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Citigroup Joins Fight Against Online Gambling - Agrees to Block Key Internet Transactions15 June 2002New York — Attorney General Eliot Spitzer today announced that the nation's leading financial services company has agreed to block online gambling transactions with its credit cards. The move by Citibank, the nation's largest credit card issuer, is expected to significantly reduce illegal internet gambling. "Americans now waste $4 billion a year on this pernicious form of gambling," Spitzer said. "With this agreement, we will cut off an unlimited line of credit that was a jackpot for illegal offshore casinos." Under the agreement, Citibank will no longer process transactions with online casinos and other internet gambling operations. These transactions are regarded by experts as particularly troublesome because internet gamblers can, and usually must, bet on credit. Such gamblers can drive themselves deep into debt and bankrupt their families, Spitzer said. Further, there is no effective way to prevent minors from gambling online, he said. In New York, as most states, the promotion of unauthorized betting and gambling is illegal ?- whether online or off. However, Internet gambling businesses usually operate offshore in foreign locations, beyond the enforcement power of local authorities, so that they can avoid prosecution. Noting that it is often difficult to prosecute online casinos operating in violation of New York and U.S. law, Spitzer said it was essential that financial entities, including banks, credit card associations, and other payment and processing services, do everything in their power to avoid facilitating these illegal and harmful transactions. Over the past several years, many large credit card issuers, such as Bank of America, Fleet, Direct Merchants Bank, MBNA, and Chase Manhattan Bank have begun blocking such transactions. Until the Attorney General began an investigation, Citibank, which controls about 12 percent of the nation's credit card market, had not done so. The Attorney General commended Citibank for recognizing the role it can play in avoiding the harmful effects of online gambling, and called upon all credit card issuers and other payment systems to follow the lead of Citibank and other banks that block such transactions. While there have been several law enforcement actions combating online casinos, the Attorney General's action is the first to address financial entities that process gambling transactions. In 1999, for instance, the Attorney General won a lawsuit in which it alleged that a casino that was licensed in Antigua, but accepted bets from New York residents, had violated New York's gambling laws. The Attorney General's latest action reflects a growing effort by law enforcement and legislators to place obligations upon the financial systems through which illegal Internet transactions, such as gambling, occur. Several bills currently pending in the U.S. Congress would place new restrictions and criminal penalties on financial entities that facilitate such transactions. In addition to imposing blocking mechanisms that will reject transactions coded as gambling, Citibank has agreed pay $400,000 to groups that combat compulsive gambling and aid those affected by it, and to pay an additional $100,000 to the State of New York. The case was handled by Assistant Deputy Attorney General Dan Feldman, Assistant Attorney General Ken Dreifach and Investigator Vanessa Ip. |