Back in 2013, the United States of America shocked the online gaming world with news that New Jersey, Delaware and Nevada received permission to host legal online casino and/or poker games. This stunning announcement conjured up tremendous enthusiasm in the online gaming industry, despite the many logistical, regulatory, and compliance-related issues. While New Jersey and Delaware received the green light for legalized online casino entertainments like 888casino, Nevada opted instead for legal online poker. The issues that plagued the online gaming sector in the US were quickly ironed out, notably geolocation limitations for in-state gaming, and intrastate gaming. Within no time at all, New Jersey quickly blossomed into the most lucrative US online gaming enclave. There was of course one major oversight: payments processing. The online gaming industry was all but ready to roll out games of blackjack, roulette, poker and slots to millions of legal-age players in the states (limited to online poker in Nevada), but banks and financial institutions were not playing ball.
Why Were US Banks Reluctant to Process Payments for Online Casinos?
At the time, big banks like Wells Fargo & Company, American Express, and J.P. Morgan Chase were set against allowing the processing of transactions (deposits or withdrawals) from online casinos. In 2013, major banks refused to be swayed in processing transactions for the online gaming industry. The director of public affairs and public relations at Chase Card & Merchant Services, Steve O’Halloran stated that: ‘We Don’t Allow Credit Card Transactions for This Activity…’ about online gaming. American Express spokesperson Ms. Chao had similar sentiment. The issue at stake is not so much the moral high ground, but a purely business argument. Banks stand to incur significant losses from gambling-related activity in terms of customer service disputes, underage gambling concerns, and claims against credit card issuers.
How Are Online Casinos Coping with the Position Taken by Banks?
Since the Unlawful Internet Gambling Enforcement Act (UIGEA) largely directs the actions of banks, many of them have not come on board with the online gaming scene. It is difficult to find consensus between state and federal regulation, and players are somewhat concerned about their own legal requirements. In all land-based gambling activity, many payments processing options are available. These include wire transfer, e-checks, ATMs inside casinos and the like. The legality around depositing and withdrawing at online casinos in the US is something that has been extensively researched. It should be pointed out that depositing at online gaming sites is not a crime, the onus is upon banks to comply. Greater liberalization in banking vis-à-vis online gaming has been taking shape since 2013. It is entirely possible that your bank will reject or even restrict payments that you make to an online casino, owing to UIGEA regulations. Some banks choose to place more emphasis on this than others.
Cryptocurrency Emerging as a Favorite to Banks for US Online Gaming
Online casinos are increasingly offering players a diverse range of payments processing options. These include cryptocurrency like Bitcoin, Litecoin and Dogecoin, among others. Cryptocurrency – digital currency – falls into a unique category that is not fiat currency, and is not regulated by banks, financial institutions, or the government. Players can anonymously purchase BTC online, and have it anonymously transferred to their online casino accounts. Many online casinos seeking to avoid banking regulations and restrictions can opt for the path of lesser resistance with digital currency deposits and withdrawals. Depending on where you are in New Jersey, Nevada, or Delaware, your bank may or may not process your deposit/withdrawal to your preferred online casino.
There are multiple other payments processing options available to players in the US, including: Visa, MasterCard, prepaid cards, Western Union, e-checks, EZVoucher, Skrill, MoneyLineWallet, and others. The easiest way to transfer money is via credit card. E-wallets are another popular option with added security, and PayPal is now one of them. Players can also opt for prepaid cards – debit cards – in the US to transfer funds to online casinos. Among the banking alternatives, Bitcoin is proving to be one of the most prized. For starters, there are zero transactions fees and commissions and no currency exchange rates need to be considered. As such, Bitcoin casinos are popping up all over the US and players are lapping it up in their droves.
What is the Future of Regulations on Banking and Online Casinos in the US?
Online casinos have had to find inventive ways of accepting money and making payments to players. For starters, casinos make electronic transfers to third parties that create the illusion of ‘clean money’ in states where online casino gaming and online poker gaming is unregulated. The third party would then send payments to winners. That credit card processers and US banks are refusing to play along with regulated online gaming is somewhat problematic. At inception, the burgeoning online gaming industry in the US was projected to be worth $7.4 billion by 2017, but that has fallen well short of the mark. Credit card issuers like MasterCard and Visa are more concerned with liability issues (underage gambling and illegal use of credit cards) than they are with the UIGEA. But it’s not necessarily Visa and MasterCard that are rejecting transactions, it’s the banks that process transactions for Visa and MasterCard.
For example, MasterCard Inc. and Visa Inc. permit transactions to be processed in the networks where states allow online gaming. This was confirmed by Rosetta Jones of Visa. She penned an email stating: ‘Visa has updated its procedures to code newly legalized Internet gambling transaction so that financial institutions can identify and process them in states where they are allowed…’ MasterCard follows the same thought process as Visa on this issue. The whole system with respect to online gaming and banking approval is dependent on the individual banks. In 2013, Bank of America refused to process transactions. PayPal, Wells Fargo, and American Express shared the same sentiment at the time. There were various issues that were holding up bank approval, notably geolocation technology which would bring several complicating factors into the mix. For example, a player in Maryland or Pennsylvania may mistakenly be able to access New Jersey-based online casinos and then refuse to honor the debts incurred on his/her credit card. Fortunately, the technology is now watertight and online casino gaming is restricted to states where it is permitted.
Online Casinos Find Ingenious Solution to Payments Dilemma
We are also seeing the return of many popular e-Wallets to the US. These include Moneybookers and Neteller. But the most exciting development for the online casino industry is found at their land-based partners. This unique workaround sees land-based casinos accepting payments with Visa, MasterCard, American Express, Skrill and others for use at their online casinos. This completely eradicates the problems associated with registering and depositing online. Now, banks needn’t be concerned about issues of legality and fraud since the payments are being made at bricks and mortar facilities for use at online casinos affiliated with them. Since all online casinos in New Jersey are partnered with land-based casinos, this solution works like a charm if you are close enough to make a deposit!
