Regulated online poker went live in Nevada on April 30, 2013 with the launch of Ultimate Poker. The first regulated online poker room in the US opened with five deposit options. The most popular option may be cash deposits at any Station Casino cage. Other deposit options include credit/debit cards, echeck, bank wire and check by mail.
WSOP.com launched on September 17, 2013 to players that preregistered. The official launch date was September 19, 2013. It offers Visa, Mastercard and echecks as deposit methods.
The deposit options offered by Ultimate Poker and WSOP.com are fully legal and are not restricted by the Unlawful Internet Gambling Enforcement Act (UIGEA), which only covers undefined illegal online gambling transactions. Some players have experienced issues making deposits. Most of these problems are related to credit cards. A majority of these complaints have focused on Visa.
Ultimate Poker appears to have given up on Visa altogether as it is no longer a deposit option. The Visa acceptance rate for WSOP.com has been extremely low. The opposite is true for offshore online poker sites where Visa is the card of choice for US players. Mastercard is not available as a deposit option on many unregulated sites that still accept American players.
There has been some speculation that the UIGEA is the reason players are experiencing problems with deposit options at regulated sites. The issues appear to be more likely associated with payment processing and bank policies.
Banks Past Experience Processing Online Gambling Payments
Credit card companies started banning online gambling deposits as early as 2001. This action appeared to be the right move when Paypal’s parent company Ebay paid a $10 million fine to settle a case where the company allegedly violated state and federal online gambling laws. The case was settled over three years before the UIGEA was signed into law by President Bush and five and a half years before related regulations went into effect. Most banks and credit card issuers had already decided to decline credit cards and other banking transactions related to online gambling well before the UIGEA was considered by Congress.
Banks have been subjected to lawsuits from losing poker players looking to recover online gambling losses. One such case was filed against many credit card issuers over ten years ago. There have been other similar suits over the years. Corporations try to avoid litigation and processing online gambling transactions had become a liability.
Fraud Burdens Online Gambling Processors
Chargebacks are another issue associated with processing online gambling deposits. This is when the cardholder disputes the charge made on a credit or debit card. Chargebacks come in many forms. Some credit card disputes arise from unauthorized use, including stolen or cloned cards. Chargebacks may also come from a fraudulent player that refuses to pay the debt accumulated from legitimate gambling transactions.
Chargebacks are costly for banks and processors. The investigation is expensive and it can cause issues with intermediary processors. It is a major resource drain for the banking industry when no revenue is being generated from the process.
Chargebacks also create a complicated situation for online gaming sites. There is not much a gaming site can do to fight a chargeback when the card was not present at the time of the transaction and goods were not delivered. There are also costs involved with the chargeback beyond the loss of the deposit. A merchant that has too many chargebacks will pay higher processing fees and may potentially lose its ability to accept credit cards.
Regulated sites will have fewer problems with chargebacks. Licensed online poker rooms have more recourse against fraudsters. Players are also identified through a verification process while registering. This may not be enough to comfort the banks.
Credit Card Acceptance Low Prior to UIGEA
Few US online poker players carried a credit or debit card that could be approved for online gambling by the time that the UIGEA was passed. Even though the UIGEA was signed into law in October 2006, the regulations attached to it were not enacted until January 19, 2009. Banks restricted credit card transactions related to online gambling well before the UIGEA regulations went into effect.
Mastercard Policy Towards Online Gambling
Mastercard recognizes the difference between unregulated offshore gambling and games that are clearly recognized as legal under state or federal law. Mastercard codes unlicensed online gaming transaction under the 7995 Merchant Category Code (MCC). These transactions in the United States are generally declined by banks.
Mastercard has created MCC 9754 for regulated real money gaming, according to Casinoadvisor.com. This includes pari-mutuel betting and fantasy sports. It is also likely to include regulated Nevada online poker. This seems apparent due to the high rate of success players have when depositing with credit and debit cards that feature the Mastercard logo. In addition to MCC 9754, Mastercard has created MCC 9399 for online lottery transactions.
Even with the Mastercard policies in place to help identify regulated poker transactions, some players still report transactions being declined by individual banks. There are also many player reports related to successful Mastercard deposits at Ultimate Poker and WSOP.
Visa Policy Has Not Caught Up
Visa has yet to create separate codes to differentiate between legal and unlawful transactions, according to Calvinayre.com and several other sources. Regulated companies are required to apply for the Visa merchant verification value program setup through the individual banks, which are left to determine whether an online gambling deposit is a regulated or illegal one. This is an expensive process that does not appear to be utilized by most banks.
Visa contacted all of its issuing banks with information about its Internet Gambling Stand-In Processing (STIP) Blocking Service and stated the product “is able to differentiate between legal and potentially illegal gambling transactions.” The issuing banks may use this information to determine the legitimacy of transactions.
UIGEA Covers Commercial Account Only
The UIGEA is a compliance law that is aimed at requiring banks to recognize transactions that are related to illegal online internet gambling. A 2010 notice released by the FDIC states:
The rule requires certain participants in the designated payment systems to establish policies and procedures that are reasonably designed to identify and block or otherwise prevent or prohibit restricted transactions. A “participant” is defined as “an operator of a designated payment system, a financial transaction provider that is a member of or, has contracted for financial transaction services with, or is otherwise participating in, a designated payment system, or a
third-party processor.” The term “participant” does not include a participant’s customer unless the customer is also a financial transaction provider participating on its own behalf in the designated payment system.
In other words, poker players are not covered by the UIGEA at all. The declined transactions are occurring either because of a lack of communication between banks and the processors or a bank policy that declines all online gaming transactions.