U.S.A. Accused Of "Absurd Protectionism"

Published: Wednesday, October 04, 2006 Online-Casinos.com

ONLINE GAMBLING EXEC ACCUSES U.S.A. OF 'ABSURD PROTECTIONISM'

Time for the European governments to voice disapproval of damaging US moves, but do they care?

The always articulate and fearless Sportingbet executive Nigel Payne has strongly attacked the new US anti-online gambling legislation in a widely reported interview with the BBC.

Against a background where the unexpected American proposal has already wiped billions off the value of UK publicly listed companies, Payne said the U.K. government and European Union needed to support European companies in the face of America's "absurd protectionism."

"Specifically, US internet horse racing, US internet lotteries, US fantasy sports, intra-state betting and intra-tribal betting are made expressly legal by this bill," Payne said. "What in fact is happening is overt protectionism going on between the United States and the United Kingdom, and it is somewhat disappointing that the European Union and the UK government seem disinterested in protecting the UK companies."

Payne has told several media outlets that the industry has the technological capability to defy the law and continue to take American bets, but it would need tangible support from the British government and EU to do so. "If the government doesn't say that this is absurd protectionism, then it's very difficult to carry on," he told the BBC.

The UK government and the EU had so far been "disappointingly silent," the high profile executive said in another interview with The Guardian newspaper. "I know that they know it's protectionism, and I would hope that they would step up to the plate, but I do not know whether they will be doing so."

A spokesman for the DTI said: "We are happy to listen to the concerns that online gambling companies have."

Unfortunately for Payne, and the industry there is little chance that the British government will denounce the legal stance of the United States. "These are companies that have to make their own business decision based on their own judgment and their own analysis of the legal position of different countries," said Anthony Wright, a spokesman for the U.K. Department of Culture, Media and Sport.

"We believe regulation with tough controls is the way forward, which is a different approach to the U.S., but that's not a criticism, it's just a fact."

Judging by media reports, other online gambling bosses are thinking a little more proactively as the crisis develops.

888's CEO-in-waiting Gigi Levy told The Guardian that the effect of the US legislation would be to drive internet gambling underground. "Wherever there is demand there is supply," said Levy. "There are 10 million Americans that play online and they're not going to go away."

Mitch Garber, the head of Internet poker giant PartyGaming, joined Levy in predicting that the new American law would spark a wave of consolidation in the industry.

Levy said mergers would happen first between online operators, and Garber confirmed that PartyGaming would be mopping up the smaller companies that might be vulnerable in the wake of the new law. US land casinos like Harrah's Entertainment and MGM Mirage, he said, could then probably pick up the scraps.

Three serious threats face non-US Internet gambling companies: the possibility of senior execs being arrested whilst on American soil on federal or state warrants that have been covertly issued on allegations that their companies have accepted US bets; the likely interference with the free movement of US betting dollars as a result of the new legislation and the risk that expensive US targeted advertising and promotional investment in the US could be blocked without refunds.