Online Gambling

Online Gambling Companies Turn to Fight

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As Radley Balko noted on Tuesday, the European Union, Japan, and Canada have reached a settlement with the U.S. regarding its protectionist online gambling policy, which treats foreign-based companies that take bets from Americans as criminal organizations while tolerating certain forms of domestic online gambling, such as state lotteries and horse racing. The deal involves trade concessions (which so far have not been publicly specified) but no change in the U.S. stance on gambling. It's likely the other countries that have objected to the American policy—including Antigua and Barbuda, which filed the initial complaint that led to a series of WTO rulings condemning the U.S. for violating its trade commitments by discriminating against overseas gambling companies—also will reach settlements involving trade concessions and/or payments. Rather than let the WTO dispute fizzle out, the Remote Gambling Association (RGA), a U.K.-based trade group that represents the biggest publicly held online gambling companies, today filed a complaint against the U.S. under the the E.U.'s Trade Barriers Regulation. Among other things, the RGA argues that the U.S. government is violating international trade law by suing and prosecuting foreign companies and foreign citizens for their past involvement in online gambling:

The DOJ has repeatedly stated that all forms of online gambling are illegal, yet it continues to enforce this view only in connection with non-US businesses. In October 2006, the US enacted a new law (the "Unlawful Internet Gambling Enforcement Act", or UIGEA) which effectively criminalised online gaming provided by foreign operators while providing exemptions for protected domestic suppliers. The UIGEA forced the largest and publicly listed EU online gambling companies out of the lucrative US market, despite the WTO commitment that the US had made to offer access to its own domestic gambling market. The stock market listed EU companies collectively lost billions in market value overnight when the UIGEA took effect, whilst US online gaming companies and unlisted US-facing companies continued to operate unperturbed….

The RGA has asked the EU to investigate the discriminatory enforcement regime as an illegal barrier to trade for EU businesses.

"How would US investors and businessmen feel if they invested in a business in the United Kingdom based on international law commitments, and then suddenly the U.K. not only passed new laws forcing them to shut down their business, but then tried to throw them in jail for past activities while still allowing their domestic competitors to continue on doing the same thing?" [RGA head Clive] Hawkswood asked. "That's what is happening to our industry in the US," he added.

If the E.U. finds that the RGA complaint has merit, the trade group says, it can "pursue discussions with the US to find an appropriate solution to ending the discrimination."  If the negotiations fail, "the EU could later bring a WTO case directly against the US based on these claims."