Online gaming firms consider legal challenge to US ban

[BiggDawgg]

Online gaming firms consider legal challenge to US ban

- British-based companies could mount WTO case
- Antiguan government says it will work with websites

By Hans Kundnani
October 6, 2006

British-based online gambling companies could join forces with the Antiguan government to challenge the new US legislation targeting internet gambling that wiped an estimated £4bn from the sector's stockmarket value on Monday.

Antigua, which has already successfully challenged previous US laws on internet gambling, said yesterday it would be willing to work with UK companies such as Sportingbet to challenge what they see as US protectionism.

Following a complaint from Antigua, the World Trade Organisation ruled last year that US laws on online gambling contravened its rules. A WTO panel will decide in November whether the US is now complying with its rules.

Antiguan officials said yesterday that the new legislation, included in the port security bill passed by the Senate last Friday and due to be signed into law by President Bush within two weeks, was "as contrary to the decision of the WTO in our case as can possibly be imagined" and "puts the United States on a direct collision course with the WTO".

"The new legislation just makes our case before the WTO that much stronger," said Mark Mendel, a lawyer who represents Antigua in the WTO.

Complaints to the WTO from European companies are brought by the European commission, which said yesterday it had not yet received any approach from any UK company on the issue. However, several UK companies, including Sportingbet, have indicated they are actively considering a WTO case against the US.

Sportingbet chief executive Nigel Payne has been in Antigua since Tuesday afternoon and is understood to be meeting the Antiguan authorities to discuss the US legislation. Sportingbet has a licence in Antigua, which allows it to operate servers and customer support in Costa Rica for its US customers.

Meanwhile John J Farmer, a former New Jersey attorney general, told a conference in London that the legislation, which makes it illegal for banks and credit card companies to receive payments from online gambling sites, would drive the online gaming industry underground and benefit "fly-by-night operators".

There were also the first signs of much-anticipated consolidation in the online gaming industry yesterday as ukbetting said it had received a number of informal approaches to take over the company.

PartyGaming is known to be interested in acquisitions despite its shares falling 60% this week and said it cancelled its dividend to "take advantage of the many attractive opportunities in the sector that will emerge in the coming months".

PartyGaming, which has been forced to renegotiate its loan facility as a result of the US legislation, is also hoping to take over smaller rival Gamesys, which has all its customers in the UK.

However, even in the UK online gambling may now be under threat as a result of the US crackdown. US credit card companies MBNA and Capital One are considering the possibility of blocking the use of their cards for online gambling even from UK customers. Some major credit cards such as American Express already ban such uses.

[BabyRN]

i had 2 capital one credit cards that i tried to use a year and a half ago before i got neteller, and they wouldn't let me use them.

[MainStick]

and you would think they woudl work with that hoard of armed savages working for them too ;)

No, I only know of one person who was able to use a BANK card to work with Pstars about 1 to 2 years ago.

Honestly, this is where I figure we would see the LARGEST fight from. *The amount of money that they are LOSING can pay for a lot of lawyers. *It can also buy a lot of Senators too.

I saw an economist post that said this would likely lead to quick legalization and taxation of the industry. *Cause now, the same people who put in the offer to buy Harrahs and other large casinos, could realistically afford 888, Sporting Bet and Party Poker... *With purchasing these entities at reasonable prices, due to the recent Market Cap losses... combine that with lobby dollars, it would likely whiplash into the situation we have been asking for. *US licensed and overseen Online Poker Rooms. *Create a Federal Tax revenue stream and guarantee that they aren't as rigged as they seem to be.