|ebay, the online auction giant, is to phase out PayPal’s processing of online gambling transactions. |
ebay bought PayPal, the internet payment processor, for more than $1.3 billion in stock yesterday, in a long-rumoured deal that the companies hope will make Internet trading faster, easier and safer.
But the deal will have the opposite effect on people who frequent gambling sites. PayPal is a favourite payment processor of internet gamblers, who already face an increasing number of blocks put up by many financial institutions.
Nearly 15 percent of PayPal's revenue comes from gambling sites. However, eBay makes up 60 per cent of PayPal’s business.
eBay Chief Financial Officer Rajiv Dutta said eBay will discontinue PayPal's online gaming business. Dutta said the move is due to the 'uncertain legal situation' around online gaming.
Internet gambling is considered to be of questionable legality under U.S. law, although it is widespread.
San Jose-based eBay hopes to close the acquisition by the end of the year if regulators and shareholders approve.