European Union Seeks Betting Truce with US

7/5/08 - Financial Times

By Roger Blitz

Peter Mandelson, the European Union trade commissioner, is demanding that the US call a truce in its criminal proceedings against European-based gambling companies it believes have violated its laws.

The European Commission is taking up the complaint of gambling companies that the US is singling them out in favour of its own operators, and Mr Mandelson wants the US to freeze legal action until he has decided whether their case merits the commission's lodging a formal case against the US at the World Trade Organisation.

Commission insiders said a letter from Mr Mandelson to his US counterpart, Susan Schwab, sought an amicable solution to what has become a fractious EU-US dispute over online gambling.

Mr Mandelson is asking Ms Schwab to raise the issue with the US attorney-general, Michael Mukasey, and seek a temporary suspension of Department of Justice investigations against EU companies and individuals to prevent an escalation in the dispute.

The EU trade commissioner will increase the pressure later this month when he sends a delegation to Washington to argue the case with US politicians.

Companies in the European online gambling industry, including PartyGaming and 888, are being pursued by the DoJ for the settlement of liabilities for alleged infringements of US law banning online gambling.

The DoJ has also issued subpoenas against European-based banks that advised those companies.

Ms Schwab's office brushed off complaints last month by saying there was "no basis" for any allegation of discriminatory enforcement of US gambling laws.

Commission insiders said Mr Mandelson's letter said there were "significant" differences in the positions of the US and the EU.

They said Mr Mandelson impressed upon Ms Schwab concerns that DoJ enforcement actions could reach a point where they did irreversible harm to US interests and would undermine his efforts to try to reach a solution to the dispute.

A temporary freezing of DoJ action would maintain the interests of European companies and not affect the DoJ's position, Mr Mandelson is said to have argued.

The European online gambling industry fled the US en masse two years ago when Congress strengthened laws against gambling by electronic devices and made it a federal crime to take money for "unlawful internet gambling".

But the Remote Gambling Association, which represents the European online gambling industry, argues that while the DoJ has continued to go after its members, it has taken out no proceedings on US-based operators, enabling them to practise unimpaired.