U.S. online gaming ban a chance for Ireland: report

DUBLIN (Reuters) - Ireland should reform outdated gambling laws that outlaw casinos and could benefit from an effective ban on Internet gambling in the United States if it had the right legislation, a government committee said.

The committee, set up by the government in 2006 to review how Ireland can better regulate gaming and casinos, said the Internet Gambling Prohibition and Enforcement Act 2006 in the U.S. meant many operators were looking to relocate to Europe.

"The recent United States prohibition of payment mechanisms for gambling online, presents a window of opportunity for Ireland," the country's Casino Committee said on Thursday.

Ireland's economic success over the last decade has been driven, in part, by its ability to attract investment by foreign firms with the likes of Google and Yahoo setting up European headquarters in Dublin.

However, the committee did suggest that Internet gambling should be strictly regulated to protect minors and the vulnerable, prevent criminals from entering the market and ensure the trust of e-gambling customers.

But it said blocking Internet gaming along the lines of the U.S. ban presented numerous difficulties.

It also proposed discussion with Finance Minister Brian Lenihan regarding "possible competitive taxation rates."

Ireland's low corporate tax rate of 12.5 percent has been another key factor in its ability to attract foreign investors.

"Should this opportunity be grasped within the appropriate timescale, Ireland, as a gaming friendly centre of excellence, can reasonably expect to attract a reasonable portion of this dynamic industry," the report said.

ECONOMICALLY INEFFICIENT

In relation to casinos, which are illegal in Ireland, the report found over 30 establishments were providing games such as blackjack and poker by operating as private members clubs.

Current rules governing gambling and dating back to 1956 were primitive and bringing the law into disrepute because they were not being enforced, the committee found.

It noted one type of gaming machine currently in operation accepts 500 euro ($786) notes despite current legislation limiting stakes to 6d (6 old pennies), with prizes capped at 10 shillings. Shillings have not been in use in Ireland since 1971.

The report said that, should the government legalize casinos, it could do so without compromising EU laws and international guidelines on money laundering and terrorist financing but recommended a "restrictive licensing regime".

The current regime had created a "patchwork quilt of licensed funfairs and amusement halls" that bore no relation to public demand and was economically inefficient, it found.

The committee also recommended that (casino-style) gaming and betting on activities such as sport should be kept separate.

"There should be no betting of any kind permitted on or in any licensed gaming premises," the report said. "Likewise, there should be no gaming activity of any kind permitted on or in any betting or bookmakers' premises."

Irish bookmaker Paddy Power owns betting shops in Britain and Ireland but has also been investing heavily in online gaming such as blackjack, poker and slot machines.

The committee said casinos, if legalized, should have to pay a higher rate of tax than the 1 percent of turnover currently applied to bookmakers.

(Editing by Richard Hubbard)