Brussels acts over laws on online gambling
3/27/09 - Financial Times - View Source
By Roger Blitz
Europe yesterday opened a new front in transatlantic trade disputes by declaring that US laws on online -gambling and the arrest of European gaming company directors were illegal and had obstructed legitimate commercial activity.
But offering a rapprochement to the administration of Barack Obama, the European Commission said that though legal action under World Trade Organisation rules might be justified, "the issue should be addressed with the US administration, with a view to finding a negotiated solution".
The Commission began its investigation last year at the request of European operators who hastily quit the lucrative US gaming market in 2006 after Congress passed laws making it illegal for financial institutions to -handle online gambling transactions.
The US police then conducted a series of highprofile arrests of European executives on US soil and the US department of justice issued subpoenas against investment banks that had advised European online gambling companies and pursued the founders of some of those companies.
Anurag Dikshit, the co-founder of UK-listed Party-Gaming, in December pleaded guilty in New York to one charge of illegal internet gambling and paid a forfeiture of $300m.
The Commission's draft report concluded that European companies were still being pursued by the justice department even though they had quit the US market. "The report comes to the conclusion that these proceedings are legally not justified and discriminatory," the Commission said.
Lady Ashton, EU trade commissioner, 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 Commission's move comes less than a week after Ron Kirk was sworn in as US trade representative.
Lady Ashton's comments reflect the hopes expressed by the European gaming industry and some European politicians that the Obama administration and a new Congress will rethink the hardline approach of their predecessors.
Barney Frank, chairman of the House of Representatives financial services committee, plans to reintroduce a bill shortly to establish a licensing and regulatory framework for online gambling operators.
Mr Frank last month told the Financial Times that the DoJ's "zealous" pursuit of gaming executives was -"outrageous", and that he expected the president to demand that the department take a softer line.
Clive Hawkswood of the Remote Gambling Association, which brought the complaint to the Commission, welcomed the report and said the onus was on the US to end prosecutions of European companies.
"The DoJ will not have changed overnight because of this, and maybe not the federal government," he said. "Unless a solution is reached, we are no further forward."
Copyright The Financial Times Limited 2009