New Hampshire lottery hit by online gambling law

Just as predicted in many articles reviewing the Unlawful Internet Gambling Enforcement Act (UIGEA) passed by Congress in late 2006, the legal online gambling companies will suffer as a result of over-blocking of internet gambling transactions. The Congress passed the law in late 2006, making it illegal for banks and financial institutions to process transactions to and from illegal internet gambling websites and although some exceptions for legal businesses were carved, it appears that the half-thought law (rushed in the last hours of Congress and attached to unrelated Port Security bill) is taking its first victim - the New Hampshire Lottery.

As reported by the local media, the NH Lottery has disclosed that the two major credit card companies, Visa and MasterCard, are blocking a big chunk of the online subscription ticket sales. Players can buy certain lottery game subscriptions online, via the New Hampshire Lottery website, but now the state is losing money as the two big credit card companies are blocking payments made by the players. "We could end up losing some significant revenue from this. It can amount to a million dollars a year or more to the Lottery if credit cards are not allowed," NH Lottery Executive Director Rick Wisler was quoted by the Union Leader.

The problem stems from the 2008 change of the code for the NH Lottery transactions to show betting, casino and gambling, which in turn leads to blocking of the transactions in accordance with the UIGEA. Credit card companies, such as Visa and MasterCard, assign merchant codes to their transactions to help identify the industry, for various reasons. Changing the NHLottery code to reflect gambling leads to a likely block of such transaction. By some accounts, the revenue of the New Hampshire lottery is down as much as $12 million in the six months of 2008 the change in the credit card merchant code has been in place.

Published on 01/23/2009