By Gene Huntington Administrator
Gambling Control Division Last November, the Gambling Control Division adopted rules to clarify that credit cards may only be used for cash advances that are clearly authorized by the credit card merchant agreements or regulations.
At the summer Gaming Advisory Council meeting, members discussed whether there is a need for further restrictions on the use of credit cards in light of reports of gamblers who have accumulated huge credit card debts from gambling losses. That discussion included the view held by some gambling industry representatives that the misuse of credit cards is not widespread, but only occurs in isolated instances.
The Gaming Advisory Council recommended that the Gambling Control Division undertake an effort to ensure that all operators are informed about the statute and rules related to credit gambling. To that end, the main points of Montana's credit gambling statute (23-5-157 MCA) are:
–Any consideration paid to gamble must be paid in cash.
–No note, IOU or other evidence of indebtedness may be used to obtain
cash.
–A check can be accepted to obtain cash, but the check must be accepted unconditionally.
–A credit card may be used to obtain a cash advance to gamble.
–A check that is known to be bad may not be accepted.
–Credit gambling is a criminal offense.
Rules adopted by the Division last November were designed to prevent gamblers from becoming indebted to gambling operators when cash advances charged to credit cards were dishonored or "charged back" to the operator.
The new rule amendments provide that:
"(3) Any debt resulting from a credit card transaction to obtain cash for the purpose of gambling may not become a debt owed to the licensee, be assigned to the licensee, or be assigned or sold to a collection agency acting on behalf of a licensee. Debt resulting from a credit card transaction to obtain cash for the purpose of gambling may only become debt owed to the financial institution issuing the credit card.
(4) No licensee may accept credit cards for cash advances for the purpose of gambling by representing the transaction as a sale of merchandise, gift cards, or in any other way that would violate the rules or agreements with the issuing merchant bank or credit card company. Any attempt by a licensee to collect credit card charges from a cardholder made in violation of credit card rules or regulations will constitute a violation of the public policy against credit gambling."
Under these rules, operators cannot:
–advance cash but record the credit card transaction as anything other than a cash advance, including the sale of goods, food, beverages or services;
–overstate the value of goods, food, beverages or services in order to return cash to the customer for the purpose of gambling;
–accept credit cards for the sale of gift cards or certificates that may be redeemed for cash to gamble;
–advance cash for gambling if it violates the credit card merchant agreement or regulations; or
–attempt to collect from the cardholder cash advances that were charged to a credit card in violation of the merchant agreement or credit card regulations.
Gambling operators may:
–allow customers to obtain cash from an ATM;
–advance cash to customers if doing so is clearly authorized by the
operator' merchant bank agreement and the regulations of the credit card company; and
–accept credit cards for the sale of food, beverages and services so long as no cash is returned to the customer.
New financial products have significantly changed how people handle their money and manage their finances.
In addition to credit and debit cards, new services help protect merchants by alerting them when a check will be dishonored or is fraudulent. However, if the check service indicates that the check is bad but the operator accepts it anyway, the operator may then have violated the credit gambling statute.
This statute provides that "a check issued or delivered that is accepted by the licensee with the knowledge that it will not be paid by the depository" also constitutes credit gambling.
A good rule of thumb for operators who accept credit cards and checks is this: if an operator knows that a transaction will result in a debt to the operator or a collection agency, don't accept it.
Editor's note: Traditionally, the Montana Tavern Times has periodically offered space to the GCD to allow them to enhance communications with licensees and to clarify current issues. In this case, Huntington was specifically asked by the Gaming Advisory Council "to work with the Montana Tavern Times" to more fully explain and reinforce the new rules dealing with charge card cash advances for gambling purposes. The Tavern Times, in the interests of assisting the GCD, the GAC and further serving its readers, has consented to do so.
Source: The Montana Tavern Times, Sept., 2006, published monthly by Continental Communications, 125 W. Granite St., Suite 102, Butte, MT 59701.