PayPal Limits Online Gambling In New York
PayPal is to stop processing payments from New York customers to online casinos, as of September 1, after an investigation by New York State attorney general, Eliot Spitzer, and to pay a USD 200,000 fine. The settlement effectively makes PayPal a law enforcement agent in that federal officials have to be alerted if it finds any customers to be operating a Web site that "reflects or represents conduct that violates any state or federal law", even outside New York. "[PayPal is] effectively judging [for illegal activity]", observed NY-based lawyer, Mike Godwin.The move is part of Spitzer's crackdown on online gambling, which is illegal in New York, as in other states. Online gambling was expected to account for 10 to 15 per cent of PayPal 2002 revenues, but eBay said PayPal's gaming service would be dropped after its acquisition, due to "the uncertain regulatory environment". PayPal already reports suspect customers to law enforcement officials, but will now have to notify agents if a member advertises "for sale on its Web site controlled substances without a doctor's permission", the NY Times reports.
PayPal agreed to the provision to comply with federal laws, but Spitzer says the move "shows that we intend to stop any company [that] facilitates illegal gambling transactions". In June, Spitzer's office investigated Citibank over concerns of facilitating illegal gambling, and the bank has now paid USD 100,000 in costs, and USD 400,000 to gambling support groups. Since credit card transactions are tagged to show what is being bought or sold, card issuers can withhold credit for gambling payments, as Citibank, MBNA, JP Morgan Chase and Bank of America are now doing. Related Links
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