|PayPal, the electronic payment service preferred by many online casinos, has agreed to block online gambling merchants from using its transaction system and will pay a $200,000 penalty, the New York State Attorney General's office said Wednesday. |
PayPal, which is shortly to be acquired by Internet auctioneer eBay Inc., was the subject of an investigation by the office of N.Y. Attorney General Elliot Spitzer for allowing gambling companies to take money from New York gamblers.
Under the terms of the settlement, PayPal will not process payments from New York customers to Internet casinos as of September 1, and will pay $200,000 to New York state in disgorged profits, investigation costs and penalties, his office said.
'e-cash' companies such as PayPal allow individuals and businesses to send and receive online payments, via credit card or electronic fund transfers to and from bank accounts.
The Attorney General's office said PayPal had become the preferred method of payment for online casinos over the past year as more credit-card issuing banks have begun to block direct gambling transactions. It estimated PayPal has 260 online gambling merchants using its services.