just cover---Thought U might be interested in this article I saw the other day.
Credit Card conundrum
By Brendan Elliott
One of the most convenient ways to fund your sportsbook or online casino account could soon go the way of the dodo bird.
More and more credit card companies are balking at accepting or refunding money with a bettor's credit card because too many people are trying to scam the system.
Alan Elias, spokesman for Providian, was recently quoted in the New York Times as saying his company's policy to deny such transactions was "not about us making judgment calls about morals and ethics." Instead, he explained, "our company puts itself at risk for large business losses if we allow charges for Internet gaming."
***.com user, Peter, has seen first-hand the pitfalls of using a credit card for his gambling transactions.
He deposited a sum of money into a FirePay account -- a third-party credit-card processor -- through a Capital One credit card.
The transaction went through without a hitch, and he moved the money into a sportsbook account. Everything appeared to be in order until he decided to withdraw the money. That's when he hit a bureaucratic cyberspace brick wall covered in legal red tape.
"The sportsbook credited back my FirePay account, and I then transferred the money to my Capital One credit card from the FirePay account," he said.
But getting access to the funds after FirePay sent the money to his Capital One credit card was another thing all together.
"It's been two months and my card still hasn't been credited," he said.
FirePay claims the funds are in Capital One's possession, and that Capital One has frozen the money for legal reasons.
Peter is livid. How could Capital One allow the initial transaction to go through, yet not accept the transfer back?
Calls to Capital One by Covers.com have so far gone unanswered.
But Peter might want to blame his fellow gamblers for his problems, not the bank.
Customers frequently deny having placed bets or simply refuse to pay their credit card bills after running up large gambling debts because technically, it's illegal to use a credit card to place bets.
That can pose trouble for credit card companies -- as was the case when a California woman lost more than $100,000 but argued in court that gambling debts were not enforceable and had her debts wiped clean in a court-ordered settlement.
As a result, many credit card companies and banks simply refuse to approve a transaction if they know it is for a gambling site.
Peter's problem may have been that Capital One didn't know his initial deposit to the FirePat account was for gambling, but clued in when FirePay tried to credit back his account -- a common practise for refunding gambling winnings.
Some Internet casino owners say four of every five transaction requests are now denied. As a result, some gambling sites -- particularly those serving the United States market, where eight of every 10 wagers originate -- have seen revenue fall at least 30 percent.
"It's excruciating for the casinos," Mitch Garber, executive vice-president for SureFire Commerce, told the New York Times.
Garber said that last year 25 percent of the credit card transactions he tried to process for casinos were rejected by United States banks. That's a third higher than the previous year's figure, he said.
"The magnitude of the rejection rates has taken off," Garber told the newspaper.
Among the banks Garber said had rejected gambling transactions were Wells Fargo, Providian, and MBNA.
According to Peter, you can now add Capital One to that list.
Visa and MasterCard do not have blanket provisions that prohibit banks that issue their cards from paying Internet gambling transactions. But late last year, Visa USA started auditing Internet casinos to make sure they were accurately identifying transactions as wagers.
The idea behind the audit was to ensure casinos did not try to report gambling activity as another type of transaction to trick the bank into approving the transaction.
MasterCard International has put an end to third-party transactions at places like FirePay, PayPal, Neteller and SureFire with a policy that specifically forbids the use of its cards at third-party processors for Internet gambling purposes.
American Express and Discover haven't allowed credit-card gambling transactions for quite some time.
"We do not do business with illegal or very high-risk industries," American Express spokeswoman Joanne Fisher told the New York Times. "We have to be in a position that we know we're going to be paid."
As a result of the about-face by credit card companies, Christiansen Capital Advisors, a New York firm that serves as a consultant to casinos, recently downgraded its worldwide growth forecast for the online casino industry.
Christiansen estimates the 1,400 gambling sites on the Internet generated $3-billion in revenue last year and will generate $4.1-billion in 2002, a drop of about $500-million each year from earlier projections.
With files from The New York Times
