The passage of the federal Unlawful Internet Gambling Enforcement Act in 2006 banned processors and banks from any handling of online-gaming transactions. The major turning point for online gaming came with the interpretation of the 1961 Wire Act in December 2011. The U.S. Department of Justice released a memo with the interpretation of the act being that it applied only to online sports betting; this interpretation cleared the way for selling lottery tickets online which then led to online poker and other games.
New Jersey, Nevada and Delaware currently allow some forms of online gaming. According to an article by Niraj Chokshi of The Washington Post, the U.S. should “Expect at least 10 states this year to consider bills that would legalize online gambling, according to a new study.” The 10 states considering legislation are: California, Colorado, Hawaii, Illinois, Iowa, Louisiana, Massachusetts, Mississippi, New Jersey and Pennsylvania.
Eight states considered bills last year but only two, Nevada and New Jersey, passed bills. Online gambling for the state of New Jersey began November 26, 2013 and saw a generated $8.3 million by the end of the year. According the Chokshi, “GamblingData predicts New Jersey’s online gambling market will generate $262 million in gross gambling revenue this year and $463 million by 2017.”
The New Jersey Division of Gaming Enforcement has regular oversight for online-gaming. The Division also lists several payment companies, such as Skrill USA, that are registered to work with operators and gaming users within the state. Mobile wallets provide a means for money to be transferred from online gaming accounts to the funding accounts.
In an article by Digital Transactions, Skrill USA chief executive, Neil Steinhardt, says that “Consumers pay nothing to move funds via the automated clearing house to their Skrill accounts, but pay 2.9% if using a branded payment card. Withdrawals from a Skrill account are free.”
eMerchantBroker.com, which specializes in merchant accounts, has developed a merchant account designed specifically for gaming and casino companies. According to their website, “It comes as no surprise to anyone that given the nature of the industry, banks back away from providing merchant services for online casinos. Further deterring the traditional merchant service providers is the inevitable high rate of chargebacks and disputes.” The company promises a merchant account to those that can maintain a chargeback rate of lower than 3%.
As states discuss and pass legislation, competition will continue to rise from both within the country and on an international scale; since online gambling has been legal in other countries for years. With the recent return of online-gaming to the U.S., companies are seeing a field of opportunity. Steinhardt commented to Digital Transactions that “If you look to Europe as a model, customers like to bring in control of their own funds and like to work with established operators.”