E.U. Tells U.S. to Change Its Stupid Gambling Policy, or Else

Jacob Sullum | March 27, 2009

In a preliminary report issued yesterday, the European Commission (the European Union's executive body) concludes that the U.S. government's crackdown on Internet gambling violates its international trade commitments by discriminating against websites based in other countries. The report came in response to a complaint from the Remote Gambling Association, a European trade group. In recent years the U.S. Justice Department has been prosecuting European companies for helping Americans place bets online, even going so far as to arrest executives of those companies if they happen to visit or stop over in the United States. Meanwhile, American gambling sites, mainly related to horse racing, continue to operate unmolested, having received an implicit exemption under the Unlawful Internet Gambling Enforcement Act of 2006. That inconsistency amounts to an illegal trade barrier, says the E.C., which may file a complaint with the World Trade Organization if it cannot reach a satisfactory accommodation with the U.S. government. The tiny Caribbean country Antigua and Barbuda won a similar WTO complaint in 2007, earning the right to compensatory trade sanctions. Needless to say, a European Union complaint would pose a much bigger economic threat.

I chronicled the online gambling crackdown, including Antigua's successful WTO complaint, in the June 2008 issue of Reason. Further coverage of the issue here, here, and here.

Comments

SpongePaul|3.27.09 @ 11:16AM|#

gambling, another thing the fed needs to keep its nose out of.

spambot|3.27.09 @ 11:17AM|#

Isn't the gambling our government is taking with our taxes enough for them?

|3.27.09 @ 11:24AM|#

In a preliminary report issued yesterday, the European Commission (the European Union's executive body) concludes that the U.S. government's crackdown on Internet gambling violates its international trade commitments by discriminating against websites based in other countries.

You go, Europe!

What will be the Obama administrations response? Place your bets here.

|3.27.09 @ 11:25AM|#

Hey, if our government can't protect their regressive stupidity tax lotteries, what are they going to do for revenue now?

Shannon Love|3.27.09 @ 11:34AM|#

I have no problem with internet gambling but I do find it interesting that there seems to be a presumption that the laws of the country in which the server rest should control the legality of the gambling and not the laws wherein the client rest. I find this interesting because we don't apply the same standard to any other time of internet activity.

Most dramatically, in the case of child pornography, a pedophile can't claim they can't be prosecuted because the images they looked at were on a server in another country. If we bust someone for kiddy porn we don't extradite them to the country where the server resides.

The same holds true for all the internet interactions I can think of. For internet transactions that use credit cards or banking, the controlling laws are the ones in the client's jurisdiction.

We might want to spend some time thinking about this issue beyond just gambling laws. We don't want to find ourselves in a circumstance in which someone could legally steal and publish your medical records merely by routing through a server in another country.

Jozef|3.27.09 @ 11:37AM|#

I dislike the gambling ban as much as the next person; hell, I'd love to be able to place bets when in the US. However, I dislike hypocrisy at least as much, and reading about the EU criticizing others for maintaining trade barriers always gets my blood boiling...

|3.27.09 @ 11:41AM|#

I have no problem with internet gambling but I do find it interesting that there seems to be a presumption that the laws of the country in which the server rest should control the legality of the gambling and not the laws wherein the client rest.

*Rolls eyes*
It's a trade agreement, a treaty if you will. Treaties are the law of the land subordinate only to the constitution. You could look it up.

Ska|3.27.09 @ 11:42AM|#

It's likely a tax issue - the US gov't can't do much to make a company in Grand Cayman send you a 1099 for your winnings. And like Tim Geithner, you'll forget that you had any income from foreign sources, and the IRS/Treasury Dept. won't have any record of your earnings. You might even have an overseas bank account for this that you forgot to declare to the treasury (another filing requirement for US taxpayers).

Spoonman|3.27.09 @ 11:42AM|#

I dislike the gambling ban as much as the next person; hell, I'd love to be able to place bets when in the US. However, I dislike hypocrisy at least as much, and reading about the EU criticizing others for maintaining trade barriers always gets my blood boiling...

Seriously. African farmers would like a word with you, Europe.

Anonymous|3.27.09 @ 11:52AM|#

Treaties are the law of the land subordinate only to the constitution.

... which includes the possibility of repeal.

|3.27.09 @ 11:52AM|#

Legalities aside, it is a sad day when Europe is telling us we're not free enough.

In any event, should this hold up to the point where our puritanical masters allow internet gambling in the U.S., Europe will probably wish they kept their mouth shut because a ton of U.S. companies will pop up overnight and take most of the business. As it stands now, lots of people just take their chances with non-US sites, giving those sites good revenue.

affenkopf|3.27.09 @ 11:54AM|#

Seriously. African farmers would like a word with you, Europe.

Because agricultural subsidies only exist in Euope and ot in the US.

|3.27.09 @ 11:55AM|#

Raivo Pommer
[e-mail]

Der Dresdner Bank Krise

Die Spitzenmanager der Dresdner Bank haben 2008 trotz Milliardenverlusten weit mehr verdient als jeder andere Bankvorstand in Deutschland. Laut Geschäftsbericht des mittlerweile zur Commerzbank gehörenden Instituts kassierten die zeitweise neun Vorstände gut 58 Millionen Euro und damit mehr als doppelt so viel wie im Vorjahr. Größter Posten waren Abfindungen von mehr als 24 Millionen Euro - keiner der Dresdner-Vorstände wird nach der Integration des Instituts in die Commerzbank weiterbeschäftigt.

