Friday saw the launch of new Merchant Category Codes (MCC) for online gambling, but their introduction isn’t expected to change the fortunes of operators in US regulated intrastate markets anytime soon.
One of the biggest problems states like New Jersey have had in jumpstarting their fledgling online gambling markets is the reluctance and/or outright refusal of many large financial institutions to process transactions for gambling sites.
In the absence of a nationwide federal stamp of approval for online gambling – not to mention significant efforts underway to stuff the intrastate genie back in the bottle – major banks and credit card companies have been understandably leery about embracing the new islands of forward thinking.
Last September, plans were announced to introduce a raft of new online gambling MCC to replace the catch-all 7995 MCC that had become so toxic in the eyes of financial firms following the 2006 passage of the Unlawful Internet Gambling Enforcement Act. On Friday, Mastercard, Visa, American Express and Discover introduced three new online gambling MCCs covering state-sanctioned online lotteries (7800), online casino games (7801) and advance deposit wagering for horse and dog racing (7802).
But introduction doesn’t automatically equal acceptance. Matthew Katz, CEO of player verification software outfit CAMS, told the Press of Atlantic City that financial firms may view the volume of wagers being generated in states like New Jersey as too small to warrant changing the ways these firms do business.
Katz believes the new 7801 code will provide “a slight increase” for New Jersey’s market but doesn’t think it’s the “silver bullet” operators have been seeking. “The banks are not set up to operate on a state-by-state basis, and the potential liability it creates for them is much greater than the revenue. It’s not a priority.”
PLAYOLG, PAY SERVICE FEES
North of the border, the Ontario Lottery and Gaming Corporation’s new PlayOLG.ca site is making enemies of customers who fund their online play via credit card. Seems a lot of players are neglecting to read the fine print, which says financial institutions may impose service fees when credit cards are used for gaming purposes.
Several Canadian media outlets have reported irked customers finding service charges on their monthly statements related to their PlayOLG activity. In some cases, simple online purchases of lottery tickets have resulted in service fees of up to $10 per transaction – more than the value of the tickets purchased.
OLG maintains that the policy is nothing to do with their website, which clearly states that the application of fees is at the discretion of the credit card issuer. Several financial firms have confirmed that gaming activities are considered “cash-like” and thus treated as cash advances, with all the associated fees and interest charges. However, a CIBC spokesperson told the Toronto Star that if a client had encountered such charges “for the first time and was surprised, we can reverse the charge.”
