Providian National Bank, the sixth-largest Visa card issuer in the United States, said it will deny approval for most online wagers made by its customers.
"People who use credit cards to gamble on the Internet present a higher credit risk to a lending institution, and there also is a more significant fraud risk with Internet gambling transactions," Laurie Cole, Providian's vice president of corporate communications, said in explaining the bank's decision.
"Providian was evaluating the Internet gambling issue and has decided to decline to authorize transactions on its credit cards that we can identify are originating from Internet gambling sites," she added.
The decision comes as the company recently settled a lawsuit with a Net gambler and as online gambling comes under scrutiny by lawmakers on Capitol Hill.
Providian sued Cynthia Haines, who used her credit cards to gamble away more than $70,000 over the Internet from her home in California but didn't pay her bills. Haines responded by filing a countersuit against the bank as well as against Visa and MasterCard, claiming the companies were at fault for letting her gamble with credit in the first place.
In July, MasterCard settled with Haines and adopted a policy that gambling sites have to post a notice stating that Internet gambling could be illegal in a customer's jurisdiction.
Visa came to a similar agreement with Haines, concluding that she will not have to pay back her debts directly. The online gambling sites that took her bets will cover them with the issuing banks. The Visa merchant sites will pay Providian National Bank nearly $5,000 and will pay First Union Direct Bank $5,400.
Congress is considering a bill that would outlaw most forms of Net gambling. The Internet Gambling Prohibition Act, authored by Sen. Jon Kyl (R-Arizona), would update the Federal Wire Act, which prohibits taking bets over phone lines.