Updated on 09/16/2011 8:52AM

Dubious moralism on credit card ban


WASHINGTON - If a person wishes to buy pornography over the Internet, he may do so using a Citibank Visa card or most other credit cards. If he wants to purchase weapons or pay dues to a hate group, he can use plastic as well.

The companies that issue credit cards usually aren't in the business of making value judgments.

But there is one exception to this rule, one human activity so heinous, so depraved that Citibank and other prominent credit card companies won't be associated with it: betting. Their strictures may apply to legal as well as illegal gambling.

Under pressure from New York's attorney general, Citibank announced recently that it will prohibit the use of its cards in gambling transactions. Leaders of the horse racing industry aren't sure what is being prohibited. Internet transactions? Illegal Internet transactions? All wagers? But they do know that the actions of the credit card issuers complicate their efforts to let their customers bet from home by telephone or computer. Such bettors need to fund their accounts and using a credit card is by far the easiest way to do so.

Even before this announcement, Citibank and other companies such as MBNA and Chase Manhattan Bank were refusing to handle many gambling-related transactions, partly because of high delinquency rates. One bettor refused to pay her debts on the grounds that Internet gambling is illegal - and she won her case in court.

But the move by Citibank, the nation's largest financial-services company, attracted special attention because it was cloaked in anti-gambling rhetoric. Eliot Spitzer, New York's high-profile attorney general, made the announcement, declaring: "Americans now waste $4 billion on this pernicious form of gambling - i.e., online gambling. With this agreement, we will cut off an enormous line of credit that was a jackpot for illegal offshore casinos. These transactions are particularly troubling because Internet gamblers can, and usually must, bet on credit. Such gamblers can drive themselves deep into debt and bankrupt their families."

This is the same type of hypocritical moralizing put forth by anti-gambling zealots in Congress. If Spitzer and other politicians really want to protect the public from pernicious forms of gambling, they could start at home and denounce state lotteries, the most extortionate gambling game in existence. (New York's lottery had revenues of more than $4 billion last year.) With their condemnation of gambling, they are not only trying to score some political points but also to protect the state's game from competition.

While Spitzer said he was targeting offshore casinos, the credit card companies can't target sites with precision. Credit card transactions are "coded" to indicate what is being bought and sold, and Citibank spokeswoman Maria Mendler said their policy "applies to any transaction coded by Visa or Mastercard as a gambling transaction." The process, she said, "is automated, not judgmental."

So would Citibank's ban apply to legal gambling as well? "It probably would," she said.

The policy not only troubles the horse racing industry, but confuses it. Greg Avioli, deputy commissioner of the National Thoroughbred Racing Association, said, "I'm not sure that anyone has seen a detailed explanation."

Companies in the legal betting business have had different experiences with credit card issuers. Diantha Shaffer of www.youbet.com, the pre-eminent on-line betting service, said that many customers have encountered trouble trying to make deposits with credit cards. She said youbet.com encourages customers to use a service called Express Cash, which facilitates a transfer of funds from their checking accounts.

However, Bill Hogwood, senior vice president of Greenwood Racing, said that Philadelphia Park's telephone and on-line betting service has been unaffected: "We haven't been embroiled in what's happening elsewhere."

Tom Aronson, senior vice president of the TVG Network, said credit card companies need to make distinctions among types of gambling. He noted that the Interstate Horse Racing Act of 1978 authorized the telephone and on-line betting that his company offers and declared, "Credit card issuers should feel comfortable with the difference between companies like TVG and the offshore operations."

Many people in the Thoroughbred industry noted that Visa has enthusiastically associated itself with racing by sponsoring the Triple Crown series. Yet at the same time Visa seems to be associating itself with the position that gambling on the horses is wrong. That position seems to be contradictory and indefensible - but nobody is forced to defend it.

The credit card companies have allied themselves with the many Washington politicians who decry the evils of gambling and strive to protect even responsible adults from the dangers of placing a wager. At least the politicians are publicly accountable for their actions, and they have to work through a prescribed legislative process before prohibiting citizens from doing something that they want to do. But when Citibank and other companies take such an action, there is no due process and no opportunity for debate. Who elected them to make dubious moral judgments on behalf of the American public?