New York State Attorney General Eliot Spitzer publishes this press statement that explains that ten banks end online gambling with credit cards.
In New York, as in most states, promoting or facilitating unauthorized betting and gambling is illegal -- whether it occurs online or off. However, because Internet gambling businesses usually operate offshore in foreign locations, beyond the enforcement power of local authorities, they often avoid prosecution. Yet, in this case, the banks are all in the US.
The credit card transactions are "coded" by merchants and their merchant banks to indicate to credit card issuing banks (the lenders) what is being purchased. By blocking certain of these codes, issuing banks can avoid extending credit for much gambling activity that occurs on the Internet.