I work for an offshore betting company who I probably should not name.
our customer’s deposits often get declined by their banks because the code that the bank sees shows that it is for betting.
It’s perfectly legal, but most of the banks now have a policy of not authorizing these deposits. even if the customer has plenty of money available…
this really annoys me as it’s hurting our business and surely it is the customer’s business what he/she does with their money. not their bank. the bank is only looking after the money for them!
so why do the banks have this policy?
Put this in the pit if you want. it is a bit of a rant, but more of a question.
Lobsang, here in the United States we are fortunate to have a government that cares about us. Our elected officials blanch with horror at the thought that we might blow our hard-earned money gambling instead of using it to support our families–especially, I hasten to add, if we might blow it at sleazy establishments like yours that don’t share their booty with the vice lords known as American state governments. The only thing that makes a politician tremble more is the thought that somebody somewhere might be lighting up a joint.
Seriously, the behavior you observe is a consequence of the Bank Secrecy Act, which requires banks to report any suspicious or illegal activity on the part of their customers to the federal government. The primary purpose of this law is to conscript banks as informers in the War on Drugs, and if it happens to make illegal offshore gambling more difficult, hey, as far as the politicians are concerned that’s a great side benefit.
jklann, I’d say you’re being rather more antagonistic than is atrictly appropriate for GQ. For instance, I might add that since banks are chartered by the state, insured by the state, and protected from fraud by the state, it is perfectly reasonable for the state to demand a price for this largesse, but I won’t, as that’s a topic for Great Debates.
That said, I’d generally agree with what’s been posted so far. Large off-shore transactions by natural persons (as opposed to corporations) are often either tied to the drug trade or money laundering, or are part of a scheme to defraud the bank if the thief has got his hands on some customer information and wants to use it before the theft is noticed. There are indeed laws which require the reporting of some of these transactions, if large; as for the fraud part, since the bank, not the defrauded customer nor the government, is typically on the hook for these kinds of thefts, it needs to ensure that the transaction is legit before it releases the money.
Cliffy I think (or hope) jklann was being sarcastic, not antagonistic.
Our business is perfectly legal, and we have anti-money-laundering safeguards in place. Can the banks not check this? or Isn’t the bank system robust enough?
Many banks do authorize our customer’s deposits. just some don’t.
Most of the deposits are around $50 - hardly large. sometimes deposits of 5 dollars get declined!. a very small minority of deposits are over about $250
we also check that the money is being spent on betting (which it would not if it was being laundered)
Maybe, maybe not. Most state and federal gambling laws were written before the advent of the Internet, and their applicability to online gambling is often uncertain. It sounds like your company has excluded 10 states where Internet gambling is clearly illegal, but there may be questions in many other states.
It doesn’t surprise me, then, that banks will vary in their response when faced with a transfer to an account which will be used for Internet gambling. Some might look the other way, or not even notice, but others will fear either (a) the burdensome reporting requirements of the Bank Secrecy Act (note the Orwellian name), or (b) a nuisance lawsuit of the type described in Sailor’s link.
I assume that in addition to taking the customers’ deposits/bets through their credit cards you, like many offshore casinos, offer them the option of paying them any winnings by the expedient of crediting back the winnings to that same credit card. Easier/cheaper than a wire transfer in some cases, and to anyone who’s looking, it just seems like a merchant rebated the customer for, say, returned merchandise. Also minimizes excessive scrutiny by overagressive regulators who may come after the casino for violating the anti-gambling or other laws of the regulator’s/gambler’s home state.
The problem is that the IRS has figured this out too, and is worried about credit card debits/credits being used to mask gambling transactions (specifically, gambling wins by U.S. citizens, which are taxable, and other money laundering). If your $10,000 exacta bet win is credited back on you MasterCard as “Credit from Antigua Enterprises Inc.,” how’s the IRS going to know to audit/tax you on it? They are, thus, not happy with any organized fishy offshore credit card behavior by U.S. citizens, and have targeted casinos among others in particular:
In addition to what has already been posted, the companies may simply be protecting their own asses.
A little while ago, a woman used her credit card to rack up quite a big loss on Internet gambling. However, she refused to pay and sued the credit card company for even allowing her to use it because gambling is illegal.
I have no idea how the case has gone, but it may simply be that the companies don’t want to have to worry about it, and the simplest way to avoid it is not to allow the deposit to begin with.
Another issue is that they may have a history of gamblers losing a lot of money and then going bankrupt, thus failing to pay off their bills. I can’t speak to this in any general manner, but it does make some amount of logical sense and I can point to one of the secretaries in my office, who had been a regular at Vegas and has (perhaps not so coincidentally) declared bankruptcy twice, thus screwing the credit card companies both times.
quote: ‘Nevada law is not as clear as it could be on the subject. The Nevada law is the same as the rest of the English-speaking world: In general, gaming debts “are void and unenforceable and do not give rise to any administrative or civil cause of action.”’
For a few specific examples of players declining to pay credit card/check/market balances because they were incurred in respect of gambling, and because the relevant jurisdiction (e.g., the site of the bet, or the home state of the issuing bank) maintained this rule, see:
Obviously, the legislatures of Nevada, N.J., etc. have been intensively lobbied to change these rules (just as credit card companies successfully lobbied to change usury laws), but it’s still risky enough that I’d imagine some banks want no part of it. See generally: