European Union officials will interview several members of the current US administration next month over the protectionist policies of the States which prohibits European online gambling firms from trading in the US market.
The European Commission has already sent out questionnaires to many House and Senate committees as well as US agencies enquiring about the Unlawful Internet Gambling Enforcement Act (UIGEA). This piece of legislation, passed in 2006, bans financial transactions with Internet gambling firms.
The Remote Gaming Association (RGA) has welcomed the meeting as they represent several of the UK’s top online gambling firms. The RGA have been urging the EU to take more action on trying to get the UIGEA repealed.
The Washington publication, The Hill, has covered the arranged meeting between US and EU officials in a lengthy article earlier this week. It mentions that the interview could result in a trade challenge to US policy by the European Union.
Also in the article, the RGA has blamed the UIGEA for costing its members hundreds of millions of dollars in lost revenue and stock value.
For example, online gambling firm PartyGaming had a market capitalisation value of $10 billion at the beginning of 2006. This figure was slashed to $2.4 billion after the UIGEA became law.
RGA’s CEO Clive Hawkswood said to The Hill, “For the publicly listed companies, the immediate effect [of the law] was to wipe hundreds of millions of dollars off their share values.”
Mr Hawkswood went on to say that some of his members have been threatened with the enforcement actions of the US Department of Justice, like David Carruthers of the now defunct BetonSports who is still being detained.
The RGA believe it is wrong for the US authorities to penalise its members for services their firms may have operated in the US prior to the UIGEA becoming law in October 2006. They reckon it wasn’t clear that online gambling services in the US were illegal before the UIGEA came into force, as many online gambling companies operated there at that time.
The Department of Justice’s response appears to be that online gambling was illegal after the outdated Wire Act was passed in 1960 and the UIGEA was meant as an enforcement measure to stop financial institutions from making payments.
The Hill article goes on to predict that the EU questionnaires and the arranged meeting between the EU and the US could result in renewed World Trade Organisation action. The EU effort is still only an investigation though according to US trade officials.
Mr Hawkswood is fairly sure that the EU investigation would find enough proof to launch an action but argued this might not be the best outcome. He said, “We would be very surprised if they did not conclude that there was still a case to answer.” He also added it would be in the best interest of both the EU and the US to agree on a negotiated settlement.
The RGA believes that its members are suffering from selective enforcement by the US authorities. US punters are allowed to bet online on horse racing, fantasy sports and lotteries only which are operated by US betting companies.
Mr Hawkswood told The Hill, “The fact that the Department of Justice continues to threaten enforcement action against EU companies while apparently taking no action against US companies, such as those offering horserace betting, is an additional concern because the EU has identified that as discriminatory action which constitutes an unfair trade barrier.”
