Last week brought a flurry of news regarding the apparent attempts by Mastercard and Visa to restrict users ability to make deposits to online gambling and poker. We discuss the facts, speculation and impacts inside.

What Happened?

Last week, Bluff Magazine reported that several rooms (including Bodog, Doyle’s Room and CEREUS) announced that Mastercard would no longer be a deposit option for US players. Toward the end of the week, rumors began to surface that VISA was also engaged in a crackdown on online-gaming related transactions. At this point, there’s been no confirmation of VISA’s actions except anecdotal reports.

Why Did It Happen?

Without official comment from the companies, it’s impossible to do anything but speculate; however, logic suggests that any clampdown is a result of credit card companies tightening the noose on online gaming payment processors as the deadline for compliance with the UIGEA (June 1st) draws near.

Some, including Costigan over at G911, are suggesting that the crackdown is simply an annual exercise that occurs near the Super Bowl as high volumes of deposits at online wagering sites give companies a unique opportunity to identify and shutter processors associated with online gambling.

Who Does It Affect?

US poker players wishing to deposit at online poker rooms with a VISA or Mastercard may find their transaction declined. Other players should be unaffected. Again, the evidence regarding these crackdowns is largely anecdotal at this point, so your experience may vary widely from room to room.

I’m a US Player Wanting to Deposit. What Should I Do?

Credit card transactions may be difficult and frustrating in the status quo. Most rooms offer players multiple deposit options; you can learn more about those options from within the cashier of any online poker room.

How Do Credit Card Companies Know A Transaction is Related to Online Gambling?

Credit card companies use a coding system that identifies the general nature of a transaction. A unique code – 7995 – is supposed to be attached to all transactions having to do with ‘betting/casino gambling’ by the company who processes the transaction.

It’s speculated that some companies attempt to evade the coding system by re-coding transactions – essentially making it appear that a consumer has purchased something other than what they actually purchased. Re-coding is explicitly prohibited by credit card companies, and processors who engage in the practice may now be facing serious repercussions.

Not all rooms and processors engage in re-coding; PokerStars, for one, released a statement in the wake of the crackdown clearly distancing their room from the practice: “PokerStars does not, nor ever has engaged in the practices of mis-coded credit card transactions. We have therefore been unaffected by any crackdown by Visa or MasterCard to close down such mis-coded processing accounts.”

What Happens Next?

It’s a pretty murky picture. In the short term, depositing with credit cards will likely be difficult at best. Small rooms might face some liquidity issues as their payment processors tangle with Mastercard and Visa, a serious potential impact highlighted by Jeremy Enke over at PAL: “If this is true, it is the end of CC payment processing in the U.S. It apparently is the start of enforcing the new laws pre-legislation. I was also told that banks are holding funds everywhere and starting to charge exorbitant fines to the processors to get their money out.”

Long-term, the impact simply won’t be clear until the uncertain status of the UIGEA is settled. While the delay in the compliance deadline for the UIGEA was a victory for online poker advocates, last week’s crackdown suggests that companies like MasterCard and VISA are likely hedging their bets and engaging in significant enforcement attempts in anticipation of compliance.

What Can I Do?

If you’re interested in making your voice heard on this particular issue, your best bet is to support the Poker Player’s Alliance. The PPA is the leading advocacy group calling for clarification of the legal status of online poker, and that’s the core issue involved in this situation.

Visit the PPA here.