Visa preparing for legal online gambling transactions in the US
Guess who is coming back to process online gaming transactions once again after the UIGEA in 2006 banned online gaming. Visa is now in the process of setting up to accept online gaming transactions in the US so that players once again will be able to use their credit cards freely. Ever since President George Bush signed the online gaming ban into law credit card companies basically placed a blanket ban on these types of transactions. But, ever since the Department of Justice essentially confirmed in December 2011 that the law and ban only relates to sports betting and that other forms of online gaming were legal; the states and their lotteries opened up the flood gates to each offering more online products. The new frontier has arrived. Nevada, New Jersey and Delaware have now legalized and regulated online gaming with other states not too far behind. This will surely prompt the Federal Government to now take a look at a federal bill so the country can have some consistency in the market. The US market has always been seen as the "Holly Grail" of the global gaming market and industry leaders knew it was just a matter of time before this day would come. Over the years since the UIGEA was being enforced by the banks and credit card companies (by law they had too) it has been a nightmare for the offshore gaming companies to get any consistency with banking companies and not deal with the underground. It was Visa's merchant code 7995 that was assigned for gambling transactions that was put on the radar in a big way. This code covered everything from horseracing wagers to lottery tickets. It was up to the merchants to make it easier for themselves and Visa by registering with the merchant verification value program.
What makes it difficult is that it is an extensive and bureaucratic validation process is that they had to verify if the betting transactions were legitimate and legal according to the UIGEA. At that time the merchant was given a specific code to ensure there were no more transaction processing problems and were given a specific code moving forward. What makes this interesting now is that Visa will have to have something effective in place like a merchant verification process or value program that will keep up to date on all the changes happening in the US market as online gaming becomes licensed and regulated in more states with more product offerings. The question remains will Visa have to keep adjusting the validation process for players so that legal transactions are not blocked and they keep up to speed on all the changes going on in the marketplace with credit card processing. Canada has taken a much different approach to online gaming where the Provinces own and regulate their own online gaming site. So a player that resides in that Province can use their visa to play at an online gambling site. They seem to have stuck to the Province monopoly structure and not allow other private companies to offer gaming products legally and operate there. This makes it easy for Visa as they just process for one site in each market.
In the US it will be a different approach with Nevada and New Jersey having different requirements but allowing any private gaming company to apply for a license. It will be more confusing for Visa since each state will essentially define what is legal and what is not. For example, in Nevada only online poker is legal. In New Jersey, online poker and casinos are legal but the site must be operated by or partnered with land-based casino. Either way Visa looks at it or how they attack each market, one thing is certain and that is they now have to prepare for the online gaming revolution. When the UIGEA became a law it was up to them to enforce it and now that it's becoming legal it will be up to them to make sure each transaction falls with in those state's legal requirements. When the online gaming ball starts really rolling in the US, Visa and the other credit card companies could potentially be processing lots of transactions and making lots of money in fees. So, it's best if they prepare now for all the intricacies of this ever-changing market and legal gaming landscape. One thing is for sure when the credit card transaction games start rolling it will be "big" no matter what. It's time for all of them to prepare for the revolution today...welcome back.
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