UNITED STATES BANS INTERNET GAMBLING
Double standards?
On 30 September 2006, US Congress approved a bill that bans most forms of internet gambling (betting), including poker. The measure has been sent to President Bush to sign into law, which he will undoubtedly do soon.
The ‘Unlawful Internet Gambling Enforcement Act of 2006’ is attached to the Safe Port Act as part VIII… The two matters are not related at all, but this way it could be past last-minute with no debate and no formal vote on the issue itself. That’s what is called democracy…
The new legislation would make it illegal for banks and credit card companies to make payments to online gambling sites. The effects of the new bill could be far-reaching and in some cases dramatic, resulting in high financial losses and job losses. It should be noted that many States allow gambling in land-based casinos (a source of income for those States), which raises the question whether there is a double standard as it comes to on- and offline gambling.
The bill does not criminalize gambling as such. It prohibits people from using U.S. financial institutions and thus from using checks, credit cards or fund transfers for on-line gambling activities. It should be noted, however, that the bill criminalizes each and every person in the U.S. or abroad who is involved in any financial transaction that violates this bill.
It is questionable whether the bill is in accordance with WTO standards and it seems to make sense to challenge its validity. According to the WTO, the US inconsistently applied gaming law so as to prejudice foreign countries, in violation of the General Agreement on Trade in Services (GATS). Click here for the full report. Another double standard?
Also, the U.S. Constitution not only limits the power of the government, but aims at securing the liberty and individual rights of citizens (Bill of Rights). The question is whether this new bill is unconstitutional. The individual autonomy is at stake: why would state control (i.e., a ban) be acceptable when it concerns online gambling and not if it concerns land-based casinos?
It is worth mentioning that the European Commission urged a.o. the Netherlands and Italy to amend their legislation to legalize internet gambling. In the meantime, the industry should take measures to control the damage as much as possible. For the time being, they should focus on other countries and territories, in particular Asia.
Karel Frielink
Attorney (lawyer) / Partner
Additional note (4 October 2006):
Professor of Law I. Nelson Rose, the author of many gambling law books including “Gambling and the Law“, has analyzed The Unlawful Internet Gambling Enforcement Act of 2006 on his website Gambling and the Law.
Additional note (10 October 2006)
Further insights can be found on Interactive Gaming News (a River City Group Publication).
Additional note (11 October 2006)
I have been interviewed by RED HERRING and been mentioned here together with Dr. Erol Cort, Antigua’s Minister of Finance and Economy.
Additional note (13 October 2006)
Today President Bush signed the Safe Port Act and thus the United States Unlawful Internet Gambling Act.
Additional note (31 January 2007)
According to the Financial Times, the European Union’s top financial regulator has accused the US of using a crackdown on online gambling to protect its domestic gaming industry and warned it could trigger legal action before the World Trade Organisation. The FT continues: “Charlie McCreevy, the internal market commissioner, yesterday said US legislation that made it illegal for banks and credit card companies to process online bets placed by American citizens with foreign gambling sites was “protectionist”. ‘In my view it is probably a restrictive practice and we might take it up in another forum,’ Mr McCreevy said. He added that the case could go to the WTO and suggested he would pursue the matter with his American counterparts on a visit to the US in March.”
It should be mentioned that the Dutch government has decided to take action against credit card companies as well, notwithstanding the fact that such action is a clear violation of EU law. So Charlie McCreevy should focus on the Netherlands too!
