“The report concludes that US measures constitute an obstacle to trade and is inconsistent with WTO rules. As a result, WTO proceedings would be justified,” says a statement posted on the European Commission’s website.
However, the Commission may choose to forge an agreement with the Obama Administration rather than pursue WTO action. The RGA represents a bevy of European internet gambling companies, many of which are traded on major stock exchanges in London and Vienna. Its membership roster includes Party Gaming, 888, Ladbrokes, Sportingbet, and Playtech, which owns and operates the popular iPoker Network.
The 2006 Unlawful Internet Gambling Enforcement Act (UIGEA) drove publicly traded internet gambling sites out of the US market in deference to shareholder interests. However, US-based sites which permit online wagering on horse racing were allowed to flourish. In addition, sites like
PokerStars and Bodog, which are not publicly traded, continued to solicit customers from the US. The Commission’s final report said, “There are serious adverse effects for the EU. They include revenue and stock market value lost by affected companies as a result of their absence from the US market and also the threat of serious sanctions hanging over them which affect their normal operation outside the US.”
The European Commission’s investigation was launched in March 2008. In the end, its report outlines many of the ambiguities and shortcomings of the UIGEA, including the lack of a definition of “unlawful internet gambling” and the propensity of credit card companies and other payment processing companies to “overblock.”
The latter has taken center stage in North Dakota and New Hampshire, where legal online lottery purchases have been stunted by UIGEA regulations. Moreover, the report dives into the specifics of the Professional and Amateur Sports Protection Act (PASPA), which allows sports betting in several US states, including Delaware and Nevada. In short, the European Commission report spends countless pages assessing convoluted US gambling laws.
As a result of withdrawing from the US market, the stock price of publicly traded internet gambling companies took a nosedive. Party Gaming, 888, and Sportingbet lost 75 per cent of their value for a sum of GBP 5.7 billion between January of 2006 and October of 2006. In addition, bwin, which is traded in Vienna, lost GBP 120 million as a result of exiting the US market. In December 2008, Party Gaming Co-Founder Anurag Dikshit admitted to violating the Wire Act of 1961 in a New York courtroom. On the same day as Dikshit’s agreement was struck, shares of Party Gaming shot up 27 per cent. According to the Commission, the increase is evidence of how “the uncertainty created by the [Department of Justice] investigations is affecting the business prospects of EU remote gambling and betting companies.”
Safe and Secure Internet Gambling Initiative spokesperson Michael Waxman told that “We hope that members of Congress are paying attention to all these very compelling arguments about why regulation is needed. We hope that, following Congressman Barney Frank’s leadership, members of the Congress will start paying attention and move in support of regulation.”
Frank’s Internet Gambling Regulation, Consumer Protection, and Enforcement Act (HR 2267) outlines a comprehensive regulatory environment for the internet gambling industry in the United States. It was introduced on May 6th and has 30 co-sponsors.
On the future of the European Commission’s activities, a recent Wall Street Journal article noted, “The EU said Wednesday it would hold off on filing a formal complaint in the hope of negotiating some sort of solution with the Obama Administration.”
A couple of days ago the US Government froze USD 33 Million in player transactions coming from poker sites accepting US players. PokerStars is the poker room that got hit the hardest while Full Tilt Poker and Cake Poker takes this as an opportunity to build their player base.
