Banking Issues Plague New Jersey’s Online Gaming Launch

New Jersey’s five day test of internet gambling sites is underway. Several players have reported problems and glitches in the system. Some players got repeated error messages and others reported that even though they were located in New Jersey they were rejected as out of staters. One player reported that he had to wait hours before his driver’s license was approved. One problem facing online gamblers is the rejection of gambling transactions by credit card companies and payment processors like PayPal. After the passage of the ill advised Unlawful Internet Gambling Enforcement Act (UIGEA)of 2006 several banks implemented systems that automatically reject gambling transactions. Now that several states have legalized online gambling banks and credit card companies will have to adapt.

An article published by Bloomberg said that Bank of America, Wells Fargo, American Express and PayPal prohibit transactions related to internet gambling because of established guidelines. They also fear that they could be held liable for underage gambling and players that are able to overcome geolocation restrictions. Here are the policies of several companies;

Visa and MasterCard allow gambling transactions in states where it is legal. The final decision lies with the card issuers. Visa spokeswoman Rosetta Jones stated “Visa has updated its procedures to code newly legalized Internet gambling transactions so that financial institutions can identify and process them in states where they are allowed.”
Bank of America does not allow gambling transactions but the company is in the process of reviewing their policies.
American Express prohibits all gambling transactions.
Wells Fargo and Discover Financial Services ban gambling transaction citing federal liability issues.
Currently PayPal does not allow gambling transactions. The company cites internal policies that could change in the future.

Davis Rebuck, director of the New Jersey Division of Gaming Enforcement, told reporters “Clearly, we’re going to have struggles for some folks who are going to not be able to have their accounts funded through traditional means with their own bank. They’ll do it through alternate means, or they’ll find other banking institutions that will allow them to. It’s going to be a growing process.” Alternate banking options include wire transfers, checks, clearing house transfers and land based deposit options.

The New Jersey Division of Gaming Enforcement’s banking department is reaching out to credit card companies, payment processors and the US Treasury Department to try to resolve banking issues faced by players. Rebuck stated “The government is working its end to try to build confidence in the banks. The private sector obviously is working with their banks and trying to give them confidence.” Currently New Jersey does not offer internet bingo but if the demand is there the game will be added at a later date. By that time all of the glitches and banking issues will be resolved.