Analysis: Citibank Blocks Use of Credit Cards for Internet Gaming

On June 14, 2002 under pressure from New York States regulators and threats of criminal prosecution, Citibank announced it will block the use of its credit cards for Internet gambling. The prospect of criminal prosecution for aiding and abetting Internet gaming, which both U.S. federal law and some state laws criminalize, is a risk that has caught the attention of credit card companies. Citibank is the largest credit card issuer in the U.S. Citibank release a statement in which it agreed to pay $400,000 to nonprofit agencies that provide gambling counseling. Citibank also explained that it was blocking Internet gaming because of the ?increased potential for fraud loss,? and higher ?delinquency rates? on the charges. Still another problem has been that some debtors have successfully resisted payment of their debts on the basis that creditors cannot enforce a debt on an illegal transaction, citing the illegality of Internet gaming under U.S. federal and state laws.