There has been controversy over the UIGEA since the bill was tacked onto an unrelated port bill back in 2006. Without ever defining what “unlawful gambling” actually is, the law nevertheless puts the burden on the financial institutions to block any illegal transactions related to gambling. For two years, various government agencies have debated back and forth over what the best way to enforce this would be with a result that nothing was done – until a few days before President Bush was to leave office.
At the last minute, Mr. Bush set forth a ruling that financial companies must comply with or be in violation of the law themselves. Although they have until December 2009 to be in full compliance, some of the companies are beginning to block transactions already. This type of last minute ruling is referred to as a “midnight rule” and is actually under fire on Capitol Hill. Congressman Jerrold Nadler of NY has introduced HR 34 which calls for a 90-day review period for any bills passed in the final 90 days of a Presidency.
Unfortunately for the New Hampshire Lottery Commission, major credit card companies are already taking steps to comply and have been blocking perfectly legal online lottery subscription sales. Thus far, this seems to be affecting those who are trying to use credit or debit cards to buy subscriptions to the Powerball and Tri-State Megabucks games – naturally two of the most popular lottery games in the state.
The trouble started when Mastercard and Visa changed the NH Lottery’s merchant code from “government service” to “betting, casino and gaming”. This change was in order to comply with the new regulations. Needless to say, this problem has lottery executives understandably nervous about what this could do to revenue.
“We could end up losing some significant revenue from this,” Executive Director Rick Wisler said. “It can amount to a million dollars a year or more to the Lottery if credit cards are not allowed.”
Wisler said that both Mastercard and Visa said that they would take their concerns under review but nothing has been changed at this time. Visa issued a statement in response to a reporter’s question that may explain why this happened but does little to address the concerns.
“Visa requires its financial institutions worldwide to ensure that their gambling merchants — including lottery tickets, casino gaming chips, off-track betting and wagers at race tracks — identify their transactions as gambling transactions when they are submitted through the Visa system for authorization by the cardholder’s financial institution. This identification requirement enables our issuing financial institutions to block properly coded Internet gambling transactions where prohibited.”
For some would-be subscribers, the problem lies in the charges that are accepted. Thre have been many complaints from purchasers who managed to make the purchase but were then charged extra fees by their banks for those purchases. At this time, there are no details available as to how many customers were affected by bank fees or which banks are assessing the extra charges.