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Protectionism and Online Gambling

24 April, 2009,  Milton Shaw, Staff writer

In the world of international trade it is a dirty word...protectionism.  And this is especially so in an economic climate where history has shown that countries closing their doors to competition simply to protect local businesses only serves to stunt world economic growth prolong recovery from global recession.

Protectionism is also a very topical word in the world of online gambling.  Casino and sports betting services have long been condemned by governments around the world, while operators from within their own jurisdiction are given licenses to offer these products to residents.  Australia's Interactive Gambling Bill seeks to block offshore operators while allowing local operators to accept bets over the internet from Australians.  For some reason principles of free trade have been forgotten by many governments when it cones to online gambling.

But it seems this is slowly changing.  And a catalyst for the change has been the European Commission (EC).   The EC is the EU executive arm, charged with upholding the laws of the European Communities Treaty, one of which is a provision requiring all EU Member States to allow freedom in the provision of services from other EU Member States.  The clear purpose of the law is to forbid Member States from protecting local monopolistic operators from cross border competition.  Any protectionist laws enacted by Member States to this end will be both unenforceable and the subject of EC infringement proceedings.

And according to the EC and European Court of Justice, the freedom to provide services laws apply to online gambling services just as it does to all others.

Online gambling bans enacted by 10 EU Member States, including Germany and France have been the focus of EC infringement proceedings.  France announced in March 2009 that it will be amending its laws to open its market to online gambling under a new regulatory regime planned to come into effect in early 2010.

And now the EC has the US's protectionist approach to online gambling, and UIGEA in particular in its cross hairs.  It released a report earlier this year finding that the US was in breach of international trade obligations and foreshadowed proceedings before the World Trade Organization in the absence of a negotiated resolution.

Never a dull moment in the world of online gambling.


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