What’s in the (Credit) Cards?

While I’ve been playing online poker for some time, I actually have very little experience with depositing funds onto sites. (Thinly-veiled brag there, as they’d say on the forums.) I opened accounts before the Unlawful Internet Gambling Enforcement Act of 2006 became law. Thus was I able to use Neteller to open my first account, then simply shift moneys around to open others.

After the UIGEA came and Neteller went, there was a brief period when other third-party processors appeared ready to fill the void for American players, but none of them lasted long enough for me to bother with them. Eventually we saw more depositing options return, but as I say I haven’t really messed around with those, and instead have just nursed the bankrolls I still have on a few sites, taking a little cabbage out every now and then.

I’ve experienced no trouble at all with withdrawing funds (most recently last month from PokerStars). I did notice, though, the stories over the past couple of weeks regarding new problems for those trying to deposit onto online sites using MasterCard or Visa cards.

Recall that while the deadline for banks and other transaction providers to comply with the UIGEA was moved back to June 1, 2010, that date represents when it becomes mandatory for these entities to block transactions with online gambling sites. In other words, there’s nothing stopping them from going ahead and starting to block such transactions if they wish, which is why some folks have begun receiving notices from their banks telling them that “restricted transactions” will be prohibited from being processed. (See here for an example.)

Then, earlier this month, word came that MasterCard had begun blocking transactions. Truth be told, MasterCard had always tried to prevent folks from using their cards to deposit onto online poker sites. However, somewhere along the way the codes would get changed to get transactions to go through, although now and then some still would experience their transactions being declined.

What recently changed (apparently) was MasterCard proactively uncovering how the transactions were being “uncoded” as related to online gambling. As a result, some sites removed MasterCard from their depositing options. (PokerStars, incidentally, quickly came out with a statement that they never manipulate codes on their end, but rather it is up to the issuing bank whether or not to deny the transaction.) Those initial reports regarding MasterCard were accompanied with speculations about whether Visa had also begun successfully blocking transactions, with some reports noting that indeed Visa had as well.

The timing for all this has been the subject of some speculation, with some pointing to the Super Bowl (on February 7th) as having invited the crackdown, and others noting a federal appeals court ruling (on February 1st) in which the U.S. Second Circuit Court of Appeals upheld an order that found a couple of Canadian-owned companies in contempt for not complying with a subpoena issued over the companies’ processing $350 million worth of payments for online gambling companies. (That case involves charges of fraud and money laundering as well, though, and so may or may not be related.)

MasterCard and Visa continue to be presented as depositing options on all three sites on which I play (PokerStars, Full Tilt Poker, Bodog), as well as on other sites, too. However, just because you see those options listed as available, that doesn’t mean they will work.

Dan Cypra over at Poker News Daily interviewed “an insider in the world of payment processing” regarding the current situation, who explained that while some credit card deposits are being blocked, others are going still through. However, when the deposit is blocked, “the players are not notified.” Rather, the transaction still appears on their bill, and “the processor the gaming company used then has their account with MasterCard closed and they are fined.”

In other words, until the online sites get their money from the processor (the “middleman”), they’ve given the player the money with which to play. “We basically just gave him free money,” says the unnamed insider. “These companies do not settle instantly with the poker rooms and that is where the big risk comes in” -- for the online sites, that is.

If I’m following everything clearly, players are still not really risking anything other than the possibility of getting hit with a penalty fee for a declined transaction (which depends on the card issuer). But it does look as though this recent development is already affecting the games somewhat, as the insider tells Cypra: “From what I have been told, cash in is down significantly. Obviously, if you take a credit card channel as big as MasterCard away from your portfolio, there will be a big hit.”

Bottom line: Online poker for U.S. players remains a foggy, uncertain place, with the forecast not appearing to include any chance of clear skies any time soon. Last week saw a couple of features in mainstream publications -- Forbes Magazine and The Washington Post -- that recapped the current legislative situation, though understandably neither were able to predict with any certainty what will happen next.

Nor can I.