Citibank Agrees To Ban Credit Card Gaming

by Mike Godfrey, Tax-News.com, New York

19 June 2002

Although the US Congress is having problems trying to craft a bill that would ban on-line betting and gaming, the country's prosecutors are having more success in controlling what they see as morally reprehensible conduct through suasion applied to the credit card companies through which many offshore gaming sites process their transactions.

New York Attorney General Eliot Spitzer announced on Friday that Citibank, the largest credit card issuer in the US, has joined Bank of America, MBNA and Chase Manhattan Bank in agreeing to block all online gambling transactions that use its credit cards.

Spitzer said that the agreement is expected to significantly reduce illegal, underage and potentially addictive Internet gambling, Spitzer said. The agreement applies to all online gambling transactions, not just in New York, but also involving casinos and sports books operating offshore.

'Americans now waste $4 billion a year on this pernicious form of gambling,' Spitzer said. 'With this agreement, we will cut off an enormous line of credit that was a jackpot for illegal offshore casinos.'

'Citibank agreed to take these steps to help alleviate concerns raised by the attorney general about the impact that gambling on credit may have on New York residents,' said Citibank spokeswoman Maria Mendler, adding that online gambling is associated with higher rates of credit card fraud and delinquency.

Citibank also agreed to pay $400,000 to nonprofit groups that counsel and help families hurt by gambling addictions, the company said.

Of course the credit card companies are not turning away a lucrative source of revenue and a prime source of new customers simply for the good of their immortal souls. New York prosecutors were successful in attacking offshore gaming site operator Jay Cohen under the 1961 Wire Act, and no doubt threaten the card issuers with court proceedings if they don't toe the line.

The problem with the proposed legislation in Congress, and it applies equally to credit card bans, is that there is no way of knowing whether an Internet gambler is under-age or a potential addict, so that the result of a ban is to deprive normal grown-ups of an innocent pastime which they have every right to enjoy. Except of course that it won't work: as the authorities didn't learn through Prohibition, people will just find a way around the law if it is ridiculous, and in the case of on-line gambling there are plenty of alternative payment systems which casinos can make available to their customers.

For a survey of offshore on-line gambling, see Tax-News.com's Report Shop at www.tax-news.com/reportshop.

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