Citibank Promises To Block Online Gambling Credit Card Charges, While House Judiciary Committee Pursues Legislative Restrictions.

Citibank, the nation's largest credit card issuer, came to an agreement

with New York to block online gambling transactions using its credit cards.

"Americans now waste $4 billion a year on this pernicious form of

gambling," New York's Attorney General said.

"With this agreement, we will cut off an enormous line of credit that was

a jackpot for illegal offshore casinos." The bank also agreed to pay

$400,000 to nonprofit groups that counsel and help families hurt by gambling

additions.

Citibank previously resisted pressure to block gambling charges, even

though other major credit card issuers had done so, including Bank of America,

Fleet, Direct Merchants Bank, MBNA, and Chase Manhattan Bank. The New York

Attorney General's investigation, however, resulted in this settlement.

Citibank controls approximately 12 percent of the U.S. credit card market.

Meanwhile, the House Judiciary Committee took action on Internet

gambling on June 18, 2002, approving

the Combating

Illegal Gambling Reform and Modernization Act [pdf format] that would make

it illegal to use the Internet or other new technologies to operate a gambling

business. Federal regulators would be authorized to close down gambling sites

found operating through U.S.-based Internet service providers, and would give

law enforcement the ability to stop credit card payments to offshore Internet

gambling sites. Before coming to a full House vote, the bill must undergo

reconciliation with a similar bill approved by the House Financial Services

Committee.

Why This Matters: With 12

percent of the U.S. credit card market, Citibank's participation should give

the embargo on online gambling credit a significant boost. Critics of the

online gambling bill complain that so many exemptions were included to gain

votes that the resulting bill lacks teeth.

This article originally appeared in ADLAW By Request, a publication of Hall Dickler Kent Goldstein & Wood LLP.

The content of this article does not constitute legal advice and should not be relied on in that way. Specific advice should be sought about your specific circumstances.

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