Cynthia Haines racked up the losses while playing craps, blackjack and other games in offshore virtual casinos during 1997 and 1998.
Her attorney, Ira Rothken, noted that public policy in California has caused courts to frown on loans for gambling, legal or not.
"We don't have to go as far as to say that the gambling itself is unlawful," he said. "All we have to show is that Visa was involved in giving loans for gambling."
Debt forgiven
"Internet gambling may be illegal in the jurisdiction in which you are located, including locations within the United States. Visa cards may only be used for legal transactions. Display of a payment card logo by an online merchant does not mean that Internet gambling transactions are lawful in all jurisdictions in which the cardholder may be located."
Under a separate agreement in July, gambling sites using MasterCard now have to ask gamers where they reside, and retain that information for a year. In addition, they must post strong warnings, cautioning that online gambling may be illegal in some jurisdictions.
The settlement frees the credit card companies from the risk of having their affiliations with online casinos declared illegal. It still must be approved by a judge next Tuesday. Rothken says he expects that will happen.
Under the settlement, Visa USA agreed to forgive the debt, and will collect the money instead from the gambling sites.
