Online Gambling: Ex-MasterCard Execs Bet on U.S. Regulation
Three former senior executives from MasterCard are betting that lawmakers will soon regulate legalized Internet gambling here and have set up shop to facilitate wagers as a U.S.-subsidiary for a United Kingdom payments processor.
UC Group Ltd, the parent of SecureTrading, released a statement today saying it is poised to provide “safe financial transactions and required consumer protections” in the United States in anticipation of federal legislation.
The announcement by the U.K. processor comes only days after online poker rooms and other gambling sites started reporting that MasterCard – and in fewer cases, Visa, the top payments facilitator – are blocking the placement of financial transactions. Although the sites offer other payment services for wagering, losing the two payments giants would strike a major blow to their operations.
SecureTrading’s chairman, Chris Thom, was chief risk officer at MasterCard, where he spent 11 years. The subsidiary’s chief operating officer, Ted Friedman, previously worked at MasterCard New York and Europay International in Belgium. And T.J. Sharkey, its head of customer sales and support, spent 17 years at MasterCard, recently as the group head of Global Merchants and Acquirers.
“Momentum for regulating Internet gambling in the U.S. has been building for some time,” Thom said in statement. “As Congress prepares to take the final step, SecureTrading Inc.’s turnkey system is primed to enable our customers to go live the moment Internet gambling is regulated.”
The business gamble is not far-fetched. Legislation (H.R. 2267) was introduced by Rep. Barney Frank, D-Massachusetts, in May 2009 that would legalize and regulate poker and other online betting games. These online venues have surged in popularity in recent years and account for more than half of the multi-billion dollar Internet gambling market.
Barney, chairman of the House Financial Services Committee, and other influential Democrats were able to delay implementation of legislation that bans Internet gambling payments until June 1, 2010. The law, enacted by the Bush Administration, prohibits financial transactions that are used to place bets online. Regulators extended the deadline to allow payment processors, such as Visa and MasterCard, and U.S. banks to come up with compliance guidelines that would prevent U.S. gamblers from placing bets.
But many lawmakers and proponents of legalized betting sites, such as those state-sanctioned for horse and dog racing, say the law enacted in 2006 is confusing and fails to distinguish between legal and illegal Internet gambling.
Opposition to regulated online poker and other betting games will be strong and organized, particularly from re-energized social conservatives and sports leagues, led by the National Football League. They argue that Internet gambling will significantly increase gambling addiction and crime, and would be difficult to keep away from children.
Proponents have powerful lobbies, including the Poker Players Alliance, whose chairman is former Republican senator Alfonse M. D’Amato, and boasts 1.2 million members.
The Washington Post reported that the alliance is funded largely by the Interactive Gaming Council, a Canada-based trade group for offshore gambling firms. The groups have spent more than $4 million on lobbying over the past year, the Post said. The alliance claims its members have sent more than 300,000 mailings and e-mails to members of Congress.
