ONLINE GAMBLING CONFERENCE HOSTED BY GREAT BRITAIN - USA A 'NO SHOW'

31 October 2006

Newspaper

DAILY PRESS
By JANE WARDELL – AP Business Writer – October 31, 2006, 8:19 AM EST

ROYAL ASCOT, England — Officials from more than 30 countries debated ways to regulate the global Internet gaming industry on Tuesday, just weeks after the United States effectively banned online gambling.

Britain’s Culture Secretary Tessa Jowell, who was hosting the gathering, said there was broad agreement at one session to improve regulation of the industry amid fears it could exploit children and encourage criminal activity.

Jowell said that a regulated Internet gaming industry would offer gamblers better protection than the U.S. decision to outlaw the practice.

“Remote gambling has gone from a niche to mass market in a matter of years,” Jowell told journalists during a break in the gathering, the first summit to discuss the global impact of Internet gaming.

“We are optimistic that by the end of the day we will have achieved a number of things. There is a recognition that it is in the interests of all our citizens that we move to a framework of global standards on Internet gaming.”

However, U.S. officials declined an invitation to take part in the talks at the Royal Ascot race course outside London.

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

The U.S. Congress caught the gaming industry by surprise 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. U.S. President George W. Bush signed the law Oct. 14.

The decision closed 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.

Jowell likened the U.S. decision to a new form of the 1920s Prohibition on alcohol, warning that it would drive the industry underground.

A draft communique from Tuesday’s meeting noted concerns surrounding the industry, including its vulnerability to misuse for criminal activity and its threat to children.

The communique proposed the use of age and customer verification tools to protect young people and the vulnerable. It also called for ongoing communication between national jurisdictions through the International Association of Gambling Regulators.

Antigua in particular is engaged 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 he hopes that a closer relationship with Britain will develop stronger support for the ongoing WTO case as well as opening up opportunities for Antiguan licensed companies listed on the London Stock Exchange.

“We believe that once the United States ultimately comes into compliance with the WTO rulings in Antigua’s favor, which it must, you will see the FTSE AIM-listed companies re-entering the American market via subsidiaries or affiliates located, licensed and regulated in Antigua,” Mendel said.

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

In Britain, new legislation next year will clear the way for super casinos and an influx of online gaming businesses.

Under the new 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.

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