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The rules to the Unlawful Internet Gambling Enforcement Act have only been in effect for a few days, but already there has been problems regarding the law. The New Hampshire Lottery Commission is claiming that Visa and MasterCard are both blocking legal lottery transactions.
“We could end up losing some significant revenue from this. It can amount to a million dollars a year or more to the Lottery if credit cards are not allowed,” said Executive Director of the New Hampshire Lottery, Rick Wisler.
The problem that is arising in New Hampshire is that Visa and MasterCard are blocking online subscription transactions to the Lottery. Many people have decided to go the route of online subscriptions to buy their lottery tickets. It allows people to buy for over 100 draws at a time.
Visa and MasterCard created the issue in New Hampshire when they both changed the merchant code for the Lottery. The change was from “government service” to “betting, casino, and gaming,” according to UnionLeader.com.
This is the first problem that has arose since the UIGEA went into effect. Visa and MasterCard has changed the merchant codes to come into compliance with the law. With the law being vague, it will take some time for banks and credit card companies to adjust the way they are used to doing business.
The company’s may not have to partake in a complete overhaul, however. iMEGA has a lawsuit against the Federal government to eliminate the UIGEA on the basis that it is unconstitutional. They are not the only group trying to have the law overturned.
Representative Barney Frank also has a Bill currently in Congress that would eliminate the UIGEA. The current Congress may also look to regulate the online industry in the not so distant future.
Powerball, a multi-state lottery, is the game mostly being effected in New Hampshire. If the credit cards continue to block the online subscriptions, the state could lose out on valuable money for education. The lottery claims there are over 25,000 subscriptions a year that are signed up for online.
If the credit card company’s review the New Hampshire situation and decide not to change the merchant codes, the state has indicated a willingness to fight their battle in court.
In addition to the cards that are being blocked, the state has also received complaints that additional fees on people’s cards that are being accepted, are being added by banks that are approving the transactions.
“This is just the beginning of many legal problems the government is going to have with the UIGEA. The law is vague, and banks and credit card company’s now have the responsibility to stop online gambling transactions. The government knew these were the dangers of this law, that legal forms of gambling would also be affected by the published rules for the UIGEA,” said Attorney Scott Tredskin.
What Tredskin says holds some truth. Many financial institutions already have said that they would rather block all forms of gambling, rather than spending the money to develop a system that would filter out only what the government states to be illegal, which at this time is undefined.