EU Trade Commissioner Pressures US to End Internet Gambling Ban

As a demonstration of the rapidly growing payoff from the falling value of the US dollar against foreign currency, European Union Trade Commissioner Peter Mandelson was in Washington today as part of an effort to compel Congress to repeal a ban on Internet gambling signed into law last year. Comm. Mandelson argued that the ban was unfair to Europe, where much of the world's online gambling operations are centered.

"It's not in the interest of American consumers to have good responsible competitors in this market excluded by regulatory mechanisms," Reuters quotes Mandelson as having told a Capitol Hill press gathering.

In October 2006, in one of his final acts as Senate Majority Leader before his retirement, Bill Frist (R - Tenn.) engineered a set of rules that managed to tack a previously rejected separate bill banning monetary transactions with online gambling operations in the US, onto a sea ports regulation bill containing anti-terrorism measures that the Senate was certain to pass, and President Bush sure to sign.

As it stands, the SAFE Ports Act doesn't actually ban the act of gambling online. Instead, it bans any financial institution from transacting electronically or otherwise with an organization known to conduct gambling operations. Since online gamblers typically pay by credit card, the ban on those transactions effectively cancels out their entire operations. Within weeks of Mr. Bush's signing, trading in stocks of online gambling firms in Europe plunged sharply, and several declared bankruptcy soon afterward.

European gambling firms - those that remain - have recently asked the World Trade Organization to impose up to $100 billion in compensatory sanctions, for their being shut out of the US market, and in many cases to close up shop. Today, Comm. Mandelson indicated he supported their claims, raising them to the level of a trade deficit line-item.

"When a member of the WTO defaults on its commitments, compensation is due," Mandelson remarked. "That's the case of online gambling."

In a speech before the Carnegie Endowment today, Mandelson presented a broader view of EU/US trade relations: "Close ties between Europe and the United States are still the main foundation of world politics and the global economy," he said. "We have a deep store of shared values, experiences, and interests. The EU is beginning to transform itself from an internal market into an outward looking political actor - as [French] President Sarkozy reflected in his speech to Congress this week. The EU and the US cannot dictate every contour of the global age, but that does not mean we will be dictated to either."

As Mandelson spoke, the US dollar fell on foreign currency markets to another new all-time low against the euro. At the end of trading Thursday, the dollar was worth 0.6814 euro.

The Commissioner's remarks come one day after a German appeals court overturned a lower court ruling banning online gambling operations conducted by a single firm, BWIN Interactive. The basis for the court's ruling - quite literally, according to Thomson Financial - was that it's too difficult for any court to place an outright ban on Internet users' activities, so there's no real point in trying.

The ruling in the German case could conceivably have an impact in that country on laws regulating other types of Internet activity, for similarly libertarian reasons.