May 30, 2001 10:00 PM

Discover Card has signed a court agreement saying it won't operate merchant accounts with online casinos patronized by California residents.

The deal was reached as part of a settlement of a lawsuit brought by a California man who lost more than $70,000 gambling online.

According a report in CNET News, the man sued both Discover and American Express. Discover agreed to write off $700 in gambling debts charged to his card and pay his attorney's fees. A trial is set for early next year on the more than $10,000 charged to the American Express card.

The agreement might have wider implications. Because of the difficulties in determining the geographic origins of online bets, it could shut off all gamblers with Discover Card accounts. The company said it is trying to do that already, according to CNET News.

If this happens, Discover Card will join a growing list of credit providers that refuse to honor debts incurred from online betting. In the meantime, lawsuits are pending in Oregon and Illinois over online gambling losses in which credit card companies figure prominently among the defendants.