BUSINESS

US-facing betting sites dealing with new credit card crackdown

TAGs: Bitcoin, Credit Cards, VISA

US-facing betting sites dealing with new credit card crackdownAmerican sports bettors who patronize internationally licensed online gambling sites are facing new difficulties in funding their betting accounts.

Industry sources have informed CalvinAyre.com that a number of payment processors that do business with US-facing betting sites have recently received letters from credit card giant Visa expressing suspicions that these processors are handling illegal gambling transactions.

For US financial institutions, tracking the volume of fraudulent and/or miscoded transactions – aka transaction laundering – that flow through their systems is like finding needles in haystacks. But these institutions are now employing big data techniques, including intelligent risk models and machine learning algorithms to detect unauthorized transactions.

In the case of these gambling payment processors, algorithms have likely detected (among other things) rises in the number of customers who’ve begun spending significant amounts on new (for them) products or services, such as the infamous sporting goods and flower deliveries that led prosecutors to drop the legal hammer on online poker companies back in 2011.

These algorithms would also examine other data points, including a user’s social media accounts for evidence of gambling talk, and (for winning gamblers) a rise in money flowing back to other financial accounts. If enough red flags are raised, the financial institution then launches a manual investigation and guilty processors get cut off at the knees.

The net result of this increasingly invasive scrutiny of how Americans choose to spend their hard earned money will be greater difficulty in funding online betting accounts, at least via the use of major credit cards.

In the short term, this will cause problems for struggling books like Sportsbook.ag, which rely on football season for the bulk of their deposits. With less money flowing to the book, Sportsbook.ag’s already notoriously slow payouts will make March of the Penguins look like a NASCAR race.

The clampdown will also give a boost to credit betting operations, be they the old fashioned back-of-the-bar bookies or their more modern counterparts at the pay-per-head sites. For what it’s worth, this growth won’t be confined to the US, but will be witnessed in all jurisdictions that insist on attempting to cram genies back into bottles.

In the long run, the tightened noose will only accelerate US-facing gambling operators’ adoption of alternative payment channels such as Bitcoin. In turn, the increased acceptance of Bitcoin – and its ability to create a publicly verifiable record of transactions and game play – will further erode the need for regulatory agencies.

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