|Citibank, the largest credit card issuer in the US, has agreed to block all online gambling transactions that use its credit cards, New York’s Attorney General said Friday.|
As reported by the Associated Press, the agreement announced by the bank and Attorney General Eliot Spitzer 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.'
Other companies, including Bank of America, MBNA and Chase Manhattan Bank, also have begun blocking the gambling transactions, Spitzer said. Citibank controls about 12% of the US credit card market.
'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 additions, the company said.
But credit card companies blocking payments could be counter-productive, said Anthony Cabot, a gaming industry attorney for Lionel Sawyer & Collins in Las Vegas. According to Cabot, online gambling companies will use online payment schemes (such as Paypal and FirePay) to accept wagers. Such a system could take hold with other businesses on the Internet but would likely be created offshore, draining profits that otherwise could have come from American processors, he added.