Fund Transfers

The American government has been extremely against any from of online gambling. Starting with the Interstate Wire Act in 1961, often referred to as the Federal Wire Act, the government made any form of electronic wiring of money for the purpose of wagering illegal with a maximum penalty of two years in prison. This was before the Internet exploded though. Although in 2002 the Court of Appeals ruled that the Federal Wire Act does not prohibit online gambling, many inconveniences have been but on online gambling providers. For instance, when the Internet first started being exploited for the purpose of online gambling, all major credit cards, as well as banks, were willing to transfer money into the online gambling sites so the customer would be willing to make wagers. Then when the customer, if lucky, would win and want to cash out some of these funds, the online gambling sites would typically re-wire the money directly back to your bank account. Through rulings in the U.S. courts, this is no longer the case. Virtually no credit cards are allowed to wire money to these online gambling sites, and banks can no longer directly transfer money into these sites either. This was obviously a huge problem for these online gambling sites, and many of them either shut down all together, or closed their doors to any U.S. customers. Party Gaming was one of these sites that now denied U.S. customers, and in result of their announcement, their stock dropped 60%.
Not all of the online gambling sites shut down though. Other providers such as Bodog, BetUs, Sportsbook, and many others were able to stick around to provide to their American customers. By doing this, they had to use a third party site that money could be legally transferred into, and then allowing the customers to transfer the money from this third site into their online gambling site. This was not the end of their problems though because these third party sites had no way of paying out to the customer. Once the money was in the third party site, it either had to be spent or just stay untouched. This left the gambling sites with few options. Because many banks refused to deal with these online gambling sites, very few banks allow them to directly transfer money back into the customers bank account. So the only option really left for the sites were to send out checks when the customer decided to payout. Now this cost the gambling sites quite a bit money, so they had to make further restrictions to the customer. The majority of online gambling sites only allow for one check to be sent out each month, per customer, and any additional checks within a month would cost the customer a hefty fine. So through all these legalities that affected the business of online gambling, the business still exist, but at a greater inconvenience for both the customer and the provider.