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EU Concludes Investigation Into US Gambling Laws,
by Ulrika Lomas, for LawAndTax-News.com, Brussels
Monday, March 30, 2009
An investigation by the European Commission has found that United States laws
on remote gambling and their enforcement against EU companies constitute an
obstacle to trade that is inconsistent with World Trade Organization rules.
The provisional conclusions of the report imply that WTO proceedings against
US measures would be justified, although it also recommends that a negotiated
solution to the dispute between Brussels and Washington should be sought in
parallel.
The report was completed in the framework of the EU Trade Barriers Regulation
and has been released to EU member states for possible comments on the findings,
and will be made public once finalised.
EU Trade Commissioner Catherine Ashton said: "It is for the US 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."
The report is the result of a formal examination procedure initiated on March
11, 2008, following a complaint lodged by the Remote Gambling Association (RGA),
which represents the world's largest remote gambling companies. The report concludes
that US laws deny access and discriminate against foreign suppliers of gambling
and betting services inconsistently with US WTO obligations.
In November 2008, the United States Treasury Department and the Federal Reserve
Board announced the release of a joint final rule to implement the Unlawful
Internet Gambling Enforcement Act (UIGEA) of 2006, which effectively blocks
access to the lucrative US internet gambling market for offshore operators.
The Act prohibits gambling businesses from knowingly accepting payments in connection
with unlawful internet gambling, including payments made through credit cards,
electronic funds transfers, and checks.
The controversial legislation has effectively closed the door to the lucrative
US gambling market to companies registered in foreign territories and offshore
jurisdictions, such as Costa Rica, Gibraltar and Antigua and Barbuda, one of
the largest offshore gaming domiciles with an estimated 537 gambling websites
based there in 2007.
In December 2007, the EU and US agreed upon a compensation package following
the loss of trade opportunities in the US gambling sector as a result of the
US's intention to withdraw its GATS (General Agreement on Trade in Services) commitments
on gambling. Under this package the World Trade Organisation allowed Antigua
and Barbuda to impose USD21m worth of retaliatory measures against the US, although
this was considered to be a drop in the ocean compared to the billions in revenue
the island may lose as a result of the US legislation. Antigua had initially
asked for USD3.4bn in damages.
According to the EU report, European companies remain subject to legal proceedings
by US authorities based on their past activities, despite the withdrawal of these companies from the American online gaming and betting market in 2006. The report concludes that these proceedings are "legally
not justified and discriminatory."
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