\nBy REUBEN KRAMER, Staff Writer
\n\tNew Jersey\u2019s legal Internet casinos hope a credit-card code released Friday will spur big banks into finally greenlighting payments for online gambling, though there\u2019s skepticism about whether the code will have banks reversing blanket bans.
\n\tVisa, Mastercard and other card associations facilitate card payments, but the banks that issue the cards decide whether to decline or authorize a purchase.
\n\tAnd when it comes to Internet gambling, legal and otherwise, some of America\u2019s biggest banks continue telling their cardholders: no dice.<\/p>\n
\n\tMore than half of Mastercard transactions and more than one-quarter of Visa transactions are declined for legal online gambling in New Jersey, the state\u2019s chief casino regulator said in January.
\n\tA four-digit number \u2014 7995 \u2014 is a big reason why.
\n\tThat\u2019s the Merchant Category Code that the card associations have used for years to identify transactions coming from online casinos.
\n\tIt\u2019s the same code considered anathema by some of the nation\u2019s biggest banks, who refuse to authorize any 7995 transactions, fearing criminal liability for facilitating illegal gambling.<\/p>\n
\n\tIt\u2019s also the code assigned to legal online gambling transactions coming out of New Jersey.
\n\tBut the associations launched a new code \u2014 7801 \u2014 for transactions made at government-licensed online casinos. No longer will legal online bets be lumped in with illegal ones.
\n\tThe banks\u2019 hardline approach to online gambling is a holdover from the years when the practice wasn\u2019t legal anywhere in the country. (It\u2019s now sanctioned, to varying degrees, by New Jersey, Nevada and Delaware.)<\/p>\n
\n\tThe move has hamstrung New Jersey\u2019s legal operators, who have been forced to ask customers to fund gambling accounts using alternate methods such as wire transfers and e-wallets.
\n\tThose methods let gamblers get money into their accounts relatively quickly. But many Americans prefer to pay for online bets the same way they pay for other Internet purchases: with plastic.
\n\tIn 2006, after Congress passed the Unlawful Internet Gambling Enforcement Act, the federal government began clamping down on rogue offshore Internet betting outfits.
\n\tFor card-issuing banks, \u201cthe easiest way for them to comply was for them to say, \u2018Hey I block all 7995 transactions,\u2019\u201d says T.J. Sharkey, an executive at Vantiv Gaming Solutions, which handles most of the payment processing for New Jersey\u2019s legal online casinos.
\n\t\u201cEven after the opening of the Internet gaming landscape in the U.S., most of the issuers said, \u2018I\u2019m not going to change my blocking,\u2019\u201d Sharkey says. \u201cHence, we have these issues.\u201d
\n\tThose issues at least partly explain why Paddy Power, the European bookmaker and online casino juggernaut, has so far decided to sit on the sidelines in New Jersey, Nevada and Delaware, says Eamonn Toland, president of the publicly traded company\u2019s North American division.
\n\t\u201cWe knew the market couldn\u2019t possibly be the right size until the card-issuing banks started accepting payments,\u201d he says.
\n\tHe calls 7801 \u201ccrucial\u201d to bringing banks on board.\u201d The code \u201cmay be necessary but not sufficient,\u201d though.
\n\tThe legal Internet betting industry is still small, generating about $122.9 million in New Jersey last year, which was far less than widely predicted.
\n\tAn industry of that size is negligible to many banks, says Matthew Katz, CEO of CAMS, whose platform helps New Jersey\u2019s legal online casinos take payments and verify gamblers\u2019 age and location.
\n\tAnd there\u2019s the perceived legal risk of servicing underage gamblers or gamblers betting from outside New Jersey (state law requires gamblers to be within state borders).
\n\tAll considered, there\u2019s little incentive for banks to re-engineer their internal systems to involve themselves in a business that remains illegal in most the country, says Katz, who expects \u201ca slight increase\u201d in credit-card authorization rates now that 7801 is launched. \u201cI don\u2019t think it\u2019s going to be a silver bullet,\u201d he says.
\n\t\u201cThe banks are not set up to operate on a state-by-state basis, and the potential liability it creates for them is much greater than the revenue,\u201d he says. \u201cIt\u2019s not a priority.\u201d
\n\tDavid Rebuck, director of the state Division of Gaming Enforcement, declined to comment.
\n\tEhren Richardson, an analyst who\u2019s followed Internet gambling for years on behalf of tribal casino clients, agrees that the new code will be modestly helpful but that many banks won\u2019t reconsider their denials until the market grows.
\n\t\u201cIt\u2019s not big enough for them to pay attention,\u201d he said. \u201cThe processors like Vantiv have the challenges of having to go around and educate all these big banks.\u201d
\n\tMany of the banks likely already know that Internet gambling is legal in New Jersey. \u201cThey may not care,\u201d he said.<\/p>\n
No replies were posted for this topic.<\/p>\n","protected":false},"excerpt":{"rendered":"
By REUBEN KRAMER, Staff Writer New Jersey\u2019s legal Internet casinos hope a credit-card code released Friday will spur big banks into finally greenlighting payments for online gambling, though there\u2019s skepticism about whether the code will have banks reversing blanket bans….<\/p>\n","protected":false},"author":36,"featured_media":0,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[10],"tags":[],"class_list":["post-8863","post","type-post","status-publish","format-standard","hentry","category-latest-casino-news"],"_links":{"self":[{"href":"https:\/\/forumarchives.tmsites.net\/index.php\/wp-json\/wp\/v2\/posts\/8863","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/forumarchives.tmsites.net\/index.php\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/forumarchives.tmsites.net\/index.php\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/forumarchives.tmsites.net\/index.php\/wp-json\/wp\/v2\/users\/36"}],"replies":[{"embeddable":true,"href":"https:\/\/forumarchives.tmsites.net\/index.php\/wp-json\/wp\/v2\/comments?post=8863"}],"version-history":[{"count":0,"href":"https:\/\/forumarchives.tmsites.net\/index.php\/wp-json\/wp\/v2\/posts\/8863\/revisions"}],"wp:attachment":[{"href":"https:\/\/forumarchives.tmsites.net\/index.php\/wp-json\/wp\/v2\/media?parent=8863"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/forumarchives.tmsites.net\/index.php\/wp-json\/wp\/v2\/categories?post=8863"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/forumarchives.tmsites.net\/index.php\/wp-json\/wp\/v2\/tags?post=8863"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}