MasterCard and Visa Pull Out Of US Online-Gambling Market.

On the 5^th of February 2010, the online gambling companies operating within the US market were faced with a massive blow as MasterCard cracked down on gambling transactions made from within the United States.

In particular, MasterCard tightened the reins on the practices of gambling operators who encoded online gambling transactions under other forms of ecommerce, which had, up until the 5^th of February, allowed the American public to use their credit cards to make online gambling transactions.

It had been rumoured that Visa, MasterCard’s main rivals, were contemplating taking similar measures and as of today, this has come into practice (more on Visa below).

This trend within the credit card industry, to ban online gambling transactions in all its guises, comes as the UIGEA (Unlawful Internet Gambling Enforcement Act) prepares to be implemented into law within the next few months; the UIGEA will effectively ban payment companies from facilitating online gambling transactions, had MasterCard and Visa continued to allow such transactions they would themselves be subject to legal sanctions.

These developments within the online gambling industry in America will mean that American gamblers will be relying more heavily on alternative means of payment, such as echeques.

Therefore, in just two weeks since MasterCard made their announcement to the global gambling community, Visa has followed suit, blocking all American internet-gambling deposits. More credit card companies are likely to follow their lead in order to avoid heavy fines that will be levied at them if they are found to be in breach of the UIGEA. Yet, the credit card companies appear to be undecided as to the route they will be taking with the Canadian market.

MasterCard and Visa have yet to cite the exact reasons for their withdrawal from the American online gambling market, but it is widely accepted that the impending implementation of the UIGEA has informed their decisions. If the UIGEA comes fully into law, then internet gambling within the US will be illegal, however, the possibility that the Act is overturned is not as remote as some may think. Many companies are taking pre-emptive action and withdrawing from the American market, but if the Act is reversed, then they may live to regret their decisions as they leave behind a market that is estimated to be worth in excess of $12 billion.

However, attempting to prevent online gambling transactions is not new for either credit card company. MasterCard and Visa have long-since had terms and conditions that mean card issuers can decline any transactions that violate local law, such policies include a system that tells the issuing bank exactly which type of payment is being made.

Nonetheless, this recent move by both companies has come about as each attempts to halt the recoding of transactions from online gambling transactions to other forms of egaming transaction- a practice that has become widespread and which has allowed many American citizens to continue to gamble as they exploit this loophole in existing legislation.

 MasterCard and Visa’s actions are likely to cause shockwaves through the industry, however many of the larger online gambling operators, such as 888, Bwin, Sportingbet and Partygaming, will be relatively indifferent to these latest developments as they made their escape from the American market long before these changes.

Moreover, for those gambling operators who remain in the US market, it will not be long before they begin to recover from these limitations as they begin to make greater use of alternative payment methods, such as netelller.

Rather, the problem these remaining operators will have is to assure the public that there are alternative payment methods, before they give up the ghost and decide to spend their hard-earned cash on alternative forms of entertainment.

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