EU Seeks Compensation for U.S. Ban on Online Poker & Online Gambling

The European Union (EU) notified the United States on Tuesday that is wants compensation for the US protectionist ban on foreign online gambling (including online poker) sites that goes against trade agreements that World Trade Organization (WTO) members including the USA signed, and according to several WTO rulings. The filing comes just under the June 22 deadline.

Major EU-based companies such as PartyGaming (owner of Party Poker), 888 Holdings (owner of Pacific Poker) Sportingbet PLC (owner of Paradise Poker), and Leisure & Gaming PLC (owner of Betshop Poker) had to exit the lucrative U.S. market last October when Washington passed the Unlawful Internet Gambling Enforcement Act (UIGEA) that made it illegal for financial institutions such as banks and credit card companies to process payments from US residents to online gambling businesses.

Without half or more of the online players from the USA, such companies lost half of an estimated market worth USD $15.5 billion (11.6 billion Euros, 7.78 billion GBP) last year.

But an EU official said the concessions Europe was looking for would likely be "commitments" to open up other trade sectors, according to Associated Press reports from Geneva.

"We need new concessions that would be equal with the benefits lost," the official shared with AP, speaking on condition of anonymity because he is not authorized to be quoted by name in media reports.

Initial negotiations would focus on measuring the loss to European businesses, he said, warning that talks would take some time.

Following a dispute lodged with the WTO by Antigua and Barbuda in 2003, the WTO delivered several rulings against the Unites States for discriminatory practices regarding foreign online gambling, the latest of which was March 2007 (click here for related article).

The tiny twin-island nation of Antigua and Barbuda won their WTO case against the U.S. after arguing that online gambling provided income for hundreds of its citizens and helped diversify their economy away from tourism, which was hurt by a series of hurricanes in the late 1990s.

The WTO has maintained that the U.S. could keep restrictions against online gambling if they were also applied equally to US-based businesses, especially objecting to UIGEA carve outs for U.S. businesses such as horse racing, state lotteries and fantasy sports.

After losing the case, the U.S. announced that it would take the unprecedented legal step of changing the international commitments it made as part of the 1994 WTO's General Agreement on Trade in Services (GATS) amongst the 150 members of the WTO. As a result, the U.S. declined to challenge the WTO ruling, because it says that its legal maneuver effectively ends the case (click here for related article).

Under the GATS, if a country withdraws its commitments other nations can seek compensation for any services trade opportunities that they could prove they lost through the change.

So the EU, the world's largest consumer market, now joins Antigua and Barbuda in seeking compensation from the United States.

Meantime, several efforts are underway to exempt skill games like poker, and to regulate and tax online gambling in the United States:

In April 2007, Rep. Barney Frank (D-MA), chairman of the House Financial Services Committee, introduced HR 2046, the Internet Gambling Regulation and Enforcement Act of 2007 (IGREA) that seeks to establish a federal regulatory and enforcement framework to license companies to accept bets and wagers online from U.S. residents, to the extent permitted by states, Indian tribes and sports leagues (click here for related article).

Then early June 2007, Rep. Jim McDermott (D-Wash.) introduced the Internet Gambling Regulation and Taxation Enforcement Act (IGRTEA) which acts as a companion bill for Frank's HR 2046 bill. (click here to read related article). HR 2046 seeks to establish a licensing and enforcement framework for regulated Internet gambling in the USA, while McDermott's bill is meant to serve as the taxing mechanism.

Just hours before McDermott announced his bill, Congressman Robert Wexler (D-Florida) had introduced The Skill Game Protection Act to make 'skill' games, including poker, mah-jongg, bridge, and chess, exempt from current laws aimed to stop online gambling in the USA, including the UIGEA (click here for related article).

Also during April, Rep. Shelley Berkley (D-Nev.) introduced a bill calling for a year-long study to learn whether technologies exist to tax and regulate online gambling in the United States (click here for related article).

Despite all these efforts, Frank himself says the only way any of these bills have a chance to pass is with a groundswell of voter support.

As World Series of Poker Champion Greg Raymer astutely noted at a rally held at the 2006 WSOP, "You have to convince these Congressmen not just that you are right; you have to convince them that it is in their self-interest to be on our side. The only way that we can convince them of that is to show them how we are going to vote and how we are going to influence other voters."

HOW TO FIND YOUR CONGRESSIONAL REPRESENTATIVE

The Poker Players Alliance website offers a contact list and letter template for writing your congressperson (by zipcode) making it quick and easy to do (click here for it).

Alternately click here for a complete contact list and informative profile of all the current Senators and members of the U.S. House of Representatives.

If you do not know who represents your district, enter your state and zip code to the left of the map and you'll be shown the corresponding list for your location. Or you can click on your state on the map to see a complete list (good only if you know your district number).

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