Britain criticizes U.S. online gaming ban as it prepares for international summit
10/27/2006 11:27:59 AM

By JANE WARDELL
AP Business Writer

Britain's culture secretary criticized the U.S. crackdown on online gambling as a new form of prohibition on Friday as she prepared to host an international summit on Internet gaming next week.

Tessa Jowell warned that the U.S. ban on Internet gambling would make unregulated offshore sites the ''modern equivalent of speakeasies,'' illegal bars that opened in 1920s America when alcohol was banned.

U.S. Congress caught the gaming industry by surprise earlier this month when it added a provision to a bill aimed at improving port security that would make it illegal for banks and credit card companies to settle payments to online gambling sites. President George W. Bush signed the law Oct. 14.

The decision closed off the most lucrative region in a market worth US$15.5 billion (euro12.4 billion) this year in ''spend'' value _ the amount gambling companies win from their clients, or the amount gamblers lose.

Several London-based Internet gaming companies and a handful in Europe and Australia subsequently sold off or shut down their U.S. operations, losing around 80 percent of their combined business in the process.

U.S. officials have declined to participate in Tuesday's gambling summit in London, where lawmakers from 30 countries will discuss ways to regulate the industry, including the protection of minors and keeping the industry free of crime.

Officials from Australia, South Africa, New Zealand and online jurisdi ctions such as Malta, Costa Rica and Antigua and Barbuda are expected to attend.

Antigua in particular has been engaging in a strong defense of Internet gaming, one of the tiny Caribbean state's few economic success stories.

It argues that the U.S. ban is in direct contravention to a ruling by the World Trade Organization last year that the United States amend some of its legislation to permit Antiguan gaming operations to offer their services to U.S. citizens on a level playing field.

Mark Mendel, who leads Antigua's WTO legal team, said Friday that the summit would put further pressure on the United States to comply with the ruling.

''Ultimately, I think they are going to have to satisfy us,'' he said. Mendel said the online gaming industry was vital to Antigua, whose only other industry of note is tourism.

Next week's gathering has been months in the planning and officials intended to discuss ways to stop criminals from defrauding online gamblers and to prevent sites being used for money laundering.

However, the new U.S. law is now likely to be the focus of talks. Jowell said that regulating sites worked better than prohibition.

''America should have learnt the lessons of prohibition. The Volstead Act (which provided for enforcement of Prohibition) was meant to stop alcohol from causing harm, but in practice it forced otherwise law-abiding customers into the hands of the bootleggers,'' she said.

''If it goes wrong, there is a real danger is that off shore sites based in poorly regulated countries will become the modern-day equivalent of speakeasies, increasing the risk of exploitation and fraud.''

Under new British gambling laws, online operators have a ''social responsibility'' duty written into licenses and policed by the independent Gambling Commission watchdog.

It requires them to work to prevent underage gambling, give prominent warnings about addiction and inform users how much time and money they have spent on the site.

''Broadly speaking we have three choices: you can prohibit, like the U.S., do nothing or regulate, like we have,'' Jowell said. ''I firmly believe we have chosen the path that will do the most to protect children and vulnerable people and keep out crime.''

This really makes no sense--the government could make a ton of money off of online gambling---liscensing fees, taxes, and any other fees they could dream up! People are going to gamble whether it is legal or not--we are just turning down millions of dollars of new revenue.

What I don't understand is why Bingo, lotteries, horse race wagering, and Indian-run casinos are OK with US government--but not online gambling! Maybe the Indians are lobbying against it? They would probably stand to lose the most should online gambling be legalized and regulated.

Legalized gambling could also greatly benefit individual states, who could impose their own taxes and fees, which would be in addition to any the federal government instituted. Corporations will gladly pay the fees--they know they'll make it all back and then some! Tax revenues from individuals would increase--as it would be harder to hide gambling winnings once it is legalized. For example, if you win more than a certain amount at horse wagering, at a casino, or on the lottery--you will normally have to fill out a tax form before you can get your money. This could be instituted with online gambling using secure forms.

I also don't see how the US is going to be able to stop online gambling if it is legal in other countries, since the web knows no boundaries. I hope we don't see some form of web censorship here, like they have in China, that would really be a shame.

John

Hoorraaaahhhh~ ~ ! WE have plenty of legal gambling in the USA. We sure don't need it on the internet and off shore. I am really glad they cracked down! I hope they can enforce it. It is such an open sore, a horrible source of scam, fraud, and more.... I think there is more legal recourse to come for regulating internet. Linda

Kenneth,

There was one key issue I picked up on that would make the world of difference.

Finding a way to regulate!!!!!

At the present time it is not regulated and the US politians can't get their greedy fingers in the pie!

 

hello Kenneth..thanks for this update...who knows if it would be good or bad...maybe it can not be control very easy...Larry