EU presses U.S. to change Internet gambling law

[james01]

EU presses U.S. to change Internet gambling law

Source: Guardian Unlimited

The United States needs to change a law that discriminates against European companies that want to offer online gambling services in the U.S. market, the European Union's top trade official said on Thursday.
"What we need to see is a change in U.S. legislation that removes that discrimination against EU operators," EU Trade Commissioner Peter Mandelson told reporters before heading to Capitol Hill to discuss the issue with U.S. lawmakers.
"It's not in the interest of American consumers to have good responsible competitors in this market excluded by regulatory mechanisms."
The European Union and other trading partners have been in compensation talks with the United States over Washington'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 United States took that action because of a World Trade Organization ruling in a case brought by the tiny Caribbean nation Antigua and Barbuda. The WTO found a U.S. law allowing only domestic companies to provide online horse-race gambling services discriminated against foreign companies.
Instead of opening up the market, the U.S. Congress passed a defacto ban last year on most Internet gambling by making it illegal for banks and credit card companies to make payments to online gambling sites.
The ban was pushed by conservative Republican lawmakers who find gambling morally objectionable.
EU-based gambling firms have climbed onto the case brought by Antigua and urged Mandelson to seek as much as $100 billion in compensation for being shut out of the U.S. market.
"When a member of the WTO defaults on its commitments, compensation is due. That's the case of online gambling," Mandelson said.
"We're in talks about the magnitude of that compensation. I think what we're asking for is reasonable and realistic. The numbers aren't quite as large as has been advertised, but they need to be substantial."
The way the United States would pay compensation would be to open up other service sectors to more foreign competition, said Sallie James, a trade policy specialist at the Cato Institute who has been following the case.
Some possible options would be opening the U.S. insurance market by removing certain state restrictions or allowing some foreign ownership of airlines, both of which are very politically sensitive, James said.
Mandelson said he would talk on Thursday with Rep. Barney Frank, chairman of the House of Representatives' Financial Services Committee, about his bill to roll back the online gambling ban.
"I think he takes a fair-minded, a common sense approach to this and we look forward to that being effective legislation," Mandelson said.
Naotaka Matsukata, a senior policy advisor with the law firm Alston & Bird, said Mandelson's decision to explore legislative options could be a major turning point in the dispute.
Matsukata's firm represents UC Group, a British company which processes online payments including those for the gaming sector. (Editing by Todd Eastham)