Legal NJ Gambling Sites: New Credit Card Codes Released

Payment processing has been one of the biggest challenges facing the New Jersey online gambling industry since online poker and casino games were legalized in late 2013. Reports of declined deposits to legal gambling sites have poured in since the beginning. This has left many players unable to fund their accounts and play online.

The full extent of the problem is unknown, but we do know that Wells Fargo, Bank of America and American Express continue to block all gambling-related transactions in New Jersey. Those three institutions account for a major chunk of credit card issuers in New Jersey. Gambling revenues in New Jersey have failed to meet expectations, largely because of players’ inability to fund their accounts.

The problem stems from banks’ fear of running afoul of federal regulations that prohibit the use of credit and debit cards for online betting. There’s a real legal risk for banks in inadvertently processing a payment for someone who is underage or not located in one of the states where certain forms of online betting are legal. So as a rule, some of the country’s biggest financial institutions continue to block all gambling transactions.

Out with the Old, In with the New

Banks identify credit and debit card transactions with “Merchant Category Codes” that describe the type of transaction taking place. Up until recently, all online gambling-related transactions have been identified with the code 7995. This code identifies the transaction as having something to do with online betting and most major banks block such transactions for fear of criminal liability.

Even though online poker and casino gambling are now legal in New Jersey, banks in the state continue to block most transactions coded as 7995. This has caused headaches for players and operators alike.

On April 17th, the major credit card issuers in the US implemented three new Merchant Category Codes that will identify legal online gambling transactions:

• 7800: State-run lottery sales
• 7801: Licensed gambling and poker sites in the US
• 7802: Legal online horse/greyhound transactions

The hope is that these new codes provide peace of mind for banking institutions that are leery of having anything to do with online gambling. These codes apply only to state-regulated gambling activities. Offshore wagering transactions will continue to be processed with the old 7995 code.

The catch in all this is that banks are under no obligation to process transactions of certain types. If Wells Fargo decides it still doesn’t wish to deal with internet betting, it can continue to block transactions to legal online casinos and poker sites. Even so, the implementation of these new codes is a step in the right direction. It’s bound to take time for the banking industry to become fully comfortable with an industry that was once considered illegal.

Things will likely improve as more states join the legalization bandwagon and related transactions grow in number. Although new credit card codes may not be the silver bullet for operators’ payment processing woes, it’s positive to see the industry slowly preparing itself for the inevitable.

In the meantime, players who continue to have problems depositing in New Jersey, Nevada and Delaware can look to other deposit options. Digital wallets Skrill and Neteller have recently returned to the US market through New Jersey and are more likely to process payments successfully. Players have also reported that wire transfers and eChecks are reliable means of funding their accounts.