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Don't bank on using credit, debit card for online gambling in Michigan

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Outfits are now taking online bets in Michigan, with the Michigan Gaming Control Board approving it last month for the first 10 casinos and their online platform partners and the promise of more to come.

Just be aware if you intend to use a credit or debit card, some card issuers — such as Comerica — are alerting customers they won't allow it; and there's industry tension, regulators confirm, whether using them to gamble is beneficial.

A spokesman with the Michigan Gaming Control Board said Tuesday there are a variety of reasons for this. The most obvious is that online gaming is new, and businesses, the regulatory agencies, and policy makers are still sorting out what to do.

Another reason: There are many businesses that each have their own regulations and challenges — including the online platforms, the credit card companies, and the banks issuing the cards — and that they can decline to take credit and debit card payments.

Unlike the United Kingdom, where gambling with credit cards is banned, it is permitted in Michigan, but some gaming platforms and banks are opting out of offering the option.

Regulators speculate it likely will take at least six months before you start to see the industry reach some agreements on how to handle the credit and debit cards. Still, they add, it is difficult to predict what will happen.

There are ways of gambling online without a credit card. Some outlets accept bank or wire transfers. Others also allow you to set up a e-Wallet, which is similar to an online bank account. E-Wallet providers process financial transactions with online betting sites and are a fast-growing segment of the industry.

Still, American personal finance company NerdWallet pointed out in a report last year that using a credit card for online gambling is "a roll of the dice" because credit and debit cards "aren’t always accepted and the usual purchasing rules might not apply."

You can try to make deposits at online gambling sites to place bets with a Visa or Mastercard and "to a lesser extent," American Express or Discover Card, NerdWallet said.

Transactions, however, are often declined because many large banks don’t process them.

In addition, in the fine print of some credit card agreements, gambling is considered a cash advance. This means that there may be higher fees and interest rates, lower credit limits, and no grace period on repayments.

There also may be federal stipulations on financial reporting that banks seek to avoid and concerns about transaction disputes. As a result, the banks or credit card companies have decided to disallow these kinds of transactions.

In a notice to customers, Dallas-based Comerica Bank said it "does not currently allow the use of debit cards or web or mobile banking services for use with online gambling sites."

What's more, the bank warned, "Attempting to use these sites may result in your debit card or web banking being temporarily disabled."

In response to inquiries from the Free Press, Comerica confirmed its customer alert and said it will "continue to monitor the federal and state legal and compliance framework surrounding internet gambling for guidance how to safely provide banking services in that area."

Comerica is not alone.

Banks are seeking to avoid security issues and, according to the banking industry trade publication, American Banker, avoid "inadvertently facilitating financial crimes and being punished by federal authorities." There's also concern the new administration may tighten scrutiny of anti-money-laundering rules.

Last year, the UK's gambling commission banned credit cards to place bets, in an attempt to curb problem gambling, the British Broadcasting Corp. reported. Research showed 22% of online gamblers using credit cards were problem gamblers.

It may be too soon to know whether this is the case with online gamblers in Michigan, but if it proves to also be the case, here, regulators and public policy makers may take similar steps.

At the same time, however, in the United States, the American Gaming Association, a lobbying group in the U.S. gaming industry, has been urging state regulators to allow casinos to modernize how gamblers bet and transact funds, according to Casino.org.

In June, Casino.org reported the AGA "believes allowing casinos to move from a largely cash-based environment to digital is in the best interest of the house, customer, security, and law enforcement."

The report quoted the AGA's president Bill Miller saying, "advancing opportunities for digital payments has been one of our top priorities," adding the pandemic reinforced the urgency in allowing gamblers to use payments they are comfortable with.

In Michigan, the state gaming control board said, measures also are under consideration to allow gamblers to put down deposits or pay into accounts at nearby retail locations and then spend it online.

If approved, it may be a workaround.

Meanwhile, here is some other online gaming information you should know:

The minimum age for online gambling and sports betting is 21. You are not required to be a Michigan residents, but must be within the state's borders when placing bets via smartphone app or computer.

Ohioans could, say, cross the border to place bets. 

https://www.freep.com/story/news/local/michigan/2021/02/02/credit-debit-card-online-betting-michigan/4351696001/