Research and Statistics

Credit cards could get banned from online betting


A bill was passed banning the use of credit cards for online bets. Does this affect you?

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Editor’s note: See more-recent story, “Bankers, poker players oppose Fed’s online gambling rules

On July 11, 2006, the U.S. House of Representatives voted to pass a bill to ban the use of credit cards for paying online bets, but provides exemptions for horse racing and state-run lotteries. The legislation, sponsored by Reps. Bob Goodlatte (R-Virginia) and Jim Leach (R-Iowa), would clarify existing law to specify that online gambling is illegal. The vote was 317 to 93.

In order to enforce that ban, the bill would prohibit credit cards and other payment forms, such as electronic transfers, from being used to settle online wagers. Additionally, it would provide law enforcement officials with the authority to work with Internet providers to block access to gambling websites.

Some of the legislation’s opponents note that policing the Internet is impossible, stating that it would instead be preferable to regulate the $12 billion industry and collect taxes from it. Although about half of its customers live domestically, the online gambling industry is based nearly entirely outside the U.S.

Other detractors argue that the bill does not cover all forms of gambling, with exemptions they say would allow online lotteries and Internet betting on horse racing to thrive, while cracking down on other kinds of sports betting, casino games, and card games like poker. Congress has considered similar bills several times before. In 2000, disgraced lobbyist Jack Abramoff spearheaded an intense battle against it on behalf of an online lottery company.

Online lotteries are permitted under the latest bill targeting credit cards for online gambling, largely at the request of states that increasingly rely on lotteries to bolster tax revenues. Professional sports leagues also support the bill, due to their belief that online betting could hurt the integrity of their sports.

The horse racing industry supports the bill, but for a different reason. Horse racing would remain exempt, due to the Interstate Horeseracing Act written in the 1970s and updated a few years ago to clarify that betting on horse racing over the Internet is permitted. Horse racing would benefit as the bill would likely send Internet gamblers to racing sites, where they could still bet legally.

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