EU probes online gambling crackdown

Brussels – The European Union launched an investigation on Monday into whether U.S. prosecutions of foreign online gambling companies were discriminatory, possibly paving the way for action at the World Trade Organisation.

European online gambling companies, such as PartyGaming and bwin Interactive Entertainment, complained in December that the U.S. Justice Department crackdown had singled out foreign companies.

„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,“ EU Trade Commissioner Peter Mandelson said in a statement.

The Commission said it would look into the complaints over the next five to seven months and could launch WTO proceedings against the United States.

The U.S. came into dispute with the EU and other countries after it withdrew its WTO commitments to open up its gambling markets to foreign companies, then introduced measures in 2006 to cut off that access.

The measures wiped billions of euros off the stock market value of the European sector.

The European Commission agreed in December to a U.S. offer of openings in other sectors as compensation for the measures. But the U.S. Department of Justice is still investigating the activities of EU companies before the measures were introduced.

As part of a U.S. crackdown on Internet gambling, two founders of payments processor NETeller were arrested last year while BETonSPORTS pleaded guilty to U.S. racketeering charges and agreed to cooperate in a case against the company’s founder and other co-defendants.

Clive Hawkswood, chief executive of Europe’s Remote Gambling Association, welcomed Monday’s announcement by the Commission and said companies hurt by the U.S. market closure were suffering a „double whammy“ of being prosecuted while U.S. rivals were not.

„By any analysis, the U.S. policy is fundamentally unfair, and we are delighted that the Commission shares our concern and alarm,“ he said in a statement.

„The U.S. simply needs to end its discriminatory prosecution of EU companies and their shareholders who have, after all, been out of the US market for almost two years now.“