by | 11.17.2010 | 12:47am

By Ray Paulick

Many horseplayers attempting to use credit cards to fund legal advance-deposit wagering accounts were in for a surprise this week when their requests were turned down after the federal Unlawful Internet Gambling Enforcement Act went into effect June 1.

The law, passed in 2006 and delayed for several years as regulations were drafted, is designed to prevent Americans from using their credit cards for illegal Internet gambling, though it has specific exemptions for advance-deposit wagering approved by the Interstate Horseracing Act. But the law also provides a “safe harbor” for financial institutions, permitting them to block transactions involving any form of gambling, including licensed and legal ADW companies.  In other words, though the law permits credit cards to be used for ADWs, it doesn't require banks and credit card companies to OK transactions with those companies.

One Paulick Report reader sent us the following message on Thursday: “I've had three credit cards that always worked at my ADW accounts denied by all of them today and yesterday. They said there was nothing they could do and that I would have to deposit through my checking accounts. … I play online poker a little and tested my credit cards there after this. All three still worked for deposits to the poker site I play at. I can't bet races now as my accounts are close to empty.”

The Unlawful Internet Gambling Enforcement Act was to go into effect last Dec. 1, but was delayed until June 1, a move National Thoroughbred Racing Association CEO Alex Waldrop called “an important win for the racing industry.”

At that time, Waldrop said, “We will continue to work diligently with the financial services industry and our ADW service providers to ensure that online pari-mutuel wagers are processed in accordance with the Interstate Horseracing Act.”

On March 5, writing in his blog at, Waldrop said, “What is the NTRA doing now on Capitol Hill that affects you? Plenty. We are working to delay implementation of the regulations associated with the Unlawful Internet Gambling Enforcement Act. Simply put, the regulations can negatively affect the ability of horseplayers to fund their advance deposit wagering accounts. A $1.3 billion market is at risk. So are the thousands of online horseplayers and the hundreds of thousands of purse dollars that Internet wagering brings to our sport. Fans and revenues are  two things our industry can't afford to lose.”

Well, time flies. It's now June 4, those UIGEA regulations took effect, and many banks are not allowing transactions involving legal ADW companies. The complication arrived just days before the Belmont Stakes, one of the biggest wagering programs of the year.

“The law has a clear exemption for account wagering,” said Peggy Hendershot, who handles legislative affairs for the NTRA. “It is very specific that activities conducted under the Interstate Horseracing Act are exempt. But credit card companies have taken different approaches on how to address the UIGEA.”

One method, Hendershot said, is an opt-in process where all gambling entities are lumped together under code number 7995. In that case, she said, the credit card company would have to validate the ADW companies as an exempted entity, which requires several steps. “Not many companies were validating our merchants (ADWs),” said Hendershot. “That might explain why people are having trouble (using credit cards to make deposits).”

Hendershot said MasterCard is employing a new code unique to pari-mutuel wagering and lotteries that makes the decision for banks on whether to approve a transaction with an ADW an “opt-out” process. “Our preference would be for Visa to switch from the 7995s to the code MasterCard has adopted,” she said.

“I'm not surprised there have been bugs in the system,” said Hendershot. “It's still very much a process of education. The NTRA and our account wagering service providers are working with lobbyists and the credit card companies.”

In other news related to the new federal law, another Paulick Report reader said some banks in the United States have refused to cash purse checks from Great Canadian Gaming, which owns several racetracks in Canada, due to UIGEA and the fact the checks are foreign and from a gaming company.

UPDATE: Yet another reader sent the following comment regarding how the UIGEA may impact horseplayers: “More importantly and what VERY few people know is that banks and credit card companies are making listings/keeping files on ‘gamblers' via these funding requests and will cut credit limits. They know gamblers will default on payment at a higher rate than non-gamblers.”

Copyright © 2010, Ray Paulick

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  • Zoltar

    Long ago, my father in law said to my wife: “Banks are not your friend, they are the enemy.” Nothing has changed.

  • Vernon

    Why would any credit card company opt out when credit is determined by your ability to pay? Many players use debit cards so there’s no risk to the card company. The only thing I can think of is there’s an agenda by government and those company’s that opt out to force their will on people that gamble. There’s no way in hell these do good extremists will stop people from gambling. To put the squeeze on horse racing at this point is unseemly to say the least. Any company that “opts out”, I’ll sure as heck tear up their credit card. They better fix this problem real quick!

  • KY Horseplayer

    The banks aren’t your enemy. The Federal Government is your enemy (unless you suckle the government teet.) Their vast overreach into our lives has to stop. If I want to gamble, I should be able to gamble. I don’t use a credit card to play the horses, so this doesn’t directly affect me. But with other players not able to deposit funds, that affects the pools. Which WILL affect me. The federal government needs to get out of our lives. The more they legislate, the more unintended consequences are forced upon the American people.

  • Ian Meyers

    It is a temporary glitch as far as ADWs are concerned, no more than that. Most ADWs are now working with their merchant processors to straighten this out. As referenced in the article UIGEA does NOT apply to lawful account wagering activities.

  • Shannon

    I tried to deposit money into my ADW on Preakness day, and I was declined. The message said something about the state I was in (KY) and the banks/institutions (I tried my VISA and debit card). I was able to deposit into my poker account that weekend.

