While the European online gambling firms still feel as if they are suffering from a bad hangover after Monday's decision by the European Union to settle with the US government over trade concessions related to online gambling, US facing sites are quietly relieved.

Many of the later continue to prosper in the North American market despite restrictions placed on them last year when a law was passed essentially making it illegal to bet on line and play poker.

The Unlawful Internet Gambling Enforcement Act (UIGEA) was added in Conference Report 109-711 (submitted at 9:29pm on September 29, 2006) as part of the unrelated Safe Port Act, which was passed by the House of Representatives by a vote of 409-2 and by the Senate by unanimous consent on September 30, 2006. Due to H. Res. 1064, the reading of this conference report was waived.

European online gambling firms, many of which were trading publicly at the time, were blindsided by the bill's late night passage.  All online gambling sites listed on the London Stock Exchange or similar markets have since stopped taking United States players due to the passage of the Act, while most non-public companies (most of which operate from Costa Rica, Antigua, Panama, and the Kahnawake Reserve outside of Quebec, Canada) have announced an intention to continue taking US customers.  PartyGaming Plc, which runs PartyPoker.com, had its publicly-traded stock drop almost 60% in 24 hours as a result of this bill being passed. The company was moved from the FTSE 100 to the FTSE 250 Index on October 11.

Antigua and the United States have been involved in a long-running World Trade Organization dispute over U.S. restrictions on online gambling. The WTO ruled on January 25, 2007 that the U.S. is in violation of its treaty obligations by not granting full market access to online gambling companies based in the island nation. On March 30 the WTO confirmed the U.S. loss in the case.

On June 19, Antigua filed a claim for USD $3.4 billion in trade sanctions against the United States, along with a request for authorization to ignore U.S. patent and copyright laws. This claim was filed a day after similar demands for compensation made by the European Union.

But the EU on December 17 decided to settle with the US regarding its own position on Internet gambling and trade.  Instead the EU opted for trade concessions from the US that would allow new trade opportunities within certain sectors of the US.

Although the EU stated that it will also "continue to press for non discriminatory treatment in U.S. internet gambling legislation," the settlement takes pressure off the US to alter its current trade policy relative to online gambling and restrictions imposed by the passage of the UIGEA.

For many a US-facing online gambling website, this turned into a blessing in disguise. 

"Regulation would be bad for our industry," said an operator of one of the industry's largest firms.  "As soon as Vegas and the European big boys move in, we are pretty much toast."

That's the consensus of many an Internet casino, poker and sports betting website operating in the Caribbean and Canada, where it is widely agreed that they would have a difficult time competing with the likes of a Ladbrokes, William Hill or even an MGM Grand.

But this doesn't mean these firms do not want some form of "legality".  Since passage of the UIGEA, one of the biggest obstacles for these companies still taking action from the US has been an inability to expedite payments during the previous 5-business day window (some firms paid out next day).  This is due to limited third party money transaction processors.  A number of the more feasible options like Citadel Commerce and Neteller cut off relations with US-facing online gambling firms following passage of the UIGEA. 

These companies are more focused on a legal challenge brought forth by iMEGA.org, which quietly filed for a temporary restraining order against policy implementation for the UIGEA.  Results of a hearing this past September are well overdue.   A positive outcome would essentially make the UIGEA ineffective - at least temporarily - by ensuring the banking institutions are not required to police transactions related to web gambling (something they already claim is nearly impossible to do).  The iMEGA ruling would likely loosen the reigns of payment processors while re-enforcing the "grey area" and legal ambiguity related to Internet gambling that has managed to keep European firms out of the US market over the past year. 

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Christopher Costigan, Gambling911.com Publisher This e-mail address is being protected from spam bots, you need JavaScript enabled to view it

Originally published December 18, 2007 8:18 am EST