EU official wants U.S. gambling law changed

A top European Union trade official says the U.S. Internet gambling law discriminates against European companies by preventing them from offering services in the American market, and he is demanding compensation from the U.S. or a repeal of the bill.

Allow Internet gambling companies overseas, such as WagerWeb.com, to operate here, or compensate for lost revenues of as much $100 billion, said EU trade commissioner Peter Mandelson during a visit to Capitol Hill last week.

"What we need to see is a change in U.S. legislation that removes that discrimination against EU operators," Mandelson told reporters. "It's not in the interest of American consumers to have good responsible competitors in this market excluded by regulatory mechanisms."

Mandelson said that the United States should pay the European Union and other countries compensation for violating World Trade Organization rules by banning Internet gambling or open its doors to trade. He also met with U.S. Representative Barney Frank, D-Mass., to discuss possible legislative solutions to a trade dispute over online gaming.

The WTO ruled that the U.S. had violated trade rules by barring Antiguan online gaming operators from the U.S. market. Then, the U.S. withdrew its WTO obligations with regard to free trade in the gaming area. Now, Europe and other countries can demand trade concessions up the size of the entire sector on an annual basis. Mandelson urged Congress to pass legislation that would bring the U.S. in line with WTO requirements that it permit online gambling.

The European Union and other trading partners have been in compensation talks with the U.S. over the U.S. government’s decision to retroactively remove gambling services from the market-opening commitments it made as part of the 1994 Uruguay Round world trade agreement. The U.S. took that step after the WTO ruled in a case brought by Antigua and Barbuda.Congress has since passed a broader online gambling ban.

"When a member of the WTO defaults on its commitments, compensation is due. That's the case of online gambling," Mandelson said.

"We're not telling the United States how to regulate this industry. That's not for us to do. All we're saying is, however you choose to regulate, don't discriminate against non-American operators."

EU and U.S. leaders are in settlement talks but have not agreed on the size of the concessions. If they do not come to an agreement, the EU could demand a binding arbitration before a WTO panel.

Antigua has entered arbitration to determine the size of the compensation, while India, Costa Rica and Canada are also seeking compensation.

The passage of online gambling bill saw dramatic stock value losses for European online gambling companies, with some folding.