European Internet Wagering Operators Seek EU Probe of U.S. ‘Discrimination’
European Internet gambling operators formally complained Thursday to the EU about what they call U.S. violations of World Trade Organization rules. The action, which could result in an EU case against the U.S. at the WTO, followed an agreement this week on compensation that the U.S. must pay the EU and other nations in exchange for pulling gambling and betting services from its trade commitments (WID Dec 18 p1).
Sign up for a free preview to unlock the rest of this article
If your job depends on informed compliance, you need International Trade Today. Delivered every business day and available any time online, only International Trade Today helps you stay current on the increasingly complex international trade regulatory environment.
The Remote Gambling Association complaint centers on U.S. pursuit of “selective enforcement action for gambling transactions that took place while the treaty was in force,” said the group’s chief executive, Clive Hawkswood. It said the Department of Justice violates international law by threatening and pressing criminal prosecutions, forfeitures and other enforcement actions against foreign online gambling companies while letting U.S. operators flourish, especially when it comes to betting on horse racing.
Monday’s agreement “purports” to offer trade concessions for U.S. withdrawal of its commitments to open its $100 billion gambling service market to global competition, the association said. It doesn’t address “discriminatory and protectionist” practices in the form of selective prosecution related to trade in gambling services before the commitment was withdrawn, because the withdrawal is forward-looking only, the group said.
The Department of Justice says all forms of Internet gambling are illegal, a view it enforces only against non- U.S. businesses, the group said. The 2006 Unlawful Internet Gambling Enforcement Act drove large European operators out of the market with heavy financial losses, and threatened them with actual or threatened prosecutions, the group said. U.S. companies would not take it lightly if the situation were reversed, Hawkswood said.
The complaint was filed under the EU Trade Barriers Regulation, under which any EU company can challenge bars to trade in third countries, the association said. The EU must now investigate the allegations and decide whether to open talks with the U.S. on the matter. If negotiations don’t lead to a settlement, the EU could bring a WTO case directly against the U.S., the group said.
The U.S. now can discriminate legally against foreign gambling operators, since it withdrew trade commitments and agreed to pay compensation, said Clare Kelly, a trade analyst in the Geneva office of White & Case, which focuses on WTO issues. The decision to withdraw commitments rather than change the offending law sets precedent and worries some players, she said. It doesn’t change overall U.S. commitment, but does leave in place discriminatory behavior affecting remote gambling operators, making the group’s complaint appropriate, she said.
The U.S. has “gone about things in a new and interesting way,” and the association seems to be looking for a new way to deal with it, Kelly said. The Safe and Secure Internet Gambling Initiative applauded the complaint, saying Congress should end discrimination against foreign online gambling services. -- Dugie Standeford
* * * * *
A decision on the amount and type of damages in the WTO online gambling dispute between the U.S. and Antigua is expected Friday, said a spokesman for Mark Mendel, Antigua’s lead attorney in the case. “It’s curious European companies finally want to get involved at the WTO after Antigua has carried the water for the last several years,” said Jim Jochum, a lawyer who represents the Antigua Online Gaming Association.