by Hillary LaClair, Senior Editor
April 14, 2009
After the European Commission’s formal investigation against the United States found that the U.S. was guilty of discriminating against offshore online casinos, the Commission filed a report claiming that it could take legal action. The findings in the report show that the treatment of offshore online casinos by the U.S. blocks the market access for casino operators and is in violation of the World Trade Organization agreements. Recent trends imply, however, that the U.S. may take threats of WTO arbitration with a grain of salt.
Before taking legal action, members of the European Union have decided to ask the U.S. to open its doors to online casino operators as a settlement agreement. But a trade expert believes that lax prosecution of recent cases by the EU will not cause the U.S. to feel pressured to comply.
Dr. Stephen Woolcock of the London School of Economics told Gambling Compliance that the EU investigates several complaints each year but that it rarely decides to pursue any such cases with the World Trade Organization.
“The Trade Barriers Regulation is not a very sharp instrument to get the US’ attention,” said Woolcock. “The EU has never really used it very aggressively.”
Because trade representatives have already said that they would rather negotiate with the U.S. than pursue legal action, Woolcock believes that the U.S. may view this as an empty threat.
"The European Commission investigation further highlights the need for the Obama Administration and Congress to regulate Internet gambling not only to protect consumers, but in order to restore integrity to the international trade system," said Jeffrey Sandman, spokesperson for the Safe and Secure Internet Gambling Initiative, upon the report’s filing. "The Obama Administration should seek to forge a new direction on Internet gambling, rather than keeping in place a protectionist trade policy that hypocritically discriminates against foreign online gambling operators."
A source stated that bilateral talks were most likely to ensue because “a case would take a very long time tied up at the WTO.”
The EU is not likely to accept a situation in which the U.S. continues to pursue European online casinos for activities in the U.S. when the U.S. is bound by international trade agreements to allow unrestricted competition in services.
Representative David Blunkett MP of the UK Parliament commented, “"I fully support the call by the EU Trade Commissioner, Cathy Ashton, for urgent U.S. action to regularise the trade relationship, respect WTO rules and to regulate online gambling. This would provide not only fair competition, but protection for individuals and families, and a legal basis on which substantial revenue could be raised at a time of considerable pressure on public finances.”
Finally, newly appointed U.S. Trade Representative Ron Kirk openly supports free trade agreements and it is believed that he will devote himself to upholding WTO regulations. If nothing else, offshore casinos that have undergone litigation with the U.S. Department of Justice can expect to maintain a market without further harassment from the U.S. court system.