US ignores EU demands to cease WTO-violating enforcement

by Lou on December 16, 2008

The Remote Gambling Association (RGA), a trade association representing the largest, licensed, stock market listed, remote gambling companies today urged the European Commission to take the necessary next steps to protect European Union interests from World Trade Organization-violating retroactive and discriminatory enforcement by US authorities.

Today a principal shareholder of PartyGaming Plc plead guilty to charges under the 1961 Wire Act—the first time this Act has been applied to Internet gambling beyond sports betting. Despite never offering sports betting and ceasing to accept US customers for its poker and casino games when the still controversial Unlawful Internet Gambling Enforcement Act (UIGEA) was passed in 2006, United States District Judge Rakoff accepted the plea of Mr. Anurag Dikshit and a fine of $300 million. The maximum sentence under the Wire Act is two years imprisonment and the date for sentencing was deferred for up to two years from today’s date.

RGA’s CEO Clive Hawkswood said, “These events show that the outgoing US administration and the Department of Justice have demonstrated a total disrespect for the legal rights of European online gaming companies and those associated with them and a complete disregard for US international commitments under GATS.”

EU Commissioner Peter Mandelson wrote to the Bush Administration’s trade representative in June 2008 requesting a freeze on all enforcement actions by US authorities against European online gaming companies on the grounds that they violate international trade rules set by the World Trade Organization. Mandelson suggested that prosecutions stop until a proper dialogue could take place so as to avoid unnecessary escalation of the dispute at a time when the EU had already launched an enquiry into US actions following an RGA complaint made under EU Trade Barrier Regulations. Hawkswood added, “Not only has that request remained unanswered, but now the US authorities, it seems, have succeeded in pressuring a major shareholder into making a deal. A major line has been crossed and it could set a very worrying precedent.”

PartyGaming Plc and its shareholders are not obvious targets for enforcement action of this kind. The company is listed on the London Stock Exchange, is fully licensed in an EU jurisdiction, was among the very first to cease accepting US customers when the Unlawful Internet Gambling Enforcement Act passed, has never offered sports-betting to avoid violating US law and has co-operated fully with the US authorities. Moreover, it has been closely involved in a whole range of industry initiatives that have served to improve the reputation and accountability of the sector as a whole.

“It’s amazing really, said Hawkswood, “that a company which has just been voted by the leading industry publication as ‘responsible operator of the year’ is the one that has been most targeted for this sort of enforcement activity while other businesses that are still active in the US market, including notably US operators, do not appear to be targeted in the same way. That this happens while the US Internet gambling market, the biggest in the world, continues to grow and while US companies are free to develop their businesses in Europe, is quite astonishing. In the circumstances it is not unreasonable for us once again to seek the support and protection of the European Commission. We hope and believe that these continuing breaches of international law by the US will serve to strengthen the Commssion’s resolve,”

Professor Joseph Weiler who directs the Jean Monnet Centre for International and European Economic Law and Justice at NYU School of Law commented, “In this area, the US has lost all its cases and appeals before the WTO’s highest judicial authorities. And yet in what can only be described as puzzling and haughty contempt for the rule of law, it is acting as if it won those cases. The US is pursuing European nationals and corporations and threatening them with lengthy jail time and punitive fines based on US laws which have already been unequivocally held to be in violation of American WTO obligations. This is without precedent. It deals a blow to the multilateral trade system at the worst possible moment for the world economy and to Western economies which rely increasingly on services for our prosperity. It serves no discernable American national interest and this is a bad day for the reputation of the US in the area of international law.”

Rep. Robert Wexler (D-FL), Chairman of the Europe Subcommittee in the House Committee on Foreign Affairs had this to say about today’s events.

“It is of critical importance that we find an effective and immediate way to regulate and tax internet gaming in order to avoid a serioustrade dispute with the EU, which, in turn, could have global trade repercussions for the United States. The retroactive and discriminatoryenforcement against EU parties, who ceased operating in the US a long time ago, has directly led to an escalating trade dispute with the EU.”

{ 1 comment }

Anonymous December 17, 2008 at 12:20 am

Lou,

You were only off by $299,700,000 on the amount Dikshit was fined.

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