When arguing its
case against the United States’ Internet gambling laws with the
World Trade Organisation, the European Commission highlighted
the example of Malta as a case in point demonstrating the
‘adverse trade effects’, within the syntax of the Trade Barriers
Regulation, the situation is having on the Maltese economy. The
EC also highlighted the cases of the UK and Gibraltar, and, to a
lesser extent, those of Ireland, Sweden, Cyprus and Austria.
In its report on US laws on remote gambling and their
enforcement against EU companies, following an investigation
into the US measures and how they are affecting foreign
suppliers of Internet gambling services, the Commission
concluded that the US measures constitute an obstacle to trade,
inconsistent with WTO rules. As a result, WTO proceedings would
be justified. The report also suggests that the issue should be
addressed to the US Administration, with a view to finding a
negotiated solution.
Focusing on Malta, the report found that, “As a result of the
obstacle to trade, Malta has suffered a non quantified but
significant negative impact on its economic activity and
employment.” It added, “According to data provided by Malta’s
government to the Commission services during the investigation,
the contribution of the gaming industry to Malta’s GDP in 2007
was 5.4 per cent, and 6.3 per cent of the total gross value
added of the Maltese economy. Moreover, the sector in Malta had
a 12 per cent market share of the industry in 2007, and employed
a total of 1,882 staff as of June 2008.”
Those European online gambling and betting companies that left
the US market in 2006, still suffer legal proceedings by US
authorities, as based on their past activities on the US market.
The report concludes that these proceedings are legally
unjustified as well as discriminatory, because the activities of
EU companies took place under the cover of US WTO commitments.
Although WTO proceedings would be justified on the basis of the
report, this is, however, not an automatic consequence. The
European Commission will now seek a satisfactory solution to its
concerns through dialogue with the US Administration.
The report takes into account the intention of the US to
withdraw its WTO commitments on gambling and betting services
which would result in the US being no longer obliged to
guarantee future access to its gambling and betting market.
However, the report found that a withdrawal only affects future
access to the market, while it does not allow the US to
disregard its obligations in respect of past activities.
The EU has developed the world’s leading Internet gaming
business with many of the world’s largest companies licensed in
and operating from the UK, Gibraltar, Malta, Ireland and
Austria. There are also significant back office operations
providing technology, marketing and customer service support in
other member states. Although accurate statistics on this sector
are not readily available, it remains economically significant,
with an estimate of more than 10,000 staff employed by the
Internet gaming industry in the EU. The report also highlights
how the Internet gaming business has a significant indirect
economic impact on other sectors of the economy, involved in
providing the infrastructure that an Internet business requires,
such as financial services, information technology and
professional services.
The study offers some useful insights into the remote gambling
market, including the position of EU companies and the impact on
employment. For example, it remarks that in Malta, “Gambling GGR
as a percentage of GDP in 2003 was 7.3 per cent compared to the
EU average of 0.7 per cent”, and concludes that EU companies
enjoy a leading position in the world-wide remote gambling and
betting market.
The complaint the Commission is pursuing at WTO level originates
from a London-based trade association, RGA, including in its
membership several of the main Community enterprises offering
remote gambling and betting services. Of the nine RGA members in
the top 10 EU service providers referred to in the complaint,
Unibet and Betfair (for games, casino and poker) are registered
in Malta. The complaint contained estimates of the number of
staff employed by the Internet gaming industry in the EU,
provided by a specialised recruitment consultancy to the online
gaming industry. According to the estimates, over 15,000 workers
are employed by the Internet gaming industry in the EU, with a
current annual growth rate of 10 per cent. Eight thousand
employees in the UK; 2,000 in Malta; 2,000 in Gibraltar; 1,500
in Ireland; 500 in Sweden; 500 in Cyprus; 500 in Austria; and
500 in the rest of the EU.
Source - The Malta Remote Gaming Council after The Independent Magazine
