American Gamblers Can No Longer Use Visa

Earlier in the year I reported that Mastercard is now blocking transactions between online gambling sites – including sports books, casinos and more – and American customers. At the time, I thought there was a good chance that Visa would follow their lead. Now it has happened.

Visa is now also blocking online gambling transactions, meaning that American customers who want to play some online blackjack or any of their other favorite games cannot use the two largest credit cards to do so. This decision hurts pretty much everyone. The online casinos will lose revenue from people who used to pay using Visa and Mastercard and don’t want to try another method. The players who prefer those two cards miss out on the ability to use them for online gambling. Also, the credit card companies themselves are missing out on the revenue from online gambling.

So why are they doing this? The thinking is that these decisions are due to the Unlawful Internet Gambling Enforcement Act (UIGEA) of 2006, which is slated to go into effect in June 2010. Originally it was set to take effect January 1, but a bipartisan petition to delay the implementation was accepted by the Justice Department and the Federal Reserve.

While the UIGEA cannot be used to punish online gamblers in any way, it can be used to seize the funds from “illegal” online gambling and fine or prosecute the financial institutions involved in the transactions. The financial institutions include banks, credit unions, credit card companies and more. What complicates matters is that nowhere in the UIGEA does it state what gambling is “illegal.” In fact, court rulings have found that UIGEA doesn’t make any type of online gambling illegal. It is only a way to enforce the existing gambling laws. However, online gambling is only expressly prohibited in four states. There is currently no federal ban on online gambling.

The financial institutions, however, aren’t willing to take any chances, since the federal government last year made a habit of seizing funds from online gambling and attempting to prosecute those involved. The lawfulness of those seizures is in question, but in a recession that has crippled the financial industry, many companies are unwilling to take the risk of drawing the ire of the federal government. That is why Visa and Mastercard are blocking online gambling transactions from American customers.

Bills have been introduced in both the House and Senate that would repeal UIGEA and they hope to see the floor sometime this year. In the meantime, for Americans who want to participate in online gambling (which is legal in 46 states), there are other payment options available at most online casinos, which can include wire transfers,  money orders and online payment companies such as eWallet. I have also heard conflicting stories about whether or not PayPal is an option.

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