“The bill introduction should happen in the next month,” a spokesman for House of Representatives Financial Services Committee Chairman Barney Frank said.

On Thursday, Reuters reported the EU could file a complaint about U.S. enforcement of the gambling ban at the World Trade Organization.

“Mr. Frank will bring back legislation to repeal the UIGEA (Unlawful Internet Gambling Enforcement Act),” the spokesman said, referring to a Republican-crafted bill passed in 2006 when the party controlled Congress and the White House.

Supporters of the ban argued offshore Internet gambling websites take billions of dollars out the U.S. economy, damage families and serve as vehicles for money laundering.

The law cost Europe’s online gambling companies billions in lost market value as they were forced to retreat from one of their most lucrative markets. It barred businesses from knowingly accepting payments in connection with unlawful Internet gambling, including payments made through credit cards, electronic fund transfers and checks.

Against Frank’s advice, the Bush administration finalized regulations late last year to implement the ban and gave companies until December 1 to comply.

Frank said the rules would burden the financial service industry at a time of economic crisis.

Many publicly traded European companies, including PartyGaming and 888.com, withdrew from the United States after Congress passed the ban, but they face possible criminal prosecution for activities before then.

Anurag Dikshit, a founder of PartyGaming, pleaded guilty in December to Internet gambling charges and agreed to pay $300 million in fines. He still faces possible jail time under a deferred sentencing arrangement. Other PartyGaming founders have not settled with the U.S. Justice Department.

EU industry officials said the pressure on Dikshit to make a deal showed the Justice Department had crossed a major line in its prosecution of cases.

The European Commission, acting on industry petition, began a formal investigation in March into whether Washington was singling out EU companies for enforcement actions while allowing U.S. online firms to operate freely.

Sources familiar with that investigation told Reuters in Brussels on Thursday they expect the investigators’ report, initially due last year, to recommend action at the WTO when it is released next month.

Rather than move immediately to litigation, EU officials would use the report as leverage to seek a negotiated solution with the United States, they said.

“I am deeply disappointed to hear that your agency is proceeding with what I consider to be unseemly haste in issuing regulations implementing the Unlawful Internet Gambling Enforcement Act,” House Financial Committee Chairman Barney Frank, a Massachusetts Democrat, said in a letter to U.S. Treasury Secretary Henry Paulson.

“This midnight rulemaking will tie the hands of the new Administration, burden the financial services industry at a time of economic crisis, and contradict the stated intent of the Financial Services Committee,” Frank said.

The U.S. Treasury Department and the Federal Reserve are required to issue new rules on Internet gambling under a bill Congress passed 2006, when Republicans were still in control of the House of Representatives and the Senate.

That bill, which cost EU Internet gambling companies billions of euro in lost market value, prohibited companies from accepting payments in connection with “unlawful Internet gambling.”

But rather than define what types of gambling are illegal online, the bill relied on existing Federal and state laws to answer that question. It also still allowed any online horserace betting permissible under the Interstate Horseracing Act of 1978.

That has caused confusion and at a hearing in April both Treasury and Federal Reserve officials told Frank’s committee they were “struggling” to determine what type of online gambling was illegal under the bill.

“The challenge we have is interpreting … federal laws that Congress itself isn’t sure what they mean,” said Louise Roseman, the Fed’s director of reserve bank operations and payment systems.

The House Financial Services Committee passed legislation in September that would block implementation of the new regulations, but neither the full House or the Senate has followed up with a vote on the measure.

In response to Frank’s letter to Paulson, a Treasury spokeswoman said the Treasury and the Fed were working together “to gather considerable public comment and complete these regulations as directed by Congress.”

Meanwhile, the European Commission has been investigating whether the U.S. Justice Department was unfairly singling out EU Internet gambling companies for enforcement in response to the 2006 law.

An EU team who visited Washington in September to investigate the issue, is expected to release its report by the end of the November. Depending on what it says, that could set the stage for the European Commission to bring action against the United States at the World Trade Organization

The company, which yesterday received royal approval when the Queen visited its British headquarters near Victoria station, was condemned as “irresponsible” by MPs and church leaders for lifting its four-year ban and allowing gambling companies to buy “sponsored links” on its site in Britain.

Google introduced a global ban on gambling adverts on its site in 2004, but decided to end it for British customers after rules on television advertising for bookmakers, casinos and gambling websites were relaxed.

Google insisted that all advertisers using the service would have to be regulated in Britain or Europe and would have to have internet links to organizations helping problem gamblers. But critics condemned the move, saying the adverts could attract people hit by the global economic downturn.

The Church of England led attacks on the decision, which came a day after figures were released showing a 25 per cent increase in people seeking help with gambling problems.

A CofE spokesman said: “Whatever people are searching for on Google, it probably isn’t the chance to risk developing a serious problem that could have a hugely negative effect on themselves and their family. As people are facing more financial uncertainty, the fantasy of instant wealth could become particularly attractive and the consequences of losses correspondingly serious.”

Figures released this week by the gambling addiction charity GamCare showed a huge increase in the numbers of people seeking help. Nearly 38,000 called its betting hotline last year, compared with just more than 30,000 the year before. Callers had racked up average debts of £17,500.

Last night, MPs of all parties warned Google not to exacerbate the problems of online gambling. Peter Kilfoyle, the former Labour Defence minister, said: “It’s the height of stupidity. It seems probably the worst of times for people to be encouraging gambling… after we have been facing a financial crisis built on reckless gambling in the markets.”

Don Foster, the Liberal Democrat Culture spokesman, added: “Clearly this is perfectly legal but it is of huge concern that we have further expansion of the advertising of internet gambling when we know it creates problems.”

