Published on November 17, 2013 by Tom Jones
The Unlawful Internet Gambling Enforcement Act was put in place in 2006, with the most prevalent part of the law placing an emphasis on financial institutions blocking transactions to and from online gaming sites. Seven years after the ill-advised law was created, it is now causing problems among states with regulated Internet gambling.
Nevada, Delaware, and New Jersey have all spent the past several years creating laws regulating online casinos. Over the past few months, Nevada has launched their first online sites, with New Jersey set to do so on November 26th. Operators of these sites, however, are finding that financial institutions have not yet adapted to the legalized form of gaming.
Operators are complaining that PayPal, American Express Co., and Bank of America Corp. have been declining transactions to regulated online sites. With only a few states having regulated the industry to this point in the US, financial institutions are erring on the side of caution.
"There are still things that can go wrong even with controls in place," said Steve Kenneally, Vice President of the American Bankers Association.
Visa and MasterCard have taken a different approach. The two credit card companies have updated their coding to allow for regulated online gambling transactions to go through. While the credit card companies have adapted, it is still up to the issuing bank whether the transactions are processed.
"Until all the kinks are worked out of this new regulated system, customers are going to continue to have their transactions declined," said analyst Brad Simmons. "The process to regulated online gambling has been grueling, and until federal laws change, there will continue to be obstacles for regulated online casinos."
While some credit card companies have started to adapt, American Express is hoping true to their company principle of not allowing their cards to be used for any form of gambling.
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