Britain Hosts International Conference on Online Gambling

ASCOT, England – Britain's culture secretary sought to build support among dozens of nations — but not the U.S. — for improved regulation of the global Internet gaming industry Tuesday at an international summit on the sector.

Officials from more than 30 countries debated regulation measures just weeks after the United States effectively banned online gambling amid fears it could exploit children and encourage criminal activity.

Britain's Culture Secretary Tessa Jowell said that a regulated Internet gaming industry would offer gamblers better protection than the U.S. decision to outlaw the practice.

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"Remote gambling has gone from a niche to mass market in a matter of years," Jowell told journalists during a break in the gathering, the first summit to discuss the global impact of Internet gaming.

"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."

However, U.S. officials declined an invitation to take part in the talks at the Ascot race course outside London.

Officials from Australia, South Africa, New Zealand and online jurisdictions such as Malta, Costa Rica and Antigua and Barbuda attended the session.

The U.S. Congress caught the gaming industry by surprise when it added a provision to a bill aimed at improving port security that would make it illegal for banks and credit card companies to settle payments to online gambling sites.

U.S. President George W. Bush signed the law Oct. 14.

The decision closed the most lucrative region in a market worth $15.5 billion this year in "spend" value — the amount gambling companies win from their clients, or the amount gamblers lose.

Jowell likened the U.S. decision to a new form of the 1920s Prohibition on alcohol, warning that it would drive the industry underground.

PartyGaming PLC, the industry's largest company, said Jowell's proposal were more sensible than a ban.

"You've got to protect the vulnerable, including children, insure fair play and drive any mavericks out," spokesman John Shepherd said in a telephone interview. "Prohibition ... won't stop people from gambling, and it will strip away protection for consumers as easily as flame thrower removes paint from a wall."

PartyGaming, once the envy of online gambling with its more than $8 billion IPO in 2005, is now 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 will no longer take payments from the U.S., eliminating nearly 80 percent of its revenue and sending its stock plunging.

A draft communique from Tuesday's meeting noted concerns surrounding the industry, including its vulnerability to misuse for criminal activity and its threat to children.

The communique proposed the use of age and customer verification tools to protect young people and the vulnerable. It also called for ongoing communication between national jurisdictions through the International Association of Gambling Regulators.

Antigua in particular is engaged in a strong defense of Internet gaming, one of the tiny Caribbean state's few economic success stories.

It argues that the U.S. ban is in direct contravention to a ruling by the World Trade Organization last year that the United States amend some of its legislation to permit Antiguan gaming operations to offer their services to U.S. citizens on a level playing field.

Mark Mendel, who leads Antigua's WTO legal team, said he hopes that a closer relationship with Britain will develop stronger support for the ongoing WTO case as well as opening up opportunities for Antiguan licensed companies listed on the London Stock Exchange.

"We believe that once the United States ultimately comes into compliance with the WTO rulings in Antigua's favor, which it must, you will see the FTSE AIM-listed companies re-entering the American market via subsidiaries or affiliates located, licensed and regulated in Antigua," Mendel said.

Several London-listed Internet gaming companies and a handful in Europe and Australia sold off or shut down their U.S. operations after the ban, losing around 80 percent of their combined business in the process.

In Britain, new legislation next year will clear the way for super casinos and an influx of online gaming businesses.

Sports Minister Richard Caborn, who attended the conference, denied claims that Britain was simply trying to grab a chunk of lucrative tax revenue.

"This is not a knee-jerk reaction," he said.