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Posted by: ian_go at June 21, 2005, 6:19 pm

Topic: Antigua bets on UK in online gambling battle Forum: Winner Online

By Amy Yee in New York and Matthew Garrahan in London

Published: June 21 2005 22:58 Financial Times

The Caribbean island state of Antigua and Barbuda is looking at “strategic alliances” with UK companies to boost its online gambling industry, as it combats a clampdown from US authorities who consider internet betting to be illegal.

New gambling laws in the UK were passed recently to regulate the booming internet gaming industry. Although the laws have yet to be implemented, Antigua is keen to benefit from any path the UK could clear through murky legal and trade controversies that threaten the industry.

The island is one of several offshore tax havens used by internet gaming operators to avoid the regulatory clutches of markets such as the US and to enjoy more lenient rates of tax.

“The UK wants to be a leader in internet gaming,” said Kaye McDonald, a director of Antigua's Financial Services Regulatory Commission.

“We're looking at all future implications of the UK law in consultation with online gaming operators.”

Antigua has tried to attract online gaming oper-ators keen to target the US market. In the next 12 months the Caribbean island state will form a marketing corporation to represent the internet gaming industry as well as tourism and financial services.

“My guess is that if you're a listed company [in the UK] and you want to take bets from outside the UK then this is why Antigua is offering its services,” said Peter Dubens, the chairman of UKbetting, a UK-domiciled internet gaming operator that is listed in the UK.

UKbetting had not established an offshore operation and would not target the US market until the legality of the industry had been clarified, he added.

In a double-edged ruling, the World Trade Organisation found that some of the US measures were justified but ruled that they had not been applied fairly.

Antigua filed a complaint with the WTO in 2003 after seeing its online gaming industry decline by as much as 60 per cent.

Meanwhile, investor interest in the lucrative online gaming industry has been whetted by the planned flotation in London of PartyGaming, which could alue the Gibraltar-based group at as much as $9.2bn (€7.6, £5bn).

Although US authorities consider internet gambling illegal, US gamblers account for 50-60 per cent of the $12bn global industry. Over the past decade US legislators have failed to pass a law that explicitly bans internet gambling, but the Department of Justice has stifled the industry by attacking banks that take credit card payments and media outlets that accept advertising from online gaming operators.

At the height of the industry, about 120 online gaming operators once did business in Antigua but that has fallen as low as 22 since the US crackdown.

The US said the WTO ruling justified prohibiting a business on moral grounds.

But Antigua contends that such prohibitions would have to be applied to all forms of “remote betting”, including horse racing and buying lottery tickets online, which are legal in some US states.

Mark Mendel, lead attorney for Antigua, accused the US of dragging its feet in complying with WTO rules and said the legal wrangling could continue for four or five years.

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