Country Responded to Shrinking Sportsbook Industry

Costa Rica this year joined several other countries seeking compensation in the wake of negative effects on its economy because of the U.S. crackdown on Internet gambling.

Nearly a year after BetOnSports closed down its Costa Rica office in the Mall San Pedro, east of San José, and laid off 1,200 workers following the arrest of a BetOn- Sports executive in a U.S. airport, the global company closed in June.

Though the company had paid only 20% of the approximately $4 million it owed to Costa Rican workers laid off in August 2006, the Labor Ministry said in July it had no plans to take action against the company. Industry insiders estimated that about 20 of the 200 online gambling firms operating in Costa Rica closed down or fled elsewhere this year.

The industry fought back on two fronts.

The nonprofit online gambling group Interactive Media Entertainment & Gaming Association (iMEGA), filed a suit in a district court in the United States in June to restrain enforcement of a controversial law U.S. President George Bush signed in late 2006 that prevents U.S. credit-card companies and banks from processing payments to offshore online gambling businesses. At year’s end, the suit was still making its way through court.

The World Trade Organization (WTO) had declared the U.S. crackdown anti-competitive in a 2004 report. Costa Rica joined several other countries in July seeking compensation from the United States through the WTO, but that suit was also ongoing by year’s end.