The company will also pay $200,000 to the State of New York to cover gambling profits, the cost of investigation and penalties.
PayPal said in a statement that it is “taking this action in voluntary co-operation with the Attorney General and is not admitting to a violation on law.”
Earlier this week Ebay received US regulatory clearance to acquire PayPal. For the time being, PayPal will block only payments made by New York residents to internet casinos. However, Ebay has stated that it intends to discontinue all of PayPal’s on-line gambling activities after it completes the purchase.