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Poker News | Gambling and the Law

European Union Finds U.S. in Violation of WTO Rules

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Many in the poker industry have believed it since the passage of the Unlawful Internet Gambling Enforcement Act (UIGEA), but now the European Union concurs. The United States Justice Department’s targeting and attempts at prosecution of European-based internet gambling operations is wrong, so wrong that it violates the U.S. obligations under the rules of the World Trade Organization (WTO).

When the UIGEA was passed in 2006, the U.S. Department of Justice began looking at internet banking companies that catered to online gaming, as well as sports betting websites, and under various U.S. statues began arresting people and seizing funds. But more importantly to the European Union, gambling companies based in Europe but catering to American consumers lost billions of Euros when companies were forced to leave the U.S. market for fear of said prosecution. The UIGEA also attempted to make it illegal for American banks to allow payments to foreign online gambling sites, which severely inhibited European companies to stay afloat.

The European Union released its preliminary report on the subject after a lengthy official investigation, which was prompted by a Remote Gambling Association complaint in the area of trade barrier regulations. The report, in essence, stated that the U.S. laws regarding gambling, specifically the UIGEA, “constitutes a barrier to market access on EU economic interests.” It also stated that the fact that the U.S.-based companies allowing horse racing wagers equals discrimination when foreign companies are not allowed to participate in the same type of businesses. Thus, an unprecedented formal complaint was filed with the WTO by the European Union.

Upon the announcement of the EU decision, it was U.S. House Financial Services Committee Chairman Barney Frank, who spoke out. In light of his long-standing opposition to the UIGEA, his comments were no surprise. First, he was quoted as saying that he will be introducing legislation to overturn the UIGEA in the U.S., and he followed by noting the hypocrisy of some of his fellow legislators: “I’m struck by the people who think we have to abide absolutely and religiously by the WTO…but when it comes to banning gambling and the WTO, they ignore it.”

The only comment from the U.S. Department of Justice and office of the U.S. Trade Representative noted that the agencies would review the report and discuss with the EU.

While the EU is willing to come to a resolution through the negotiation process with the U.S., if possible, its Trade Commissioner Catherine Ashton was careful to say, “It is for the U.S. to decide how best to regulate internet gambling in its market, but this must be done in a way that fully respects WTO obligations.”

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