Poker Stakers and Backers Beware: PayPal Still an Anti-Gambling Service

Poker backers and stakers beware: Prominent US-based online payment processor PayPal continues to enforce its rules about its site being used to fund any sort of gambling activities, and users’ sites can be, and often are, quickly terminated for being used to transfer funds in connection with any such activity.  While the San Francisco-based service continues to run into headwinds concerning its unilateral and lengthy “holds” its often placed on accounts suspected of prominent gambling activity, the service is also struggling to negotiate the complex minefield of state and federal laws covering all sorts of said gambling activities, from poker to DFS (daily fantasy sports) to even the funding of casino-style gambling on state-authorized sites, in the three US states where the activity is legal.

paypal logoPayPal itself has been the subject of multiple class-action lawsuits regarding the placing of unfair “holds” (short-term, temporary suspensions), or permanent restriction or cancellation of services.  One such class-action case, Zepeda et al v. PayPal, is currently in a preliminary settlement stage, with affected users being urged to join the case’s settlement class.  (Author’s note: More information on that class-action case is available at the settlement class’s site, https://accountholdsettlement.com/.)

Numerous gamblers have run afoul of PayPal’s extra-legal restrictions in recent years.  One of the most prominent of those examples showcased popular and colorful career gambler Bryan Devonshire, who found his PayPal account “permanently limited” after he attempted to use PayPal as funding service for a poker backing/staking package he put together back in 2013.  Devo’s move was admittedly unwise, though like millions of PayPal’s customers, he was likely unaware of the full extent of the service’s restrictions when he put together the backing package.

Devo, who subsequently published his correspondence with PayPal and remains an avid critic of the service, essentially discovered that PayPal has had — and continues to maintain — a “one strike and you’re out” stance regarding the use of its services for anything remotely connected to gambling.

How PayPal’s position on that came to be is a story of the services earliest years.  Back in the early ’00s, over a deade ago, the site was admittedly suffering from a proliferation of illicit gambling-related payments being run through its servers.  Back then, PayPal was a prominent division of online-auction supersite eBay, and was initially envisioned and designed to be eBay’s in-house payment interface.

Except PayPal was too good, too convenient to be used just for eBay.  All sorts of payments, including millions related to gambling, were run through the service.  And US federal and State-of-California authorities.  A couple of years before international payment processors FirePay and NETeller drew the ire of US authorities, PayPal and eBay felt those officials’ wrath, and were quickly threatened with massive fines and possible criminal sanctions should they not cease and desist with providing a platform that could be used to fund offshore gambling accounts.

PayPal has long since split away from eBay, and some of the activity that US officials formerly declared to illegal has since been either tacitly allowed or specifically made legal in several US states.  Nonetheless, PayPal has not changed its stance, and continues with an anti-gambling stance far beyond what it’s probably legally obligated to ban.

The problem, of course, is that the site is still used for tens of millions of gambling-related transactions, almost entirely from people who are unaware of that part of the company’s and site’s rules.  Do you owe a cross-country friend a twenty from taking the wrong side of that Broncos-Chiefs matchup?  There’s a good chance you shipped your owesies via the service, and you just broke the site’s rules in doing so.

PayPal also has only limited means for checking into the true nature of the multitude of small, largely-anonymous payments which cross its virtual payment.  Paypal literally cannot come close to fully policing the activity; it never could and it never will.  All it can do is make examples of gamblers such as Devonshire, as it did back in 2013, and hope that the fear spreads.

That said, all gamblers, even those in the US, have plenty of other online-payment alternative.  We’re not going to mention any of them by name, but alternative and reputable payment channels are available.  PayPal itself remains a viable and quality service — if often a bit high-priced — for many types of transfers.  Yet it remains a “gamblers beware” service… and that’s unlikely to change any time soon.

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