Zum Vergleich: Die Vorstände der Commerzbank verdienten im vergangenen Jahr 4,3 Millionen Euro, die der Deutschen Bank 4,5 Millionen Euro. Weltweit
ist eine hitzige Debatte über Bonuszahlungen an Banker entbrannt, die für Milliardenverluste verantwortlich sind (siehe auch Boni-Streit: AIG geht in Deckung). In den Vereinigten Staaten wird gar über eine Strafsteuer nachgedacht, um die Gelder bei staatlich gestützten Instituten wieder zurückzuholen.

|3.27.09 @ 11:58AM|#

Most dramatically, in the case of child pornography, a pedophile can't claim they can't be prosecuted because the images they looked at were on a server in another country.

You don't look at images on a server. The server streams the image to your browser which then creates a temporary file on your computer. Viola, you are in possession of kiddie porn.

Gambling is entirely different. It is an action, not an image.

robc|3.27.09 @ 11:58AM|#

Shannon,

If they were arresting US gamblers that were using the sites, that would be one thing. But, they arent going after them, but after the sites themselves, which are operating legally where they are at.

The client software legality is the responsibility of the user.

DJF|3.27.09 @ 11:58AM|#

J sub B says
"""""*Rolls eyes*
It's a trade agreement, a treaty if you will. Treaties are the law of the land subordinate only to the constitution. You could look it up."""""

Actually a trade agreement is not a treaty. A treaty requires a 2/3 vote in the US Senate. An agreement requires a simple majority in the Senate and the House, so a trade agreement is no different then most other US laws and can be ended at anytime by the same simple majority in the Congress.

These trade agreements is just another way that the Federal Government ignores the Constitution by pretending that these agreements are legal when in fact they should have been treated like treaties where in all probability they would not have gotten the required 2/3 vote especially with the Senate's filibuster rules

robc|3.27.09 @ 11:58AM|#

Not that I support arresting the gamblers either.

Kolohe|3.27.09 @ 12:00PM|#

I like free trade. I like gambling.

I'm not sure if I like this action. Seems it could work in reverse as well.

Shannon Love|3.27.09 @ 12:02PM|#

J sub D,

It's a trade agreement, a treaty if you will.

As far as I know, the various trade agreements have never specifically addressed the issue of which jurisdiction controls an internet transaction.

The matter appears to be going to adjudication only because the laws treat U.S. based gambling servers different from internationally based gambling servers. That is a separate issue from whose law should control the servers. If the U.S. made its laws internally consistent would that automatically mean that gambling on an European server is clearly illegal if such gambling is illegal in the clients jurisdiction?

/|3.27.09 @ 12:07PM|#

it is a sad day when Europe is telling us we're not free enough

And if any of this had any real importance or if users were being arrested DEA-style, they might have a point. We'll leave them to their book bannings and Muslim riots and prosecuting subjects that dare to defend themselves from armed criminals.

BakedPenguin|3.27.09 @ 12:11PM|#

Notwithstanding the palpable EU hypocrisy, I hope the US government gets cornholed over this.

jtuf|3.27.09 @ 12:53PM|#

Good for the EU. I wish them luck in the case.

Naga Sadow|3.27.09 @ 1:07PM|#

As an employee of a brick and mortar casino . . . I say all gambling should be banned! Except where I work. It's for Teh Childrenz!

|3.27.09 @ 1:33PM|#

With the Czech Republic holding the EU presidency until June, there's even more fun rebukes against the US coming from Europe...

In an address to the European Parliament in Strasbourg, France, Topolanek abandoned diplomatic niceties and blasted Washington for approving a $787 billion economic stimulus package, which he said encouraged "protectionist" trade policies. He said the overall U.S. strategy for ending the recession would flood global markets with too many dollars and lead to bigger problems.

"All of these steps, these combinations and permanency, is the road to hell," Topolanek said. "The United States did not take the right path."

|3.27.09 @ 1:45PM|#

If the U.S. made its laws internally consistent would that automatically mean that gambling on an European server is clearly illegal if such gambling is illegal in the clients jurisdiction?

This whole thing is a jurisdictional clusterfuck.

The US has jurisdiction over US citizens and over internet servers on US territory. Period.

It can outlaw gambling by US citizens. It can outlaw gambling servers on US territory. If a US citizen gambles on a foreign server, it can arrest the US citizen. But it can't, or at least shouldn't, attempt to extend its jurisdiction to the foreign server. Is that so hard?

Jeff Balla|3.28.09 @ 8:55AM|#

End the treaty AND our bogus gambling laws.

|3.30.09 @ 9:42AM|#

Great article. I'm glad to see it being debated. I vote freedom. I pursue happiness when I win a pot. Let me play my game, tax free but pay for the service and I think that's called the rake.