PayPal to Stop Processing NY Gambling Charges

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Online payment processing firm PayPal Inc. agreed to stop processing payments from gamblers in New York state to online casinos under a settlement with state attorney general Eliot Spitzer, the two said in separate statements yesterday.

PayPal will stop processing the payments by Sept. 1 and pay the attorney general's office $200,000 to cover investigative costs. The settlement is the latest shot in an ongoing battle Spitzer has waged against online gambling.

"This agreement continues the work of my office to enforce the law prohibiting illegal gambling, online or offline," Spitzer said in a statement. "This case shows that we intend to stop any company who facilitates illegal gambling transactions."

In June, Spitzer said that Citibank had agreed to block online gambling transactions with its credit cards.

Spitzer contends that online gambling is more addictive than offline and that there is no way to prevent minors from gambling with credit cards.

In the settlement, Spitzer estimated that 1.1 million of PayPal's 17.8 million members list New York addresses.

PayPal is to be acquired by online auctioneer eBay in a deal worth $1.4 billion as soon as it is approved by shareholders, likely by the end of the year.

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