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EU May Challenge UIGEA Outlawing Online Poker and Online Gambling Payments

by PokerPages.com
Wed, Jan 31st, 2007 @ 12:00am

The European Union's (EU) top financial regulator, Internal Market Commissioner Charlie McCreevy, told the European Parliament on Tuesday that the United States is using "protectionist" legislation to stop foreign online poker and gambling companies entering the US online betting market, and that it may trigger legal action before the World Trade Organisation (WTO).

The "protectionist" legislation McCreevy referred to is the Unlawful Internet Gambling Enforcement Act (UIGEA) which the U.S. signed into law last October, causing many UK listed gambling companies to plummet billions in value.

The UIGEA did not make online poker illegal. Nor did it update the 1961 Wire Act which specified that the only form of illegal gambling is sports betting over the telephone, which has, by extension, been applied to sports betting over the Internet.

Instead the UIEGA did make it illegal for financial institutions to handle gaming transactions between US residents and online gambling sites. The UIGEA also exempted certain forms of state-sanctioned online gambling such as horse race betting and state lotteries, adding further weight to McCreevy's criticism of U.S. protectionism.

McCreevy told reporters the U.S. rules were a "prima facie" case of protectionism [meaning there is sufficient evidence to prove it]. He also added that the WTO is a possible venue for tackling the U.S. rules.

However, because EU and US trade officials are currently trying to restart talks on a sweeping global trade deal - the Doha round, McCreevy said he would not rush to file a complaint. "It's not something of major momentum," he remarked. Nor, he noted, has he had any face-to-face talks about the issue with Peter Mandelson, the EU trade commissioner.

Meantime, the tiny Caribbean island nation of Antigua and Barbuda has been trying to resolve a similar protectionism case against the U.S. which they originally filed with the WTO in 2003, in what is viewed as a David versus Goliath situation.

In their case, Antigua challenged US laws blocking non-US internet gaming companies from operating inside US borders, arguing that US trade officials had signed the 1995 GATS treaty committing it to allowing foreign entrants to its lucrative online gaming market.

The WTO ruled in Antigua's favor in 2005. In April 2005 the WTO Appellate Body, in response to an appeal lodged by the US, ordered the United States to comply either by lifting its ban on foreign operators or by withdrawing a "discriminatory" exemption for US online horse-racing betting sites, within 18 months.

Antigua and Barbuda complained the US had not complied with the 2005 ruling, so the WTO agreed in July 2006 to investigate their complaint. This resulted in a ruling last week, January 25, admonishing the U.S. for not taking steps to comply.

The WTO's final public report on Antigua's case is due March 2007.

Read Related Articles:

  • US Online Poker Gambling Stance Slammed by UK Secretary Jowell
  • WTO Rules in Antigua's Favor Again re Online Poker & Online Gambling
  • Antigua builds WTO case against US
  • WTO Efforts to counter US Gaming Ban
  • WTO sets April Deadline
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