EU launches Probe into US Discrimination Against European Online Poker Online Gambling Operators

The European Commission, the executive branch of the European Union, announced Monday that they are launching a probe into United States measures preventing foreign suppliers of online poker and Internet gambling services from offering their services to American residents, principally targeting the Unlawful Internet Gambling Enforcement Act (UIGEA), which caused many European gambling companies to withdraw their services from the lucrative US market.

The investigation could lead to the EU taking action against the United States at the World Trade Organization.

The Commission is acting on a complaint filed December 2007 by the Remote Gambling Association (RGA), Europe's largest trade association for the online gambling industry.

The London-based RGA represents many of the world's largest and well known remote gambling companies, including: Betfair, Victor Chandler (VCPoker), William Hill, Party Gaming (Party Poker), 888 Holdings (Pacific Poker), Paddy Power (Paddy Power Poker), Skybet (SkyPoker), Virgin Gaming (VirginPoker), Cryptologic, and Microgaming to name but a few.

The RGA complaint asserts that the US Department of Justice violated international trade law by kicking their members out of the market and then taking legal action against offshore operators while allowing domestic online gambling companies to continue operating.

The stock market-listed EU companies collectively lost billions in market value overnight when the UIGEA took effect, whilst US online gaming companies continued to operate unperturbed. The Department of Justice has subsequently threatened, arrested and carried out legal action against European firms and their representatives.

EU Trade Commissioner Peter Mandelson says, "The U.S. 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. We are interested in a constructive and mutually satisfactory solution to this issue."

Mandelson' office says, "The challenge made by the RGA concerns the fact that laws and regulations that ban the supply of Internet gambling into the United States market were already in place at a time when the U.S. had WTO commitments allowing such services. They also claim that the U.S. is now selectively enforcing these laws against foreign suppliers, for online gambling services which they offered in the past. Industry therefore argues that the United States measures violate Articles XVI (market access) and XVII (national treatment) of the GATS (General Agreement on Trade in Services)."

Clive Hawkswood, Chief Executive of the RGA, said, "As the industry trade association, we cannot simply sit on the side-lines and watch while our members, who are already badly bruised by unlawful US acts, suffer the double whammy of being prosecuted for activities whilst US industry is not. By any analysis, the US policy is fundamentally unfair, and we are delighted that the Commission shares our concern and alarm."

Hawkswood added, "The good news is that, although this is a very serious violation of the WTO rules, it is not a difficult issue to resolve. 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. This is especially so in the case of the EU, given its previously negotiated settlement in relation to the US's anticipated withdrawal of its GATS market access commitment for gaming."

The Commission will take five to seven months to complete its investigation.

It also stressed that the RGA complaint and its subsequent investigation are separate from the December 2007 compensation package agreed between the two jurisdictions.

For more information about the RGA, click here.

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