Alex Waldrop

Alex Waldrop

Anne M. Eberhardt

NTRA Making Progress on Credit Card Issues

Some banks still denying attempted transactions with ADW outlets.

The National Thoroughbred Racing Association expects to soon announce additional, specific banks that will recognize credit card transactions used to deposit money at account-deposit wagering outlets.

NTRA president and CEO Alex Waldrop said the organization has made a push with its lawmaker allies in Washington to work with banks that currently do not allow such transactions. The NTRA already has worked to set up a transaction code to allow banks to recognize such transactions as going to legal, state-regulated ADWs, as opposed to gray area, or outright illegal, gambling sites.

"We're in the process of using allies on Capitol Hill to work with representatives of those banks to convince them that the due diligence process is rigorous and reliable and, thus, they should begin to allow their cards to be used in ADW account-funding transactions," Waldrop said. "Right now the response has been favorable; progress is being made."

There are banks, PNC being the largest, that currently recognize credit card deposits at ADWs. But other major banks like JPMorgan Chase, Bank of America, Wells Fargo, and Capital One are not allowing such transactions, Waldrop said. 

The roots of the problem trace back more than a decade when the federal government approved the Unlawful Internet Gambling Enforcement Act of 2006. That law placed a heavy burden on halting money transactions to gray area or illegal Internet gambling sites on financial institutions.

The law required financial institutions to have policies and procedures reasonably designed to identify and block, or otherwise prevent or prohibit the processing of restricted transactions.

That law, which effectively curtailed U.S. players at major online poker and casino sites, also resulted in many banks halting transactions with ADW sites, which are permitted by federal law to operate. Efforts have been made to educate financial institutions that such transactions are permissible, but there are still banks that will deny attempted credit card transactions.

"We began early on working with the ADWs and credit card companies to try to distinguish our legal, state-regulated, online wagering platforms from all of these others that are of questionable legality, if not outright illegal," Waldrop noted.

A milestone in that process was development of a new merchant code, 7802, that signals to financial institutions a transaction to a legal, regulated pari-mutuel gaming site. Mastercard listes the 7802 transaction as "government licensed horse/dog racing."

"Credit card companies, in spite of the fact that we've created the new code, have been reluctant to honor the code," Waldrop said. "It's been a frustration of ours because Visa/Mastercard didn't just create a new code. They also implemented a very detailed due diligence process that credit card processors must go through in order to utilize that code in connection with any operator."

Waldrop said the process of due diligence can take months. He said the NTRA has worked to inform financial institutions of the process and its reliability, noting that some outlets have failed to meet the required standards.

ADW outlets have a variety of ways to transfer money into accounts but it's important to allow the customer options. As Waldrop noted, should a new player attempt to make a deposit with a credit card and see that transaction denied, they may not only react with frustration but—because of that denial—be suspicious of the legality of the site.

"It's an ongoing problem that all ADWs experience that there are a handful of cards that are not accepted," Waldrop said. "It sends the wrong message and frustrates a potential customer—people who might not come back after that experience; they may have concerns about its legality. That's why it's become a high priority for us and ADWs and frankly, for the industry. Everyone wants to bring in new customers."