Update: How to use Banks for Internet Gambling
Yesterday’s Bank Talk entry examined how NetSpend once served as a retail storefront for internet gambling sites. Online gambling requires some kind of access to the payments system. The rulers that be in our financial world are thrust into a new role of deciding how to best respond to the age old issue of addiction to gambling.
The means through which gamblers can utilize the banking system for their gambling is evolving. US regulatory agencies (Office of Thrift Supervision, Federal Deposit Insurance Corporation, Treasury, Federal Reserve) have remained quiet on this topic. In the fall of 2009, Treasury and the Federal Reserve issued a joint statement, in response to outside concern. They took the dramatic step of announcing that they would delay any action on this issue until 2010.
Congress appears to be the likely location for any new reforms.
How online gambling is changing
My research tells me that banks are still an agent for deposits on gambling accounts. US banks have largely left this market. They have been replaced by willing European banks. The Financial Services Authority (FSA), a UK bank regulator, appears to oversee some of the new institutions that are working with those gambling firms.
Gambling sites such as PokerStars.Com or FullTiltPoker.Com need a way for their customers to bring money to the game. Until the US established the Unlawful Internet Gambling Enforcement Act (UIGEA), consumers could use NetSpend to put money on debit cards at US banks, with the benefit of FDIC insurance.








