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EU investigates DOJ internet gambling tactics

WTO case against the US on the way?

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The European Union launched an investigation today into discriminatory trade practices by the United States in the internet gambling industry, according to a press release from the European Commission. The move could pave the way for a formal complaint with the World Trade Organization.

"The U.S. has the right to address legitimate public policy concerns relating to Internet gambling, but discrimination against EU companies cannot be part of the policy mix," Trade Commissioner Peter Mandelson noted.

Although the European Commission reached an agreement with the United States in December on compensation for America’s unilateral withdrawal from its General Agreement on Trade in Services (GATS) gambling commitments - an agreement widely ridiculed as selling the European internet gambling industry down the river - the American Department of Justice (DOJ) continues to investigate the activities of European firms prior to that withdrawal, when European companies such as PartyGaming arguably had the right to sell gaming services to American customers.

The December agreement thus appears to cover compensation going forward, without redress for past wrongs, which is why the DoJ is still on the prowl for European internet gambling companies and the EU Trade Commission is still pursuing potential WTO claims. The passage of the Unlawful Internet Gambling Enforcement Act (UIGEA) in the summer of 2006 and increased enforcement thereafter devastated the European online gambling industry - the total market value of the publicly traded companies dropped by half. SportingBet dumped its American unit for a dollar.

The news was naturally welcomed by the Remote Gambling Association (RGA), a European trade association.

"We cannot simply sit on the sidelines and watch while our members, who are already badly bruised by unlawful U.S. acts, suffer the double whammy of being prosecuted for activities whilst U.S. industry is not," said Clive Hawkswood, chief executive of the London-based RGA. "By any analysis, the U.S. policy is fundamentally unfair, and we are delighted that the commission shares our concern." ®

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