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DIKSHIT PROSECUTION FLIES IN THE FACE OF E.U. DEMANDS
The Remote Gaming Association, a body that represents the interests of most of Europe's major Internet gambling companies, this week ramped up the pressure on US representatives at the World Trade Organisation, calling on the European Commission to take the "necessary next steps" to protect European Union interests from WTO-violating, retroactive and discriminatory enforcement by US authorities in the area of Internet gambling.
In a strongly worded statement referring to the Wire Act plea and settlement with US authorities by Party Gaming founder Anurag Dikshit, the RGA said: "This is the first time this Act has been applied to Internet gambling beyond sports-betting. Despite never offering sports-betting and ceasing to accept US customers for its poker and casino games when the still-controversial Unlawful Internet Gambling Enforcement Act 2006 was passed, United States District Judge Rakoff accepted the plea of Mr. Anurag Dikshit and a fine of $300M.
"These events show that the outgoing US administration and the Department of Justice have demonstrated a total disrespect for the legal rights of European online gaming companies and those associated with them and a complete disregard for US international commitments under GATS."
The RGA's Chief Executive, Clive Hawkswood, reminded readers that EU Commissioner Peter Mandelson wrote to the Bush Administration's US Trade Representative in June 2008 requesting a freeze on all enforcement actions by the US authorities against European online gaming companies on the grounds that they violated international trade rules set by the World Trade Organisation.
"Mandelson suggested that the prosecutions stop until a proper dialogue could take place so as to avoid unnecessary escalation of the dispute at a time when the EU had already launched an enquiry into US actions following an RGA complaint made under EU Trade Barrier Regulations," said Hawkswood.
"Not only has that request remained unanswered, but now the US authorities, it seems, have succeeded in pressuring a major shareholder into making a deal. A major line has been crossed and it could set a very worrying precedent."
Hawkswood pointed out that PartyGaming Plc and its shareholders are not obvious targets for enforcement action of this kind.
"The company is listed on the London Stock Exchange, is fully licensed in an EU jurisdiction, was among the very first to cease accepting US customers when the Unlawful Internet Gambling Enforcement Act passed, has never offered sports-betting to avoid violating US law and has co-operated fully with the US authorities, said Hawkswood. "More generally, it has been closely involved in a whole range of industry initiatives that have served to improve the reputation and accountability of the sector as a whole.
"It's amazing really that a company which has just been voted by a leading industry publication as 'responsible operator of the year' is the one that has been most targeted for this sort of enforcement activity while other businesses that are still active in the US market, including notably US operators, do not appear to be targeted in the same way.
"That this happens while the US Internet gambling market, the biggest in the world, continues to grow and while US companies are free to develop their businesses in Europe, is quite astonishing. In the circumstances it is not unreasonable for us once again to seek the support and protection of the European Commission. We hope and believe that these continuing breaches of international law by the US will serve to strengthen the Commission's resolve," said Hawkswood.
The European Commission started an investigation of the RGA's complaint in March 2008. Describing the process, Lode Van Den Hende of Herbert Smith, the RGA's law firm in Brussels said: "The US has been given ample opportunity to respond to the legal and factual arguments presented in our complaint. However, we understand the US' defence has been flimsy and that the Commission will, therefore, have to confirm the RGA's assessment of WTO unlawful, retroactive and discriminatory enforcement.
"The next question is what will be done about it, given the acceleration of events causing this dispute."
Professor Joseph Weiler who directs the Jean Monnet Centre for International and European Economic Law and Justice at NYU School of Law also commented: "In this area, the US has lost all its cases and appeals before the WTO's highest judicial authorities. And yet in what can only be described as a puzzling and haughty contempt for the rule of law, it is acting as if it won those cases.
"The US is pursuing European nationals and corporations and threatening them with lengthy jail time and punitive fines based on US laws which have already been unequivocally held to be in violation of American WTO obligations," Professor Weiler added. "This is without precedent. It deals a blow to the multilateral trade system at the worst possible moment for the world economy and to Western economies which rely increasingly on services for our prosperity. It serves no discernable American national interest and this is a bad day for the reputation of the US in the area of international law."
In respect of the Dikshit guilty plea, Lode Van Den Hende explained, "What people need to understand here is that pleading guilty does not necessarily mean guilty. It is more than possible for the plea-bargaining system to act as an asymmetrical weapon in the hands of the prosecutors and one has to question whether that is happening here.
"If one looks at the fact that no court has yet applied the Wire Act to Internet gambling beyond sports-betting and that the activity ceased when UIGEA was passed, one has to wonder whether this is the right way for the US to go about making law - that will have wide repercussions, with regard to EU interests. According to opinion surveys among European companies from all sectors, one of the principal risks of doing business in the US is that politically motivated prosecutors can use criminal investigations as a form of regulation. These events demonstrate that this risk may be a very real one."
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