Backdoor Ban on Internet Betting
By Linda
Citibank, the nation's largest credit card issuer, has agreed to block all online gambling transactions that use its credit cards.

The agreement announced by the bank and New York state attorney General Eliot Spitzer is aimed at significantly reducing illegal, underage and potentially addictive Internet gambling, Spitzer said.

'Online gambling is indeed a worse problem for addicts than gambling at casinos because people can stay at home. They charge their bills to their credit cards (and) run themselves into enormous debt,' Spitzer said. 'Americans now waste $4 billion a year on this pernicious form of gambling.'

'In addition, we have the enormous and very problematic issue of children who are gambling online,' Spitzer said. 'With this agreement, we will cut off an enormous line of credit that was a jackpot for illegal offshore casinos.'

The block, which will take effect in 60 days, applies to all Internet gambling transactions, not just those in New York.

Citibank controls about 12 percent of the nation's credit card market.

Other companies, including Bank of America, MBNA and Chase Manhattan Bank, also have begun blocking the gambling transactions, Spitzer said.

Citibank spokeswoman Maria Mendler said, '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'. She added that Internet gambling is associated with higher rates of credit card fraud and delinquency.

Some gamblers failed to pay credit card debts after claiming that since it is illegal to gamble online, banks should not have authorised payments to gaming sites. This is what has stung credit card companies most and some commentators think it is crass to suggest that they have, en masse, adopted a new moral stance with regards to debt.

Ultimately, the gambler will find new ways of channelling money to gaming accounts. In particular, third-party processors such as PayPal will happily accept funds that can be used for gambling. Although Mastercard has begun to refuse to process payments from third parties.

Politicians have argued that such bans encourage snooping by financial institutions.

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