Call, raise, fold … denied? Banks reject use of plastic for online gambling sites

As more states debate legalizing online gaming, the three states that permit Internet wagering have experienced few complications beyond some banks and financial institutions refusing to approve credit and debit card transactions.

Credit card issuers J.P. Morgan Chase, Wells Fargo, American Express won’t allow gamblers to use their credit or debit cards to deposit money into online gaming accounts. That goes for both online poker and sports betting in Nevada.

“We don’t allow credit card transactions for this activity,” said Steve O’Halloran, director of public relations and public affairs for Chase Card and Merchant Services.

Nevada, Delaware and New Jersey all offer online gaming, whether its poker, slot machines or sports wagering.

Sanette Chao, a spokeswoman for American Express, said the financial services company “prohibits the use of the card for gambling services.”

“Gambling services, historically, account for a high number of card member credit losses and customer service disputes,” Chao said in an email.

It’s a similar story at Wells Fargo, according to Natalie Brown.

“In compliance with regulation GG (Unlawful Internet Gambling Enforcement Act of 2006), we prohibit the use of consumer credit cards for Internet gambling,” said Brown, vice president of consumer lending communications with Wells Fargo. “The networks (Visa, MasterCard and American Express) monitor the merchant category codes and block charges that don’t comply with federal regulations.”

Brown said Wells Fargo also has controls in place to monitor for regulatory compliance.

In Nevada, Caesars Entertainment and Station Casinos operate online poker sites, while Station Casinos, William Hill, CG Technology (formerly Cantor Gaming) and Nevada Sports Books offer online and mobile sports wagering.

“What the industry has done is take a conservative approach or response to the legalization of online gambling,” said Tobin Prior, CEO of Ultimate Gaming, a subsidiary of Station Casinos Inc. “That can be frustrating, but we work with customers to find alternatives.”

Prior said Ultimate Gaming customers in Nevada and in New Jersey have options to fund their accounts, including cash deposits at any Station Casino in Southern Nevada or at the Taj Mahal casino in Atlantic City.

Other options include electronic check or wire transfer, Prior said.

“You wish everything went smoothly,” said Seth Palansky, a spokesman for the World Series of Poker and Caesars Interactive Entertainment. “It’s not the reality. It’s a new business.”

Palansky said there is an ongoing education regarding online gaming transactions in Nevada and the two other states where it’s legal.

WSOP.com and Ultimate Poker, two websites licensed by Nevada regulators, averaged 110 and 90 transactions per day, respectively, for the week ending Friday, according to Pokerscout.com.

Outside the U.S., Pokerstars.com was the largest website with an average of 25,500, followed by 888poker averaging 2,900, the industry website reported.

Wells Fargo and other financial institutions are concerned about processing illegal bets, including those placed by underage gamblers or by customers who might not be physically present in Nevada when a bet is made.

“The potential for fraud is way lower than it was previously,” Prior said. “We have proven we can verify a customer’s age and where they are playing. Denying plastic … is holding back industry growth potential.”

CG Technology is unusual because it accepts credit and debit cards to open accounts. The bookmaker, which operates eight sports book in Southern Nevada and online race and sports betting apps statewide, does not take the cards directly, but uses a vendor payment processor.

“We cannot accept credit for gaming transactions,” CG Technology said in a statement. “Our vendor payment processor processes a cash advance on credit cards. This is the method used since inception of the program (in March).”

The bookmaker added that it’s “worth noting that transaction volumes for (credit and debit cards) are very low.” CG Technology is “largely a cash business.”

The rejection of credit cards to deposit money into accounts comes at a crucial time for the online and mobile gaming business. A H2 Gambling Capital report expected mobile gaming to reach $25.8 billion in global gross win by 2018. That would equate to about 5 percent of all gambling, according H2 Gambling Capital.

Joe Pappano, senior vice president and general manager of Vantiv Gaming Solutions, is confident acceptance of credit cards will come, but it will take a few years as gambling and banking regulators, online operators and politicians need to cooperate.

“We’ve been processing payments for banks for over 40 years electronically,” Pappano said. “We handle payments for many e-commerce sites, so we’ve taken that same infrastructure and adapted it for Internet gaming.”

Pappano said banks can be cautious when it comes to processing online gaming payments. Launched in October, Vantiv Gaming Solutions, based in Cincinnati, and is a subsidiary of Fifth Third Bank, has been processing Visa and MasterCard in Nevada, Delaware and New Jersey.

“That’s why we have educate them … to sustain positive movement in I-Gaming,” he said. “You have to remember it has only been legal for about seven months, starting in Nevada then Delaware and New Jersey.”

Pappano attributed banks’ reluctance to approve gaming transactions to Congress passing the Unlawful Internet Gambling Enforcement Act in 2006. The federal law banned businesses from accepting payments for illegal online bets.

Prior reminded banks that betting online is legal in these three states, just as is using a credit or debit card to shop online.