McCreevy Labels US Gaming Rules 'Protectionist'

by Ulrika Lomas, for LawAndTax-News.com, Brussels

02 February 2007

Speaking to reporters after addressing the European Parliament's ECON Committee this week, Charlie McCreevy, European Commissioner for Internal Market and Services, said 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 Committee: "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.

It was reported last week that the WTO's Dispute Settlement Body's panel on the spat between United States and Antigua and Barbuda over e-gaming is likely to rule against the US.

The Panel has sent a confidential version of its ruling to the parties, and a US Trade Representative spokeperson, Gretchen Hamel, confirmed that the Panel did not agree with the United States' contention that it had taken the necessary steps to comply with the WTO's 2005 ruling in Antigua's favour.

Indeed, since then the US has passed the Unlawful Internet Gambling Enforcement Act of 2006, the legislation referred to by Mr McCreevy, 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.

The Panel's final ruling will be issued in March or April after the parties have had an opportunity to make further submissions. Hamel downplayed the decision, saying that: 'The panel's findings issued today involve a narrow issue of federal law'.

After the WTO's Dispute Settlement Body had reported in Antigua's favour in 2005, the United States stated its intention to implement the DSB's recommendations and indicated that it would need a reasonable period of time to do so. Both parties could not agree on what constituted "a reasonable time period," and Antigua and Barbuda requested that the reasonable period of time be determined through binding arbitration.

An Arbitrator was appointed and he determined that the reasonable period of time for implementation was 11 months and 2 weeks from 20 April 2005, expiring on 3 April 2006. However, at the end of that period, the US issued a unilateral declaration that it needed to do nothing since it was in compliance all along. This led Antigua and Barbuda to request the establishment of the current panel.

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