Britain Criticizes U.S. Online Bet Ban
Friday, October 27, 2006; 12:02 PM
LONDON -- Britain's culture secretary on Friday compared the U.S. crackdown on online gambling to the failed alcohol ban of the Prohibition as she prepared to host an international summit on Internet gambling next week.
Tessa Jowell warned that the U.S. ban on Internet gambling would make unregulated offshore sites the "modern equivalent of speakeasies," illegal bars that opened in 1920s America when alcohol was banned.
U.S. Congress caught the gambling industry by surprise earlier this month when it added to an unrelated bill a provision that would make it illegal for banks and credit-card companies to settle payments for online gambling sites. President Bush signed the law Oct. 14.
The decision closed off the most lucrative region in a market worth $15.5 billion this year in "spend" value _ the amount gambling companies win from their clients, or the amount gamblers lose.
Several London-based Internet gambling companies and a handful in Europe and Australia subsequently sold off or shut down their U.S. operations, losing around 80 percent of their combined business in the process.
U.S. officials have declined to participate in Tuesday's gambling summit in London, where lawmakers from 30 countries will discuss ways to regulate the industry, including the protection of minors and keeping the industry free of crime.
Officials from Australia, South Africa and New Zealand, Malta, Costa Rica and Antigua and Barbuda are expected to attend.
Antigua in particular has been engaging in a strong defense of Internet gambling, 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 gambling operations to offer their services to U.S. citizens on a level playing field.
Mark Mendel, who leads Antigua's WTO legal team, said Friday that the summit would put further pressure on the United States to comply with the ruling.
"Ultimately, I think they are going to have to satisfy us," he said. Mendel said online gambling was vital to Antigua, whose only other industry of note is tourism.
Next week's gathering has been months in the planning and officials intended to discuss ways to stop criminals from defrauding online gamblers and to prevent sites being used for money laundering.
However, the new U.S. law is likely to be the focus of talks. Jowell said that regulating sites worked better than prohibition.
"America should have learnt the lessons of Prohibition," she said, noting that legislation that was meant to stop alcohol from causing harm in practice forced otherwise law-abiding customers into the hands of the bootleggers.
Under new British gambling 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.
"Broadly speaking we have three choices: you can prohibit, like the U.S., do nothing or regulate, like we have," Jowell said. "I firmly believe we have chosen the path that will do the most to protect children and vulnerable people and keep out crime."