US votes to ban credit card payment for internet gambling

Debate on the Bill was intense as the House sought to balance the need to block unregulated sites with a desire not to interfere with existing gambling laws.

The regulation of internet gambling in the US is varied and politically sensitive. Most states have already banned it, but have been powerless to stop US consumers gambling on off-shore internet sites. Only last week, a lobbying war broke out after the US House of Representatives dropped a piece of legislation designed to stop that very thing.

The Unlawful Internet Gambling Funding Prohibition Bill takes a different tack, focusing on the credit card and wire transfer payment systems that allow consumers to gamble.

It gives Federal Regulators six months to devise rules obliging those running the payment systems to come up with ways of identifying and preventing certain types of transactions.

These transactions include any transfer to a person "engaged in the business of betting or wagering" of:

Credit – including credit extended by means of a credit card;

An electronic fund transfer;

A cheque or bank draft; or

Any other sort of financial transaction.

In effect, the Bill hopes to throttle the off-shore internet gambling industry by preventing US citizens making payments. Any credit card company or other institution covered by the Bill will face court action if they make a restricted transaction, although criminal proceedings are not included.

In fact many major credit card issuers including American Express and Citygroup do already block payments to gambling sites, but this is done on a voluntary basis.

One flaw identified by critics is that the Bill specifically excludes from regulation "any lawful transaction with a business licensed or authorized by a State". The argument is that this will legitimise on-line gambling on such matters as horse racing, which are licensed by State authorities.