Credit Card Codes: Too Late for NJ Online Casinos?
If you’ve played in one of New Jersey’s online casinos since their launch in late 2013, you’ve likely faced an issue with getting your credit card to work with them.
Between making the account, proving that you’re actually located within New Jersey’s borders, and connecting your bank account to your casino of choice, you probably felt like tossing up your hands and shouting “eff it!” after your second, third, fourth or subsequent error message.
You are not alone. Credit card payments have lagged as online gaming gained acceptance. In 2013 and 2014, VISA payments to online gaming venues were only accepted approximately 73% of the time. During that same time period, only about 44% of Mastercard payments were accepted.
Online gambling in New Jersey and the rest of the United States was already suffering from an image problem. This just made it worse. Skeptical prospective players became frustrated non-players and online gambling revenues remained much lower than initially projected.
What is a Credit Card Code?
Merchant category codes are the codes that banks assign to merchant types to clarify where and how the credit card is being used. These codes are comprised of four digits.
For example, Mastercard initially assigned online gaming operators the code 7995, which is also its code for lottery tickets, racetrack wagers, and poker chips.
Banks would see this code and, unable to differentiate gambling at a legal online venue from sending money to an offshore site, block attempted transactions due to a concern over illegal gambling activity.
To prevent this from happening to players attempting to legally gamble, Mastercard introduced a separate code for legal gambling venues: 9754.
New Jersey lawmakers have decided to follow Mastercard’s lead and introduce a new credit card code to make it easier for players to access the state’s online casinos.
This new code, specific to New Jersey’s online gaming industry, will create a unique category for these enterprises, preventing any confusion like in the Mastercard example.
The code was created through an agreement between the New Jersey Division of Gaming Enforcement and the state’s Department of Banking and Insurance.
It will be fully implemented by the spring of 2015.
Security and Legality Concerns
Online gambling only became legal following a new interpretation of the Wire Act of 1961, which prohibits the electronic transfer of funds for wagers on sporting events or contests.
This act banned certain business models based on the interstate transmission of money. In 2011, the United States Department of Justice officially stated that funds transferred for use in online casinos and poker rooms are not in violation of the act.
However, many banks remained skeptical of this ruling and the newly-legalized online gambling it brought. These banks refused to authorize transactions related to legalized online gambling.
Two examples of banks that did not allow their credit and debit cards to be used to play online, stating concerns of violating the Wire Act and the Unlawful Internet Gambling Enforcement Act of 2006, were Bank of America and Wells Fargo Bank.
Concerns About Gambling Addiction
Critics of these new credit card codes and alternatives point out how making it easier to play online can enable gamblers’ addictions. By accessing online poker rooms and casinos with little to no roadblocks, it can become dangerously easy for at-risk players to lose everything.
In New Jersey, regulations are in place to protect these players. Once a player’s online gaming account reaches a balance of $2,500, the casino is required to block any further contributions until the player acknowledges how much he or she has in the account.
Some casinos take this requirement further, limiting the amount of money that a player can add to his or her account or giving players the opportunity to set their own limits before contributing. But advocacy groups like Stop Predatory Gambling feel this is not enough.
“Their business model is based on people who are addicted or are in the process of getting addicted,” said Les Bernal, the group’s national director. “If you’re a bank in this business, you’re essentially profiting from blood money.”
Alternatives to Credit Cards
To work around these issues, New Jersey legislators as well as the casino operators have opened access to alternative methods of paying for online gaming.
Lawmakers approved the use of Skrill, a digital wallet provider, as a way to transfer money to online casinos to play. Skrill can be linked to a bank account or loaded with a credit or debit card. Once the money is in the digital wallet, players can use it to easily gamble online without giving the casino their personal information.
Players can access their Skrill wallets through the provider’s smartphone app.
Another way to avoid having to use a credit or debit card to gamble is to use a prepaid card. Golden Nugget Online Casino took this direction to solve issues players had with using their own cards while it was still in operation.
Better Late Than Never
Saying that New Jersey’s online casinos have faced ridiculous obstacles is like saying the Atlantic Ocean is cold this time of year – of course they have. This issue with the credit card rejections was just one in a series of many, many stumbling blocks for the industry.
But will the adoption of new credit card codes be enough to alleviate the problems online gambling in New Jersey has faced? Not by itself.
But it’s coming at a time of remarkable growth for New Jersey’s online gambling industry. The failing casinos are closed, the websites that weren’t making ends meet shuttered, and now only the strongest players in the game remain.
They’re poised to keep trending upward and if the end of 2014 and beginning of 2015 are any indication of the next stage for the gaming industry in the Garden State, the future looks bright.