Officials from more than 30 nations attended a meeting at England’s famed Ascot racecourse yesterday, betting that regulation rather than a U.S.-style ban is the right way to control Internet gambling.
Although the meeting near London had been in the works for a while, it was held just weeks after President Bush signed legislation making it illegal for banks and credit-card companies to settle payments to online gambling sites.
British Culture Secretary Tessa Jowell likened that law to Prohibition, warning that it would drive the industry underground. She said a regulated industry would offer gamblers better protection than the U.S. decision to outlaw the practice.
“Remote gambling has gone from a niche to mass market in a matter of years,” Mrs. Jowell told reporters during a break in the conference, the first summit to discuss the global effect of Internet gambling. “There is a recognition that it is in the interests of all our citizens that we move to a framework of global standards on Internet gaming.”
Sue Schneider, publisher of Interactive Gaming News in St. Charles, Mo., said the meeting was important “in terms of showing that there are a number of very solid governments out there that are saying that a regulatory approach is preferable to a prohibition.”
The U.S. decision effectively closed the most lucrative market in a growing business that is worth $15.5 billion a year.
It is not clear what the effect of the U.S. ban on payments to gambling sites will be, Mrs. Schneider said.
“We don’t really know, I don’t think, at this point, what the impact is,” she said, adding that the number of gamblers might not change but that they will use different sites to make their bets.
A draft communique distributed at yesterday’s meeting proposed that the industry use age and Internet security tools to protect the young and the vulnerable.
PartyGaming PLC, the industry’s largest player, lauded the regulatory approach.
“You’ve got to protect the vulnerable, including children, ensure fair play and drive any mavericks out,” PartyGaming spokesman John Shepherd said. “Prohibition … won’t stop people from gambling, and it will strip away protection for consumers as easily as a flamethrower removes paint from a wall.”
PartyGaming, a Gibraltar company that became the envy of the online gambling industry with an $8 billion public offering last year, is trying to figure out how to save its business model. It runs what was once the world’s biggest poker site, PartyPoker, and has said it no longer will take payments from the United States, eliminating nearly 80 percent of its revenue and sending its stock plunging.
Antigua vigorously defended its Internet gambling industry, one of the Caribbean island’s few economic success stories.
It argues that the U.S. ban contravenes a World Trade Organization ruling last year that the United States must permit Antiguan gambling operations to market their services to U.S. citizens.
Mark Mendel, who leads Antigua’s WTO legal team, said he hopes a closer relationship with Britain will lead to stronger support for the WTO case and open opportunities for Antiguan licensed companies listed on the London Stock Exchange.
Several publicly traded Internet gambling companies and a few in Europe and Australia sold off or shut down their U.S. operations after the ban was signed into law.
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