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Citibank Blocks Gambling Charges

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June 15, 2002

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Under threat of criminal prosecution, Citibank has agreed to block the use of its credit cards for Internet gambling, joining Providian and a handful of other credit card issuers. With more than 33 million Visa and MasterCard accounts, Citibank is the nation's largest credit card issuer.

Citibank acted after the New York Attorney General warned that it could face criminal prosecution for aiding in the promotion of online gambling, which is illegal in New York and many other states.

"It's a shot across the bow to financial institutions that are supporting gambling," said Ken Dreifach, chief of the New York attorney general's Internet bureau. He said Citibank and other financial instituions were "making profits off of the financial hardships of compulsive gamblers."

Citibank also agreed to pay $400,000 to nonprofit agencies that provide gambling counseling.

Some banks had earlier blocked online gambling transactions, citing not only their hazy legality but also the stark reality that many customers dispute gambling charges, claiming that someone else used their card to run up gambling debts.

Visa and Master Card require online casinos to use a specific code when processing gambling charges. Citibank said it would block all transactions including that code.

The New York Times reported that Internet gambling operations were already suffering because of the crackdown by credit card companies. It said as many as 8 out of 10 transactions were being denied by banks. Many online casinos have gone out of business or are suffering heavy losses as a result.

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