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EU VISIT WILL HAVE U.S. OFFICIALS ON THEIR TOES
Questions to be asked challenge "some the worst written sections of the United States Code."
When trade emissaries from the European Union arrive in
Washington later this month to talk to officials in
Congress, the Justice Department, and other executive
branch agencies about online gambling and US laws,
they'll have some difficult questions to ask, writes Eli
Lehrer in The American Spectator this week.
In particular, the European delegation will seek answers
about what Lehrer describes as "...some gambling laws
that rank among some the worst written sections of the
United States Code."
And if things go poorly a trade conflict with vast
implications for the United States banking sector could
ensue.
Lehrer gives a succinct background to three federal laws
- only one of them particularly clear - that govern
Internet gambling in the United States.
He identifies these as the 1961 Wire Act, which limits
nearly all [sports] gambling by telephone and telegraph
but, for obvious reasons, says nothing about the
Internet.
He opines that the only really clear law is the 1992
Professional and Amateur Sports Protection Act which
bans all non-Nevada betting on sports other than animal
racing and jai alai.
Finally, the 2006 Unlawful Internet Gaming Enforcement
Act (UIGEA) which requires the financial services
industry to enforce bans on financial transactions with
online gambling companies but has been criticised for
its lack of precision and practicality.
Lehrer summarises the events leading to key meetings
with EU officials, detailing the activities of
Department of Justice officials and noting the
inconsistency of legislative carve-outs that enable
U.S.-based horse betting websites, fantasy sports and
online lotteries to operate freely.
"In other words, the Department of Justice appears to
have selectively prosecuted non-U.S. operators in
violation of World Trade Organization rules that bar
discriminatory treatment," Lehrer writes. "Even more
interestingly, several of the Internet gaming operators
under investigation - 888.com and Partygaming.com -
actually pulled out of the U.S. market as soon as UIGEA
went into force."
Lehrer reveals that the EU has begun the process of
creating a formal Trade Barriers Regulation complaint
against the U.S. government, which U.S. Trade
Representative Susan Schwab has, so far, brushed off.
A series of "interrogatories" - formal questions
directed at American officials - appear to indicate the
direction in which things are moving, says Lehrer. The
questions, framed in an almost 5 000 word document,
cover topics ranging from the way the United States has
enforced laws to the size of the U.S. gambling industry.
The document reads more like the outline of a legal
brief than a simple set of inquiries... and it requests
every detail of the operations of the U.S. gaming
industry and asks U.S. regulators to justify nearly
every action they've taken with regard to Internet
gambling.
Whilst there is no certainty on how far the EU is
prepared to carry the fight, the consequences could be
serious, the writer opines.
"Since enforcement of the gambling laws falls almost
entirely on the banking sector, it appears likely that
the EU could well respond with banking sanctions
directed at getting the U.S. to change its behavior.
(Other than the horseracing sites -- which serve an
almost exclusively American clientele -- there are no
American [online] gambling sites to sanction.) Lehrer
writes.
"Given the enormous volume of trade between the U.S. and
Europe, almost $700 billion in 2007, even a tiny series
of retaliatory measures would have severe implications
for the U.S. economy.
The writer concludes that even if the EU decides not to
pursue the issue, America's effort to regulate gambling
at the federal level needs to end. "Thirty years ago,
when casinos existed in only one state, federal laws
cracking down on gambling represented the public will.
Today, with gambling legal in 48 states, America's
debate over gambling has ended with the side that favors
legalization as the clear winner.
"The positive and negative consequences of widespread
legal gambling have already touched every corner of
American society. The risk of a serious trade dispute
offers a new reason why the U.S. should do away with its
federal gambling laws and let state legislatures and
consumer preferences decide where - and if - Internet
gambling needs government regulation."
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