Jeremy Hunt, the shadow Culture minister, added: “At a time when calls to GamCare have increased by a quarter I would hope Google would exercise some corporate social responsibility… At the very least [it] should ensure all advertisers meet UK gambling regulations irrespective of their country of origin.”

The Salvation Army said the move was “effectively encouraging vulnerable people into debt” warning that it contributed to a “creeping normalisation” of gambling in society.

A spokesman said: “With widespread use of the internet, use of online lotteries and betting opportunities [are] increasing. And with 16- to 24-year-olds among the most frequent users of the internet, it is not unrealistic to be concerned this group will be particularly affected by this poor decision.”

Google insisted that its UK-based advertisers would have to be registered with the British Gambling Commission before advertising, while European operators would also have to be licensed in their home country. All would have to have links to the GamCare website.

He said it would be for companies to decide which search words would trigger adverts for their services but stressed that the advertisements could be screened out by users.

James Cashmore of Google said: “We’ve decided to amend our policy to allow text ads to appear against search queries related to gambling in Great Britain. We hope this will enhance the search experience for users and help advertisers connect with interested consumers. Gambling ads will automatically be classified as Non-Family Safe which means they will not show on any search where the user has applied the Safe Search filter.”

In December, the USTR provided a hint at the scope of the deals by revealing that they involved new U.S. WTO commitments for “warehousing services, technical testing services, research and development services and postal services relating to outbound international letters.”

“Americans have a right to know what kinds of trade concessions the U.S. government is granting other countries, especially when those deals have a significant impact on domestic policy and may be worth billions of dollars,” said Bonnie I. Robin-Vergeer, a Public Citizen attorney. “The Bush administration’s decision to withhold the agreement under the Freedom of Information Act (FOIA) has more to do with its desire to prevent public and congressional scrutiny of the settlement before it is enshrined in a new WTO schedule than it does with national security. FOIA requires the agreement’s release.”

The ministry has made a list of 30-50 Internet gamers and has asked banks to stop services to these companies.
In the Netherlands only the Dutch state lottery De Lotto has a permit to offer online gambling, and last month the Dutch upper house defeated a bill that would have allowed Holland Casino to open a gambling website on a trial basis.

The Dutch approach to online gaming has put it on a collision course with the European Union, which is pushing for member states to open up their markets to competition. In February the EU gave Greece and the Netherlands a final warning before it initiates court action over restrictions in their gaming markets.

“This is a Dutch issue, so we have only asked banks operating in the Netherlands to participate,” the spokeswoman said.

With all the UIGEA issues that have come up in the US, including banks speaking out against trying to enforce the rules and the Congress holding hearings on the ineffectiveness of the UIGEA, its surprising that the Netherlands would attempt the same path to controlling internet gambling.

“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,” said EU Trade Commissioner Peter Mandelson.

European companies claim a U.S. ban that forced them out of the lucrative American market discriminates against them in violation of WTO rules, while permitting domestic gambling companies, particularly those offering betting on horse races, to flourish.

This case is reminiscent of last years WTO case where Antigua and Barbuda took US to WTO court. The case become an embarrassment to Washington. Never had such a tiny nation brought a WTO complaint against the United States, which is one reason the dispute has implications well beyond the issue of gambling.In the Antigua case, and we can assume in the EU case as well, the companies complained that, before that ban, they had the right to operate under international trade laws, and that therefore the U.S. gambling ban U.S. violate WTO rules. In the end the WTO awarded Antigua and Barbuda the right to impose $21 million a year in sanctions on the United States in retaliation for the restrictions on online betting.

The Remote Gambling Association, which represents several European gambling companies, says the U.S. action is hurting their revenues and stock value as well as making them run the risk of substantial fines. It welcomed the EU’s decision to act on its complaint.

The U.S. underscored its battle against the industry when it arrested two British Internet gambling executives who were travelling through the United States in 2006.

The 2006 WTO ruling found the U.S. had the right to prevent offshore betting as a means of protecting public order and public morals. But it said Washington was breaking trade law by targeting online gambling without equal application of the rules to American operators offering remote betting on horse and dog racing.

“If member states wish to ban gambling,” McCreevy said, “well, then I won’t cry at night about it. But they can’t be discriminatory against legally authorized gambling companies from other member states.”

Some EU states have said that curbs on competition are needed to cut addiction to gambling. But the commission said that, in the case of Greece and the Netherlands, the introduction of “new addictive games, intensive and increasing advertising and absence of concrete measures against gambling addiction contradicted that argument.”

Opap, a company which bought a license in 2001 to be Greece’s exclusive gambling service until 2020, “will defend its rights in every appropriate way,” the chief executive, Christos Hadjiemmanouil, said.

Stanleybet International, a British gambling company, is trying to start operations in Greece and welcomed the decision. “Today’s decision is another blow to member states who do not wish to play their part,” said John Whittaker, the managing director. His company urged McCreevy to pursue actions against Denmark, Hungary and Finland and take them to the European Court of Justice. The European Gaming and Betting Association, or EGBA, said national gambling legislation that does not serve “any genuine consumer protection or public order interest has no future.”

The EGBA said the warning from Brussels coincided with the Dutch government’s plans to issue a three-year exclusive online gambling license to the state operator Holland Casino.

The Dutch government is also looking to force financial institutions to refuse payment transactions to and from EU-licensed online gambling and betting operators, the EGBA said.

The Dutch state lottery, De Lotto, said that there were no harmonized EU rules on sports betting and that the commission’s decision had been prompted by pressure from primarily British-based online bookmakers.

“The European Commission seems to have set its sights on one big pan-European betting market,” the De Lotto chief executive,Tjeerd Veenstra, said.

There was no support for creating a pan-EU gaming market and the Dutch system keeps social costs arising from addiction and crime under control, Veenstra said.

Original Article