Beshear Move Endangers American Online Gambling Case With RGA

Kentucky Governor Steve Beshear has created a hornets’ nest with his attempt to usurp the domain names of online gambling sites. Companies that had felt properly insulated against American prosecution because of servers based in foreign territory now find their Internet identity at risk if the domain name was registered in the United States.

Washington-based Internet domain name registrar eNom, the world’s second largest provider of domain names, has already complied with the Kentucky judge’s order to turn certain domain names over to that state’s Justice Department. According to Point-Spreads.com, both HighRollersLounge.com and LuckyPyramidCasino.com now list administrative contacts at the Kentucky Justice Cabinet.

While sites registered at overseas locations have said their registrars will ignore the court order as without jurisdiction, plenty of conversation is sure to spring up at this week’s Internet gaming conference in Barcelona.

On Beshear’s list of 141 names being sought are such popular sites as PokerStars, FullTiltPoker, DoylesRoom, GoldenPalace and GoldenCasino.

Beshear, who campaigned for governor on a platform that stressed the need for casino gambling instate, has been unable to fulfill his promises of bringing land-based casinos to Kentucky. He uses the facts that the online gambling industry has been unregulated to assert the operators are unsavory, dishonest, and dangerous.

But, even though regulation would cure those ills, it would not protect the state’s horse racing industry. Beshear openly admits he decided to pursue the name grab in order to keep gambling money from being diverted from horse racing, a statement that may cause much damage to the U.S.

After all, the case being brought before the World Trade Organization by the Remote Gaming Association and the European Union accuses the U.S. of exactly what Beshears says he is doing; that is, selectively attacking the foreign online gaming industry to benefit horse racing and other U.S. gaming interests online, such as lotteries.

While the immediate benefit may be to close down a few barely competitive sites, keeping some thousands of dollars (if that much) in Kentucky, the potential penalty the U.S. might pay as a result of the RGA’s ever strengthening protectionism case could be in the billions.

EU-U.S. online gambling dispute intensifies

The United States seems to be on a collision course with European Union online gambling companies based on the country’s Unlawful Internet Gambling Enforcement Act.

Reuters released a story earlier this week that said the dispute between the remote operators and the U.S. could soon be headed to the World Trade Organization.

“It looks very much as if this matter will … be sent to the WTO at the end of the commission’s investigation,” said Lode Van Den Hende, an outside counsel for the Remote Gambling Association.

The European Commission began an investigation after the RGA complained about being excluded from the U.S. online gaming market. The real issue is that the U.S. has allowed some American-based online gambling entities, especially those handling wagers on horse racing, to continue operating despite UIGEA.

A formal complaint to the WTO could mean the U.S. will be faced with millions of dollars in trade damages in the future.

It would not be the first time that a country has successfully fought the U.S. over online gaming laws through the WTO. Late last year the tiny Caribbean nation of Antigua and Barbuda, where a large number of the world’s gaming servers are located, won the right to waive U.S. copyrights in films, television and music in an unusual ruling by the WTO.

Antigua and Barbuda filed a formal complaint against the U.S. over the loss of billions of dollars in its online gambling business since UIGEA was passed and the U.S. market was closed to offshore operators.

As of yet the Caribbean nation hasn’t ignored any U.S. copyrights, and officials have mentioned several times they would prefer to settle the dispute amicably.

For its part, United States government representatives have said several times that the country never intended to allow online gambling services to be a part of its WTO commitments.

According to the Reuters article, an unidentified EU trade official said he expected the European Commission to decide by the end of the year whether to start a WTO case.