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US Legislator To Challenge Gambling Payments Ban
by Glen Shapiro, Lawandtax-News.com, New York

17 April 2007

After meeting EU Commissioner for Internal Market and Services, Charlie McCreevy, last week, US Representative Barney Frank said in Brussels that he would introduce legislation to repeal the ban on cross-border Internet gambling that was made law in 2006.

"I want to get it undone," said Democrat Frank, who is Chairman of the House Financial Services Committee. "I think a reconsideration among my colleagues is beginning but it's not far enough along yet. If the storm of public unhappiness is great enough then I will try to substantially revise that ban."

Charlie McCreevy, European Commissioner for Internal Market and Services, said recently that the US rules against processing of international on-line gaming transactions were a prima facie case of protectionism and that the World Trade Organisation was a possible venue for tackling them. But he said that while negotiations were continuing over the WTO's Doha Round, he would not rush to file a complaint. "It's not something of major momentum," McCreevy said.

He told the the European Parliament: "In order to protect, I'd say, their own business, their industry there, they have de facto prevented foreigners from online betting into the United States. In my view it is probably a restrictive practice and we might take it up in another forum." McCreevy said he had not discussed the issue in any depth with Peter Mandelson, the EU trade commissioner, who would front any EU attempt to challenge the US legislation.

In its recent ruling against the US over Antigua's complaint that the US was unlawfully banning payments to offshore gaming web-sites, a World Trade Organization Dispute Resolution Panel noted that the 2006 legislation (which post-dated both Antigua's original complaint and the first WTO ruling in its favour) confirmed the lack of conformity of US law with its obligations under the GATS.

In its minutely argued report, the Panel comprehensively dismissed all attempts by the US to wriggle out of the need to bring its laws into conformity with the GATS, either by banning equivalent domestic betting transactions, or by allowing parity for overseas transactions.

The US passed the Unlawful Internet Gambling Enforcement Act in 2006, which while expanding domestic opportunities for legal gaming, effectively bans all international and inter-state online gaming, by making it illegal for banks and credit card firms to make payments to such internet operations.

Frank said that a House bill will be introduced or registered within a couple of weeks to test the level of support, but that no major progress on the bill was likely soon. He also said that his bill would not be able to address the bigger issues raised by the WTO's ruling: "My committee only has jurisdiction over credit cards. I can't do more than repeal the ban on the use of credit cards. We don't have jurisdiction generally over the Internet or other aspects of this," he said.

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