The Commission will look into industry claims that the US is
selectively prosecuting EU and not US online gambling operators. It
will also probe whether the US ban itself violated the General
Agreement on Trade in Services (GATS).
In 2006 the US passed the Unlawful Internet Gambling Enforcement
Act, which outlawed online gambling with exceptions for state
lotteries and horseracing. No EU company now operates online
gambling services in the US.
Trade body the Remote Gambling Association filed a complaint
with the European Commission in December, saying that the law and
prosecutions resulting from it unfairly targeted EU firms while
allowing US firms to operate.
"Such actions violate World Trade Organisation rules, enshrined
in an international treaty signed by 150 nations, including the US,
which prohibit its signatories from engaging in protectionism,"
said an RGA statement at the time.
“We have been left with no choice but to pursue all legal
avenues available to challenge the US Department of Justice for its
discriminatory enforcement activities against European online
gaming operators,” RGA chief executive Clive Hawkswood said.
The Commission has now agreed to take up that complaint and
launch a full investigation into the issue.
At the time of the law's passing and prosecutions against EU
companies and executives, the US had made commitments through the
WTO to allow international competition in its gambling market.
It is seeking to withdraw from those commitments and the
Commission agreed a compensation package in December for the lost
trading opportunities resulting from its withdrawal.
The RGA, though, claims that that deal did not cover the period
prior to its agreement, and it says that EU companies are being
prosecuted for their behaviour while there was a WTO agreement in
place to open up the gambling market.
"Although this is a very serious violation of the WTO rules, it
is not a difficult issue to resolve," said Hawkswood. "The US
simply needs to end its discriminatory prosecution of EU
companies, and their shareholders, who have after all been
out of the US market for almost two years now."
"The US should have every interest in sensibly resolving the
issue in a constructive way that draws a line in the sand and
clarifies the situation," he said.
The Commission said that EU companies are still under
investigation. "The United States Department of Justice is
currently investigating the activities of EU companies that took
place prior to the ongoing withdrawal of US GATS commitments on
gambling," it said in a statement. "The lack of clarity of the
relevant US domestic legislation, together with the existence of
United States WTO commitments on gambling and betting services, and
the presence of US suppliers on the market, had led foreign
companies to also offer their services in the US."
"The US has the right to address legitimate public policy
concerns relating to internet gambling, but discrimination against
EU companies cannot be part of the policy mix," said EU Trade
Commissioner Peter Mandelson. "We are interested in a constructive
and mutually satisfactory solution to this issue".
The Commission said that it would examine the factual and legal
issues involved and, if necessary, would launch a new case against
the US at the WTO.
The US already faces a WTO case regarding its GATS commitments
on gambling. Antigua and Barbuda is pursuing a case in which it and
many other countries are seeking compensation over the lost trading
opportunities resulting from US online gambling bans.
The RGA's Hawkswood expressed the frustration of operators in
December when his organisation's complaint to the Commission was
lodged.
“How would US investors and businessmen feel if they invested in
a business in the United Kingdom based on international law
commitments, and then suddenly the UK not only passed new laws
forcing them to shut down their business, but then tried to throw
them in jail for past activities while still allowing their
domestic competitors to continue on doing the same thing?” he
asked. “That’s what is happening to our industry in the US."
