USA IN BREACH OF WTO RULES IN ONLINE GAMBLING CASE

27 March 2009

EU concludes a 12 month investigation into inequities and discriminatory nature of US position

 

Dow Jones business news service reports that the 27 nation European Union trade bloc has announced the completion of its 12 month investigation into US anti-online gambling practices, reaching the conclusion that the US government is in breach of international trade rules.

The investigation was undertaken at the behest of major European gambling groups working through the Remote Gaming Association, which claimed that US laws and enforcement practices discriminated against European online gambling businesses and individuals and were in breach of World Trade Organisation rules.

The finding is a further setback for the Americans, who have lost a succession of trade disputes in the WTO brought against them by the Antigua and Barbuda government and based on US anti-online gambling laws.

EU investigators said that U.S. moves to bar European online gambling companies from operating in the U.S. constitute an obstacle to trade despite the US Trade Representative unilaterally removing gambling from its WTO trade obligations last year.

The report found that "US laws deny access and discriminate against foreign suppliers of gambling and betting services inconsistently with US WTO obligations."

It goes on to label the regulatory changes the United States made in 2006 [the UIGEA] "legally not justified and discriminatory."

The US has previously attempted to buy its way out of the issue by signing a negotiated settlement with the EU back in 2007 aimed at providing Europe with various incentives to keep the ban intact. The status of this settlement remains unknown, because its content has been kept secret by the USTR "for reasons of national security."

Despite this, European companies, which lost massive amounts of money in exiting the US market post-UIGEA, still face retroactive prosecution by the US DEaprtment of Justice in respect of pre-UIGEA American activity. Party Gaming, Sportingbet and 888.com have all admitted to being in talks with the DoJ in the hopes of reaching a settlement that will allow them to move on, albeit not necessarily in US business.

The EU investigation addressed this point, commenting: “The proceedings are continuing despite the withdrawal of European companies from the U.S. market in 2006 following changes in the U.S. regulatory framework,” the report advises, concluding that these proceedings are legally not justified and discriminatory.

Although proceedings at the World Trade Organisation would be justified, the investigating team recommended that the E.U should seek a negotiated solution with the U.S. government on the matter, the report said.

E.U. Trade Commissioner Catherine Ashton said: "It is for the U.S. to decide how best to regulate Internet gambling in its market, but this must be done in a way that fully respects WTO obligations."

"I am hopeful that we can find a swift, negotiated solution to this issue," she added.

Clive Hawkswood, chief executive officer of the Remote Gambling Association, said the industry complaint was lodged with the EU mainly over the prosecution and threat of prosecution against EU operators. “If the U.S. can give the EU some assurances it will no longer take action, then we’d be very happy,” he said.
The EU report confirms the RGA view that: “the threat of serious sanctions hanging over” these companies affects their activities outside the U.S. and there are knock-on effects on other sectors that supply the gambling industry, such as financial or professional services.

Nefeterius McPherson, a spokeswoman for the U.S. Trade Representative’s office in Washington, said her agency and the Department of Justice “are studying the report and will discuss it with the European Commission.” 

Online Casino News Courtesy of Infopowa

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