January 27, 2000		2000-R-0086
STATUS OF CONNECTICUT LAWS REGARDING THE PAYMENT OF INTERNET GAMBLING DEBT CHARGED TO CREDIT CARDS
By: Gregory Joiner, Research Fellow

You asked for the status of Connecticut laws regarding the payment of Internet gambling debt charged to credit cards.

There are no Connecticut laws explicitly pertaining to the payment of Internet gambling debt charged to credit cards. More generally, there are no laws regarding the use of credit cards in financing costs associated with gambling. Nationally, only Nevada, Louisiana, and Illinois have laws banning Internet gambling.

Credit card companies have responded to the emerging popularity of Internet gambling in various ways. Although American Express and Discover Financial Services do not accept Internet casinos as merchants, Visa and Master Card do. However, in response to a lawsuit (which was later settled) by a California woman who charged and refused to pay over $100,000 in Internet gambling losses, both Visa and MasterCard recently enacted Internet Gambling guidelines.

Visa requires member banks to verify that online casinos have a valid license to operate under the laws of the casinos' principle place of business. Internet gambling sites also must clearly post their rules of play and payout policies and use their best efforts to prohibit minors from gambling. As a condition to processing Internet gambling charges, MasterCard requires Internet casinos to post a notice on their web sites stating that online gambling may be illegal in some jurisdictions, and that gamblers using MasterCard for payment should ascertain whether Internet gambling is legal under applicable law. The company also requires Internet casinos to ask prospective gamblers to identify the state where they are located, and maintain a record of such responses from the gambling site.

There have been few cases on Internet gambling debt charged to credit cards. In Jubelirer v. MasterCard International, Inc. et al, 68 F. Supp. 2d 1049, (1999), the plaintiff sought a declaration that credit card debts arising out of online gambling losses are unenforceable as they violate the Federal Racketeer Influenced and Corrupt Organizations Act (RICO), which, among other things, makes it illegal for any person or enterprise to collect unlawful debts. The plaintiff, who incurred online gambling debt on his credit card, asserted that since Internet gambling is illegal credit card companies that process Internet gambling transactions violate the RICO Act. The plaintiff's contention that Internet gambling is illegal is based on an untested interpretation of the Federal Interstate Wire Act, which makes it illegal to offer or take bets from gamblers over the telephone lines or through other wired devices.

The suit, which was brought in U.S. District Court, was dismissed for procedural reasons. Similar claims, however, are now working their way through state courts, but none have yet been decided.

GJ:lc