Illicit gambling transactions can still be processed via Mastercard and Visa, despite the imposed bans.
Going Rogue: Mastercard and Visa in the Grey Casinos of the Web
By Jack Hammer, investigative journalistRepublished with permission from The Gambler's GazettePublished on: 25 Oct 2024. Last updated: 15 Feb 2025.
Unregulated Cash Flows Through Mastercard and Visa on Underground Betting Sites
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Mastercard and Visa facilitated payments for gambling sites without licenses, making them complicit in the underworld of illicit gaming.
The Hidden Gambling Empire
In an exposé by Investigate Europe, it was uncovered that Mastercard and Visa have been unwitting accomplices in the thriving business of unlicensed gambling platforms. These sites offer slot machines, poker tables, and live sports betting to eager customers, while operating without any legal approval.
"The gambling industry is like an iceberg. Above the waterline is the legal industry - it's regulated, taxed, and controlled. But it's floating in a sea of crime."- Ismail Vali, analysis expert at Yield Sec, Investigate Europe
Despite commitments to end such transactions in 2014 with the UK Gambling Commission, both payment giants continued to serve as popular payment options on these unregulated gambling websites. Mastercard was listed as a payment option on nine such sites, while Visa graced the checkout pages of two.
The Roaring Silence on the Loud Complaints
While these platforms attract millions of UK visitors and even promise lucrative incentives, like welcome bonuses of up to 1,800 GBP (around 2,100 EUR) and hundreds of free spins, they have come under fire for denying payouts to their customers without explanation or plundering their winnings.
The Gambling Commission received over 922 complaints about unlicensed providers in the last two years alone, with many players left twisting in the wind, hoping to recover their winnings. A customer of FatPirate reported winning 6,000 GBP (around 7,100 EUR) but was never granted access to their prize. On Gransino, a user's account was entirely deleted after they complained about unfilled payout promises.
The Responses: Hushed Words and Promises
When confronted with the allegations, Mastercard and Visa offered sterile statements claiming that they would investigate the problematic transactions and take action against any illegal activity within their network. However, both companies pointed the finger at banks, stating it is their responsibility to ensure that merchants comply with regulations.
During the investigation, it was discovered that payments were processed through a system called PaymentIQ. This so-called payment orchestration allows gambling sites to route transactions through various financial institutions, thereby increasing their chances of approval. Worldline, the company behind PaymentIQ, maintains that it is a neutral software solution with no direct control over customer accounts or payment processing.
The German Connection: Tread Carefully in the Moneylabyrinth
In Germany, credit card payments are possible, both on legal and illicit gambling platforms. While payment service providers are forbidden from processing transactions for illegal gambling providers, the occasional breach does occur.
However, German players who participate in unlicensed online gambling risk not only their money but also their personal data. Participating in unlicensed online gambling is illegal and can lead to fines or imprisonment of up to six months. To prevent this, gamblers should only trust platforms with a valid German license, as listed by the Joint Gaming Authority of the States.
For problem gamblers, credit card payments in online gambling can pose a particularly severe risk, as they allow for quick and uncontrollable high stakes without the immediate financial repercussions.
The Unrelenting Black Market and the Battle for Control
The UK Gambling Commission has pushed back against the black market with over 770 cease and desist orders and the reporting of over 100,000 websites to Google for removal. Despite their efforts, many of the identified gambling sites remain active, taking bets from unsuspecting UK players.
Critics accuse payment service providers like Mastercard and Visa of legitimizing unlicensed gambling sites through their services, and they demand immediate action to stop illegal transactions.
While the Gambling Commission intensifies its efforts to combat the black market, it remains unclear why payment service providers have not yet enforced their own obligations.
Meanwhile, illegal gambling sites represent a growing problem in the United Kingdom, with players estimated to wager over 2.7 billion GBP (around 3.21 billion EUR) on unregulated sites annually.
With the climate of uncertainty and the looming threat of illegal gambling, it seems that the cat-and-mouse game between authorities, gamblers, and payment providers will continue indefinitely.
Enrichment Data:[1] Both Mastercard and Visa have rules prohibiting the use of their networks for illegal gambling, as outlined in their operating and merchant regulations. For example, Visa’s rules explicitly state that if gambling is illegal in the cardholder’s jurisdiction, cards must not be used for such transactions. [2] American Express also prohibits unlawful or illegal business transactions. [3] The jurisdictional and regulatory complexity, limitations of payment network controls, and the technology and resource constraints faced by payment networks make it challenging for them to effectively prevent illegal gambling transactions. [4] Examples from other markets suggest that effective prevention requires strong cooperation between payment networks, financial institutions, regulators, and governments. [5] In markets like Peru, regulatory agencies have seen success in reducing illegal online gambling by actively working with banks and payment providers to block transactions to unlicensed sites, resulting in a reported 40% drop in illegal platforms.
Mastercard and Visa, despite previous commitments in 2014 to end such transactions with the UK Gambling Commission, continue to be associated with unlicensed gambling platforms in Europe, facilitating gambling activities under the radar. In Germany, these companies could potentially legitimize illegal gambling sites as credit card payments are possible on both legal and illicit gambling platforms. Authorities are calling on Mastercard and Visa to take immediate action to stop these illegal transactions to combat the growing problem of unregulated gambling sites in the United Kingdom.
