be as simple as purchasing a pair of pants on LandsEnd.com: simply fill in your credit card information and submit. However, the world of online gambling recently was rocked, as credit card giants Visa and Mastercard took steps to curtail credit card usage for online gambling.
MasterCard was the first to block internet poker players and other gamblers from using their credit cards to deposit money on online gambling sites, and last week Visa followed suit. While neither Visa or MasterCard have announced their reasons for the crack-down, many speculate that the credit card giants’ moves came in anticipation of the new Unlawful Internet Gambling Enforcement Act (UIGEA), which was passed in 2006 and is due to step into effect on June 1 this year.
The UIGEA calls for the blocking of all “unlawful Internet gambling transactions,” a phrase that many gambling proponents denounce as too vague to properly enforce. Lobbying efforts pushing this argument so far have succeeded in postponing the implementation of the new internet gambling law for another six months, from December 1, 2009 to June 1, 2010.
Internet gambling has been sharply on the rise, and credit cards have been key players (no pun intended) in enabling this increase. Since 1997, online gambling has doubled every year, spurring a fierce legislative fight to get online gambling more closely regulated. Consumer advocates, however, worry that introducing further government regulations of online gambling will amount to little more than legalizing it through the back door.
Consumer advocates point to the risk for consumers: 15 million people display some sign of gambling addiction, and young adults are particularly susceptible: according to studies, 76 percent of 18-year-olds engage in gambling. With the proliferation of student credit cards, college students are at even more vulnerable; about three out of four students now have a credit card, students are very comfortable with the internet, and most have 24/7 access to free, high-speed connections in dorm rooms and throughout campus.
The Visa and MasterCard crack-down affects almost all credit cardholders, with the exception of those using Discover and American Express. Visa and MasterCard are the world’s largest electronic payment processing companies; every single credit card transaction charged to cards issued by e.g. Citicard, Bank of America, Chase, Capital One, and other are processed through either Visa or MasterCard. In short, if the ban remains in effect, all online gambling transactions using credit cards bearing the Visa or MasterCard logo will be blocked.
It remains to be seen if the Visa and MasterCard crack-down is a long-term policy change or a short-term exercise. However, don’t expect online gambling sites to fold just because the two credit card giants have withdrawn their support: online players still have a variety of internet payment options available, including Echecks, Ewalletexpress and Usemywallet, which facilitate quick and secure bank-to-online-casino transfers. And as long as payment options are available, consumers are likely to continue to “shuffle up and deal.”
