Effort to Stop Internet Bets Impacts Account Wagering

Account-wagering providers and others in the pari-mutuel industry are working behind the scenes to remedy a situation that has kept bettors with certain credit cards from making legal Internet wagers.

The problem began May 22 when Visa, in an apparent attempt to stop offshore Internet wagering, implemented a policy that blocks some credit-card transactions. It involves a specific "merchant category code" for online gambling that doesn't differentiate between sanctioned and non-sanctioned gambling.

The situation is a bit dicey for the Thoroughbred racing industry, because Visa is an industry supporter and sponsor of the $5-million Visa Triple Crown Challenge. On June 7, Funny Cide will attempt to sweep the three-race series with a victory in the Belmont Stakes.

Account-wagering providers such as AmericaTab, TV Games Network, XpressBet, and Youbet.com are licensed state-regulated entities. The offshore operations are not. The Los Angeles Daily News, which first reported the situation in its May 24 edition, cited industry experts who said Visa and the banking industry are targeting Internet gambling because it is a "suspected source of cash flow for terrorist groups."

Meanwhile, on Capitol Hill, lawmakers continue to wrestle with legislation that would ban Internet gambling. In mid-May, the House Judiciary Committee removed an exemption for state-licensed gambling activity from the Unlawful Internet Gambling Funding Prohibition Act. Last year, a similar measure failed to come before the full House for a vote.

The Daily News reported that in a March 18 letter to bank members, Visa said its "optional online gambling" service would be "enhanced to decline all identifiable non face-to-face gambling transactions" effective May 22. That change has kept bettors from making deposits in online wagering accounts.

A few account holders told The Blood-Horse that when they attempted to deposit money with wagering services the weekend of May 24, they were stymied. TVG, for one, is telling customers if there is a problem, they should contact customer service for help in getting a direct debit of funds from accounts. They also have been steered toward MasterCard, whose affiliate banks still allow the transactions.

"I am confident once Visa looks into this issue, it will set up a separate merchant category code for state-regulated racing businesses," TVG chief executive officer Mark Wilson said in a statement released May 29.

"A good portion of our customers are being affected by this problem, and it's just startling to me that Visa would change its policy without any notification," Youbet president Chuck Champion told the Daily News. "We are not in the same category as offshore and illegal gaming."

The pari-mutuel industry for years has been fighting to be recognized as being different from unregulated gambling activity. Though the May 22 action by Visa came as a surprise, the possibility that credit-card companies might block certain transactions has been hovering over the industry for years.

The credit-card block comes at a time when many account-wagering providers are posting record growth in handle. Estimates as to the financial impact of the block weren't immediately available.