Mastercard and Visa online gambling crackdown

Mastercard and Visa have recently imposed restrictions on online gambling transactions to US customers. The following was reported by eGaming Review:

Mastercard crackdown leaves US players unable to pay

US-facing operators have been hit by an overnight crackdown on online gambling payments by credit card giant Mastercard. The US company is believed to have toughened its stance on the widespread practice of operators coding egaming transaction as other kinds of online commerce, which will all (sic) its US customers from using their cards to gamble online.

Rival US card giant Visa is rumoured to have taken a similar measure, although this could not be confirmed at the time of writing.

The action is a sign that banks and payment companies are preparing for implementation of America's Unlawful Internet Gambling Enforcement Act (UIGEA), which bans the facilitation of online gambling by payment companies. This was originally supposed to have been enforced from 1 December 2009, although the US treasury later approved a delay allowing companies until 1 June 2009 to comply.

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In the followup article it was established that Visa was also implementing the restriction on US customers:

Visa declining US egaming payments

The crackdown on US online gambling credit card payments that began on Wednesday is being operated by Visa as well as rival US credit card giant Mastercard, EGRmagazine has now confirmed, with tens of thousands of US online gamblers likely to have been affected.

As reported yesterday, US-facing operators were hit by an overnight tightening of restrictions on the use of credit cards for egaming transaction ahead of the implementation of America's Unlawful Internet Gambling Enforcement Act (UIGEA) law on 1 June, which bans the facilitation of online gambling by banks and other payment companies.

The action was at the time of writing confirmed as applying to US-registered cards issued by Mastercard, but rumours that a crackdown had also been launched by Visa had not been substantiated. However eGaming Review has now confirmed that these too are subject to the ban. Repeated attempts to use a US-registered Visa card by an eGaming Review reporter on PokerStars last night were declined, with the American poker giant sending an email in response that read:

Status: DECLINED.

Your credit card transaction has been declined. If your credit card information was entered correctly and you have sufficient funds, your transaction was probably declined due to Internet gaming restrictions set by your credit card issuer.

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So:

In order to better avoid of the USA anti-gambling radar, some gambling operators accepting US customers have been coding their Visa and Mastercard transactions in a manner as to not appear as gambling-related. The correct "internet gambing" merchant code is 7995; some operators have been putting their transactions through thus, and taking a chance as to whether or not the deposit goes through; others have not.


To put it another way: they've been trying to circumvent the system.


Since the February crackdown appears to have been applied retrospectively to January, players now face the prospect that their deposits - with which they will have had plenty of time to play, and lose or win on accordingly - will now almost certainly not be honoured by Mastercard and Visa, resulting in an effective chargeback. This may have a knock-on effect when it comes to winning players receiving their payments.


And while the general tone of the internet discussion on this matter has been one of condemnation of the US administration in the wielding of its prohibitionist axe, I'm personally interested to ask this question: why should we not lay the blame for this squarely at the door of the online gambling operators, still dealing to US customers, who tried to cheat the system in the first place?


Their motives were purely profit-driven in attempting to stay below the radar. But it is the players, who committed no wrongdoing, who may suffer as a consequence.


It is of course also the case that not all operators have been trying to cheat the system. Some, such as Pokerstars, have been coding their transactions upfront as "internet gambling"; in fact, in another EGR article they made a point of distancing themselves from the practice:

PokerStars does not, nor ever has engaged in the practices of mis-coded credit card transactions. We have therefore been unaffected by any crackdown by Visa or MasterCard to close down such mis-coded processing accounts.

So, all well and good for the folks who've behaved honestly.


But the casinos and sportsbooks that have been trying to put one over Mastercard and Visa, whatever the ultimate cost they pay as a result of this matter may be, do not deserve any sympathy.


They particularly do not deserve any sympathy from those players who may end up seriously inconvenienced, and possibly out of pocket, as a result of their duplicity.

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