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Online Gambling customers not a safe bet for banks

Online-Betting-TypesCredit card issuer banks in the US like Bank of America Corp., Wells Fargo & Co. and American Express Co., along with EBay Inc.’s PayPal have refused to allow credit card transactions for online gambling, which was recently legalised in the US.

States in the US where online gambling is legal include Nevada, which introduced online betting on April 30 this year, followed by Delaware on Oct 31. New Jersey will follow suit from 26 Nov 2013.

However, this budding industry that is estimated to reach USD 7.4 Bn in annual revenue in four years, according to the researcher H2 Gambling Capital, will definitely face a setback with this policy of banks in the US.

According to reports, major concerns of these banks include potential liability for illegal bets placed with their credit cards, such as underage gambling or a customer gambling online without being physically present in a state where online gambling is legal.

Visa Inc. and MasterCard Inc. both allow online gaming transactions on their networks in states where it is legal. But the final decision rests with the credit card issuing bank.

After the ‘Unlawful Internet Gambling Enforcement Act’ was passed in the US in 2006, the banks programmed their card-payment systems to reject gambling transactions. Now that online gaming is legalized in some states, state lottery official and corporations are trying to get the banks to alter their systems to accept these transactions.

Bank of America and PayPal are reported to possibly review and alter internal policies to allow online gambling in future. Wells Fargo and Discover Financial Services both cite federal compliance issues as the reason to decline online gambling transactions. American Express on the other hand does not allow gambling transactions of any kind.

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