Bettors Having Trouble Getting Out of the Gate

Customers who have had trouble launching Internet accounts with the newly legalized horse-betting systems in California should know that the difficulty might lie with their credit-card companies; many of them have a policy that prohibits cash transfers to gambling-related businesses.

It’s more of a sure bet that a horseplayer will be able to funnel credit-card advances into his racing account if he uses the telephone instead of the Internet. Both means of betting were legalized here as of Jan. 1, and last month the California Horse Racing Board approved the licenses of the Television Games Network and XpressBet, which are owned by companies that have been taking horse bets in other states. The racing board is expected to consider applications for other licenses at its meeting Thursday.

A reporter for The Times, attempting to start an account with XpressBet on the Internet, was unable to move money from a credit card into his horse account. But when he tried to do the same thing on the phone, talking to a live XpressBet representative, the credit-card transfer was approved.

David Webster, a spokesman for First Card Visa, said that since last fall his company has had a policy that prohibits an Internet user from taking available credit and sending funds into a gambling account.

“We no longer accept Internet gambling transactions,” Webster said, “because of the high-risk nature of these transactions and to protect our card members from fraud. This was a business decision and consistent with the practices of other credit-card issuers.”

Asked why The Times reporter was able to do business with his credit card over the phone with XpressBet, Webster said:

“Our fraud people tell me that statistically it’s not as risky [to allow a cash transfer] over the phone as it is by Internet. It’s less likely that someone using the phone will be making a call to the Bahamas.”

One of the arguments the racing industry made to obtain phone and Internet betting in California was that it needed to compete with offshore betting concerns in the Bahamas and elsewhere. Estimates vary wildly, but it has been said that as much as $50 million a year is bet offshore and overseas on California races.

Officials for Magna Entertainment Corp., which owns XpressBet, Santa Anita and several other racetracks, declined to comment about the bettor’s inability to start a horse account with a credit card through the Internet. Other ways of starting an XpressBet account are by cash at a sign-up booth at Santa Anita or by mail with a certified check.

A few weeks ago, a customer with a Television Games Network (TVG) betting account also was unable, with a Bank of America credit card, to send funds into that account using the Internet. Speaking on the phone to a TVG operator at a betting hub in Oregon, he explained his problem and she said that there was a way of moving the money from his credit card to TVG so that the credit-card issuer wouldn’t recognize the transaction as gambling-related. Then the transaction was completed.

“That could be fraud,” Webster said, but he preferred that further comments come from someone at Visa USA.

A spokesman there referred a reporter to Katherine Pulley, a spokeswoman for the American Bankers Assn., a Washington trade group that says it represents more banks than any other organization.

“If it’s fraud, it’s fraud,” Pulley said. “This has been a major point of a debate regarding an Internet gambling bill that’s been kicking around Congress for several years. Right now, enforcement rests with the banks.”

Mark Wilson, president of TVG, said that the industry should do a better job of convincing credit-card companies that betting on horses over the Internet is legal in California as well as many other states.

“We’re 100% legal in the eyes of the federal government and the State of California,” Wilson said. “The distinction between what we’re doing and what the offshore companies are doing is enormous. There’s so much of a gray area when it comes to the offshore guys.”

More and more, credit-card companies are staying away from transactions that involve casino betting and wagering on horse races. There have been court decisions that have forced them into this position. In California, according to a report in the New York Times, a woman lost $100,000 gambling, but a court ruled that she was not responsible. There is also the story about a gambler losing $1,500 in Internet roulette and then insisting that the money was fraudulently removed from his credit-card account.

Many years ago, in a small-claims court in Los Angeles, there was a suit brought by a bookmaker--in an illegal profession--against a client who owed him several thousand dollars.

The judge was about to order that the debt be paid, but then he learned that the money represented losing bets on horses and sporting events. Saying that gambling debts were unenforceable, the judge ruled in favor of the defendant. The fact that the plaintiff was a bookie never came up.