When Jim DeFrancesco tried to access New Jersey’s Internet gambling websites last week, the Ship Bottom resident was dismayed to find his credit card would not be accepted for deposits.

Likewise, Al Flores was frustrated to find some online gambling websites could not verify his location in South River, Middlesex County, thus blocking him from play.

Geolocation and payment-processing are the most significant problems the state will continue to face in the coming months as other states look to New Jersey to see whether online gambling can succeed.

There are financial implications, as well. Atlantic City’s casino industry and the state are looking to the revenue streams that online gambling will provide, since more players accessing the systems will mean more needed revenue. A report by Fitch Ratings earlier this week predicted the industry will yield $200 million to $300 million in revenue in its first year, well below Gov. Chris Christie’s initial predictions of $1.2 billion.

New Jersey Division of Gaming Enforcement Director David Rebuck, however, said he remained confident that despite the problems users were facing, the system was working correctly from a regulatory perspective. Improvements will continue to be made to improve the customer experience, he said.

“There was some tension on Thursday because we didn’t know — nobody knew — if this was really going to work,” Rebuck said. “This could have crashed. We didn’t think it would, but you just don’t know.”

Gaming analysts and industry insiders haven’t been surprised by the issues New Jersey has seen, but the problems were unexpected for many New Jersey residents who may not understand the inherent challenges.

While Visa and MasterCard have said they will allow the payments to go through in states where online gambling is legal — New Jersey, Delaware and Nevada — card issuers such as Bank of America Corp. and Wells Fargo & Co. say they won’t process online-gambling transactions. The same goes for other mainstays, including American Express Co. and PayPal.

Alternatives, including wire transfers, Automated Clearing House transfers, cash deposits at casinos and cash deposits at third-party businesses are all available methods of depositing funds. Joe Pappano, senior vice president and managing director of payment processor Vantiv Gaming Solutions, however, said those methods were temporary fixes rather than long-term solutions.

Vantiv is involved in all New Jersey Internet gambling credit and debit transactions and is advocating for more banks and card issuers to allow their their systems to accept the transactions.

“The challenge that we have is that Internet gambling by definition has been illegal for seven years based on the Unlawful Internet Gambling Enforcement Act,” Pappano said. “So, for seven years, financial institutions have been conditioned that if you process a payment related to Internet gaming, the ramifications, the penalties, were very severe.”

Congress passed a bill in 2006 that made it illegal for companies to take online bets. Since then, many banks subscribed to a stand-in process from card brands such as Visa, telling the company to automatically “hard block” any Internet-gambling transaction. That means that when people try to pay for Internet gambling through Visa accounts today, those transactions often never make it to the bank or card issuers and are instead automatically rejected.

New Jersey enacted a law earlier this year making online gambling legal within the state’s boundaries, but many banks haven’t become accustomed to processing the transactions.

A card issuer can request to unsubscribe from the process, but many have been concerned that if an unlawful transaction were approved, there would be a significant risk to the brand, said Steve Kenneally, vice president for regulatory compliance with the American Banking Association.

“Banks as a default said, ‘It’s not worth it for us to risk an unlawful gambling transaction to go through just to allow an online state lottery transaction to be approved.’ So the idea was to block Internet gambling transactions whether they’re lawful or not,” Kenneally said. “Banks have been under the microscope when it comes to federal regulators. Every bank feels like every move is going to be questioned.”

MasterCard, meanwhile, has a much higher rate of approval, Pappano said. That’s due to a decision MasterCard made to group Internet gambling under a code used for advanced deposit wagering, a category that includes online wagering for horse racing and is considered low-risk and legal. The coding difference has led to situations where an issuer such as Capital One is approving online-gambling deposits coming through MasterCard and rejecting those coming through Visa, Pappano said.

Vantiv is lobbying for Visa to change its coding. Meanwhile, Rebuck said the state was working its case as well. The division has been issued an attorney general’s opinion that Rebuck said should give banks confidence to support the payments, and the state is using that opinion to try to influence federal policy as well.

“We have been brokering and leveraging our expertise, our industry positioning and our depth of knowledge to a point where we do believe and we’re confident that you will see changes behind the scenes with Visa,” Pappano said, predicting major changes in acceptances within the next 12 to 18 months.

Vantiv and others are staking bets for quick changes on the influence of New Jersey’s market. Companies are hoping that because of New Jersey’s 9 million residents, the demand for Internet gambling will leverage card brands and issuers to accommodate the industry. Still, with New Jersey, Delaware and Nevada the only states offering legalized online gambling, the three states’ populations combined make up less than 5 percent of the entire U.S. population.

“The challenge is everyone’s excited for Internet gambling, but they want instant gratification, and it just isn’t there yet,” Pappano said.

There is also room for growth in the success rate of accurate geolocation, but Anna Sainsbury, CEO of Nevada-based GeoComply, a firm offering geolocation services in New Jersey, said the technology was already working more efficiently than it did when Nevada launched online poker in April.

About 12 percent of people logging on to New Jersey’s system with GeoComply’s services are wrongly being blocked from play. That’s an improvement from the Las Vegas market, which had a roughly 35 percent rate of false negatives, Sainsbury said, attributing the improvements to rapidly developing technology.

That technology is ensuring that people close to New Jersey’s borders have been able to be successfully located. Standing last week in front of a live digital map tracking geolocation in sensitive areas, Sainsbury showed where users were able to log in successfully from areas pushing up against New York’s borders, including Hoboken.

Each login that received a blue dot on the map was approved for play, while red dots showed those that were blocked. Blocked logins from Florida and even internationally blocked attempts also appeared on a map last week as the company demonstrated how the technology is being used in New Jersey.

GeoComply’s technology allows operators to see why a player has been blocked. In many cases, the blocks are occurring because users do not have Wi-Fi enabled on their computers or are running a type of software that has the ability to hide a computer’s location, Sainsbury said.

“The job now is to show the red dots what they need to do to play. Mostly, it’s enable your Wi-Fi and disable your blocking software,” Rebuck said. “You don’t want to do that? That’s fine. But then you’re not going to play in New Jersey.”

Rebuck has said he has no intentions of relaxing the state’s standards to ensure more people can play. Regulation requires that online-gaming companies be able to show that their systems meet or exceed the state’s standards, which include four verification elements.

Those elements include a Wi-Fi location, IP address information, a cell phone carrier and a way to tie a cell phone to the computer. The tie, intended to ensure that the mobile device is near the computer being used, can be achieved by entering a code on a computer that has been texted to a user’s cellphone or through other means.

“Different operators have a different approach, but the standards have been set by the (Division of Gaming Enforcement) as to what they’re tolerating,” Sainsbury said.

For now, Rebuck said his concern was making sure users understand what they may be able to do to access play successfully.

“I’m comfortable with where we are. It’s not an issue where the geolocation borders are knocked in too far anymore,” Rebuck said. We’ve got people playing on the borders, and the system’s still evolving. It’s just week one.”

Contact Jennifer Bogdan:

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More than 30 years’ experience reporting and editing for newspapers and magazines in Illinois, Colorado, Texas and New Jersey and 1985 winner of the Texas Daily Newspaper Association’s John Murphy Award for copy editing.