    Haven’t tied either lately and don’t plan to. No betting on the Belmont for me.

  • Memchuck

    It is amazing how the law was put into place to stop the funding of off shore sites such as the poker sites and instead it stopped ADW’s which are legal under not only the Interstate Horse Racing Act but several other acts as well.

    Tells you how screwed up our government is but more importantly how screwed up our banking institutions are and how ignornant they are of the laws in the US.

  • TVG has been running a promo for their “New” TVG Gift Cards. The deal was, buy Two $75 Cards, & they will depsosit $25 into your wagering account. Early May i decided i’d give myself an early B’Day gift, & buy two to fund my acct. when busted. Every time i tried to punch in C.C. info, it said my address didn’t match my C.C. address on file (it did, to the point i got their bill, to make sure it was EXACT).
    A few days (& 77 TVG promos for the Deal) later, i called TVG directly to find out WHY my purchase was being refused. An operater at TVG said THEY would enter the C.C. info for me to purchase Two $75 GiftCards. Three times he entered my info, only to get the same (incorrect address) notice. At THAT TIME, the TVG operator said,” Well, i guess your C.C. company isn’t accepting the transaction, considering it a gambling transaction” (I thought that was the whole idea of TVG selling a “Gift Card”, to circumvent the new law).
    Lo & Behold, a month later, a credit card bill comes in the mail. Listed are not one, not two, but THREE TVG Gift Card Transactions of $151.45 EACH ($1.45 shipping), along with THREE $10 Cash Advance Fees, & almost $5 in interest from the card purchases…
    The CARDS that were never mailed to me because my “address” was rejected by the card issuer.. NOW i have to go thru Two months of B.S. & hours on hold with my phone trying to get the issue resolved… WHAT A Clustertuck!!!

  • Garrett Redmond

    And some people want the US Government to get further into our business !!!!

  • john greathouse

    Maybe the first time you and I agree LOL

  • Allie Sheba

    It’s Bush’s fault.

  • Barb Dwyer

    Not to sound like an advertisement for them – but uses the ez money deposit system. It instantly transfers the money from your bank account so there’s no worry about your credit or debit card being declined.

  • Jay

    Doesn’t make any sense that they would target horse racing and not online gambling??!!

  • Mountaineer

    “Get the government out of my life” has come to mean get the Obama government out of my life. Guess what? The “government officials” who want to limit your betting horizons are republicans, tea baggers and fundamentalists afraid your going to have some fun.

  • Don Reed

    Can’t feel any compassion for people who use credit cards – in any way, shape, or form in the context of gambling – who have been given the bum’s rush by their cc issuers.

    (And how many of them belatedly found out that their wagering choices would have been a disaster? Did we hear their testimony?)

    Bet with cash. Period. When you run out of it, you don’t run out of luck – you’ve just been given enough to get home in one piece.

  • Don Reed

    Can’t feel any compassion for people who use credit cards – in any way, shape, or form in the context of gambling – who have been given the bum’s rush by their cc issuers.

    (And how many of them belatedly found out that their wagering choices would have been a disaster? Did we hear their testimony?)

    Bet with cash. Period. When you run out of it, you don’t run out of luck – you’ve just been given enough to get home in one piece.

    Post Note: If this isn’t an oversimplification, it appears that – in the context of the above article – the following traps, distractions, deadwood, and irritations can be avoided by using cash at a racetrack:

    The Unlawful Internet Gambling Enforcement Act;

    The Interstate Horseracing Act;

    Licensed and legal ADW companies;

    Banks and credit card companies;

    National Thoroughbred Racing Association;

    Alex Waldrop;

    Peggy Hendershot;

    “Bugs in the system”;

    “Process of education”;

    “Listings/files on gamblers”;

    “Credit limits”;

    And “defaults on payment rates.”

  • TSR

    I blame the NTRA for doing nothing again, they take money from horsemen groups around the country, they take money from race tracks around the country but less and less lately and pay huge salaries to do absolutely nothing for either group in 10 years. Churchill pulling out is the beginning of the end for this group, they can move on to representing the online poker players just take a dollar from each one of them and they can keep there fat salaries.

  • Concerned Observer

    Damned right. It’s all the governments fault. Get the government out of my life. I don’t want no damned FAA checking the planes I fly on. I’m tired of the government getting in the way of me getting the drugs I want. That safety crap of the food and drug administration is just a ruse to keep good stuff away from the people. Get rid of the weather service. i DON’T NEED NO JACKASS IN LOUISVILLE TO TELL ME IF IT IS RAINING! As for the oil in the gulf, If the damned government would have gotten the hell out of the way, and cut the taxes on BP and business this whole thing would not have happened. It’s the governments fault. We don’t need no stinkin’ government. Badges. I aint got no stinkin badge, I don’t need no stinkin badge. Where the hell is my unemployment check? It”s three days late. Damned government screwed up the postal service.

  • bookiebuster1

    How about use a green pack money card? Folks there are many other ways to fund your account beyond a credit card. For now i wont even get into the “responsible way to use credit” because that might be a bit much for some who also defaulted on their car and home loans recently :) People forget its all connected and gambling debt is BAD debt period.

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