ALBANY, N.Y. – New York state's attorney general has succeeded in doing what Congress could not: he has made a deal with the nation's largest credit card issuer to block online gambling transactions using its credit cards.
In the deal announced Friday, Citibank agreed not to provide authorization to gamblers nationwide who want to use its cards to participate in online gaming. The bank will also pay $400,000 to nonprofit groups that help families hurt by gambling addictions.
"Americans now waste $4 billion a year on this pernicious form of gambling," said Attorney General Eliot Spitzer. "With this agreement, we will cut off an enormous line of credit that was a jackpot for illegal offshore casinos."
Lawmakers in Washington have been trying to ban Internet gambling since 1996, arguing that the money goes to questionable sources that are not bound by U.S. banking regulations. They also argue that addicts run up massive credit card debts that they then frequently default on paying.
"Citibank agreed to take these steps to help alleviate concerns raised by the attorney general about the impact that gambling on credit may have on New York residents," said Citibank spokeswoman Maria Mendler. "In addition, Internet gambling transactions have an increased potential for fraud loss, increased delinquency rates, and there is a greater potential that proceeds from such transactions may fund inappropriate activities."
The challenge to prevent Internet gambling is becoming more difficult over the years, especially since some states have decided to participate.
Citibank, the largest credit card issuer with about 12 percent of the U.S. market, is joining other firms, including Bank of America, MBNA and Chase Manhattan Bank, Spitzer said.
Gambling could still be done through accounts funded by players, similar to Off-track Betting systems, a spokesman for Spitzer said.
The Associated Press contributed to this report.