EBay Says No to PayPal Gambling

[Meestermike]

July 9, 2002 PDT
Online gamblers, most of whom can no longer use U.S. credit cards to fund their habit, are about to lose yet another payment option.

Under the terms of its planned purchase of PayPal (PYPL), eBay said Monday it intends to stop offering the payment service for Internet gambling transactions.



EBay, which plans to acquire PayPal in an estimated $1.5 billion stock transaction, attributed its decision to an "uncertain regulatory environment surrounding online gaming." With the U.S. House of Representatives reviewing legislation to prohibit Internet gambling, the online auctioneer determined it was too risky to continue offering the service.

Although the decision seems sensible for eBay (EBAY), analysts say it poses a host of problems for online gambling companies. Many gaming firms have promoted PayPal recently as an alternative to credit cards. Now, they're hard pressed to find a replacement.

"There are a number of alternative payment solutions. The problem is in terms of size, none of them have as much exposure or usage as PayPal does," said Michael Tew, an analyst at Bear Stearns, which recently published a report predicting revenues at gaming sites will drop sharply next year.

PayPal and eBay are the latest in a long list of payment companies that have decided to get out of the gambling business.

Many large credit card issuers, such as Bank of America, Fleet, Direct Merchants Bank, MBNA, and Chase Manhattan Bank have already started to b**** online gaming transactions. More recently, Citibank, which controls approximately 12 percent of the U.S. credit card industry, also joined in.

Keith Furlong, deputy director of the Interactive Gaming Council, ranks the increasing credit card rejection rate as "the most important issue affecting the growth of the gaming industry." In order to survive, gambling sites will need to find new transaction methods.

With PayPal out of the picture, gamblers are apt to turn to competing online payment services. Furlong cites NetTeller and FirePay as two of the better-known alternatives.

Gambling sites also often allow payment through debit cards, which take cash directly out of a user's bank account. However, customers are wary of the lack of security features debit cards offer, in contrast to the security credit cards afford. The fact that gambling sites like to incorporate in exotic locales like Antigua or the Isle of Man only adds to the sense of unease.

Payment options will be reduced further if lawmakers pass one of two similar bills pending in the U.S. House of Representatives. The bills, introduced by Rep. Bob Goodlatte (R-Virginia) and Rep. James Leach (R-Iowa), seek to prohibit online betting and make it illegal for companies to process gaming transactions.

Against that backdrop, it's understandable why U.S. payment processing companies are staying out of the gaming arena, Tew said. The odds for staying in business are not good.

 

[walleyek]

Wonder if PrePaidATM is next. Personally, I like the convenience of being able to withdraw funds from almost any ATM machine in the world.

 

[heleanth]

I just read an article about PayPal settling with the state of New York regarding the charges of facilitating illegal gambling. They paid a $200,000 fine and admitted no wrongdoing.

The article said that PayPal will continue to make deposits to online gambling facilities for all their customers except those that live in New York.

Hope that is good news for some of you. I have used Western Union directly, but I can see where it would be great to have PayPal if you are using more than a couple of books. That way you can use PayPal to hold most of your funds and transfer to a book if you decide to make a play there. That way you don't have to keep a significant amount tied up in each book.

 

[hoya]

Did you see a date on that article or do you have a link? I'm pretty sure Paypal is not accepting gambling related transfers any more, but i could be wrong. Has anyone been able to make a transfer to a book in the last few days?

 

[taoist]

...have already begun making the transition to Netteller.


PayPal -----------> :thefinger

 

[Magic_01]

when is this suppose to take effect?

I have been using paypal still. I dont' think you can go directly to the casino, but I have been getting around it... I send money to a buddy, and he sends it right back, then I can deposit with the paypal balance.

 

[1837]

Some sportsbooks stops taking payment with paypal on wednesday but Paypal hasn't stop taking payment from sportsbooks! I've just made a deposit to one using paypal and it was as easy as before!:shrug: I'll continue on this way until they all stops but for now it isn't the case....

 

[AM2kidz]

Hey 1837

Hey 1837

Hey if you dont mind which book was still allowing you to give Pay Pal as a deposit method.... I can't get any of them to take my Pay pal... what a joke.. thanks GLTA AM2kidz....

 

[1837]

Intertops is still taking deposit

 

[1837]

I called them to request a payout with paypal and it is still available even though it isn't written anymore in their payout options... You have to call to do it with Paypal

 

[AM2kidz]

Question..

Question..

I'm not too familiar with Intertops... Are they part of Madjacks Books?? If not, are they trustworthy and how is the site doing... Are you totally happy with the way they run things?? Let me know... thanks GLTA AM2kidz...

 

[1837]

no they aren't part of Jack's book yet They are really trustworthy but have low limits of 275$ on motor racing...

 

[Domer]

sportsbet.com

sportsbet.com

You can still fund sportsbet.com directly w/CC. without any 3rd party involvement, iepaypal, netteller). It is a decent site, pays out Immediately. Does not have the #of gambling options as say Olympic, but I like it much better.

Olympic sucks, because as a minor player, they make the payout as much of a pain in the ass as possible