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In search of certainty

The American prosecutions of online Poker firms may indicate that the key decisions on e-gaming will ultimately fall to Washington rather than individual states, writes Barnaby Page


hould the US crackdown on offshore online Poker operators, which we report on page 6 this month, deter land-based casinos from expanding to the Internet?

No. It does not alter the long-term

inevitability of gaming moving online, or the compelling reasons for land-based operators to make that migration. Nor, of course, does it affect markets outside the US.

But what it does signal is that – despite the

excitement over New Jersey’s closeness to legalising Internet gambling, and the speculation that a slew of states including California, Florida, Iowa and Nevada could follow – the decision that really matters will eventually be made not in the state capitols, but in Washington.

For the prosecution of Absolute Poker, Full

Tilt Poker and PokerStars is not only a rounding-up of illegal operators (or rather, a rounding-up of illegal users of banking services to process transactions related to e-gaming, such is the weird way that the US chose in 2006 to thwart online operations).

It is, perhaps more importantly, a

proclamation by the federal government that it does not intend to sit back and watch states legalise Internet gambling. It has on its side the potent Unlawful Internet Gambling Enforcement Act and it intends to use it.

And in this respect, the new Poker

prosecutions are as much about states’ rights, and federal curbs on them, as they are about gambling per se: it is just another issue, joining a long list that includes gay marriage, the death

44 MAY 2011

penalty, and medicinal marijuana, on which the balance of powers inherent in the US political system will be tested.

Indeed, in that respect it has a parallel in the EU, where a similar debate continues – and does not seem very close to a conclusion – over gaming regulation: should it be Europe-wide, or country-by-country, or a mix of the two?

It may be depressing for the gaming industry to be caught up in this kind of politico-legal squabbling, unable to just get on with exploiting the commercial potential of the Internet as nearly every other sector has been able to do. But the bright side is that resolution, when it does come, should be definitive.

One day Washington will say “okay, you can offer online gaming providing you do this and this and this (and pay us this much)” –and that will, at a stroke, take Internet gambling out of a grey area and into clear legitimacy.

Regulatory compliance, too, will be easier than it might be with a piecemeal series of state-by-state legalisations. While there will most likely still be some local variations to contend with, by and large operators will have only to adhere to a single set of federal requirements.

That, of course, is not much consolation for the individuals now facing prosecution, or for their customers. Yet in the long run, this crackdown may be seen not as the end for online gaming in the US, but as the beginning of the end of uncertainty.

Tell that to the Marines

Antigua and Barbuda may be a minnow of a nation, but it’s certainly talking big in its reaction to the US prosecutions. The country, which licensed Absolute Poker, is contending that its neighbour is acting illegally by refusing to allow offshore companies to provide gaming services to American residents, and that its motivation to do so is protection of US land- based operators – not, as Washington argues, protection of public morality.

“The World Trade Organization [WTO] ruled that these kinds of laws criminalising the provision of remote gaming services are contrary to the obligations of the United States under the WTO agreements,” said Mark Mendel, a lawyer for the Antigua and Barbuda government.

“The United States, being a very heavy user of the WTO rules to its own benefit, simply cannot continue to prosecute persons for engaging in legitimate international commerce,” he said. “It might be time for Antigua to go back to the WTO and compel American compliance with the rulings that this very small country fought so hard for and deserves to see implemented.

“What the United States has attempted to

cloak as a moral issue is now clearly nothing but economic protectionism at its worst. Rather than engaging with Antigua and the world gaming community to reach a reasonable accommodation on this relatively new but now globalised form of economic commerce, the United States has instead determined to protect its domestic gaming interests regardless of international legal obligations.”

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