PayPal to Halt NY Gamblers

New York Attorney General Eliot Spitzer said that online payment firm PayPal has agreed to stop online gambling companies from using
the service to accept money from gamblers who reside in New York State.

The move comes less than two months after PayPal’s records regarding use of
the payment service by gamblers were subpoenaed
by Spitzer’s office.

PayPal said it is taking the action in “voluntary cooperation with the
attorney general and is not admitting to a violation of law.”

It’s another blow for the online gambling business, which has been taking it on
the chin lately.

The action by Spitzer may be more symbolic than anything else, however, as
auction giant eBay , which is in the process of acquiring
PayPal, has said that it plans to shed the gaming side of PayPal’s customer
list once it completes its $1.5 billion
of the Mountain View, Calif.-based company.

Over the past year, as more credit card issuing banks have chosen to block
direct payments to Internet casinos, PayPal has emerged as the payment method
of choice for many
gambling Web sites. The service currently counts 260 online gambling
merchants among its member businesses, according to Spitzer’s office.

Under the settlement, PayPal will not process payments from New York
customers to Internet casino Web sites as of Sept. 1 and will pay $200,000 to
New York State to cover costs of the investigation and penalties.

“This agreement continues the work of my office to enforce the law
prohibiting illegal gambling, online or off-line” Spitzer said. “This case
shows that we intend stop any company (that) facilitates illegal gambling

In June Spitzer announced a settlement with Citibank, which agreed to block
illegal online gambling transactions attempted through its MasterCard and
Visa accounts.

PayPal has set Oct. 3 as the date for a shareholder’s meeting to vote on the
acquisition by San Jose, Calif.-based eBay. The acquisition won clearance
Tueday from U.S. antitrust authorities.

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