EU TO USE WTO ONLINE GAMBLING FRACAS TO OPEN UP U.S. TRADE (Update)

22 June 2007

European Union asks for compensation from US for online gambling ban

Just a few days before the June 22 World Trade Organisation deadline for compensation claims against the United States in respect of its protectionist stand on Internet gambling, the European Union has given notice to the United States that it expects compensation.

Major EU region companies such as Sportingbet plc, Leisure and Gaming plc, 888.com and Party Gaming had to exit the US market late last year when Washington stopped U.S. banks and credit card companies from processing payments to online gambling businesses. Companies and investors lost billions in plunging revenues and share prices as a consequence of losing half of the world's online gambling action, estimated to be worth around $6 billion.

But an EU official said the concessions Europe was looking for would likely be "commitments" to open up other trade sectors, according to Associated Press reports from Geneva.

"We need new concessions that would be equal with the benefits lost," the official told AP, speaking on condition of anonymity because he is not authorised to be quoted by name in media reports.

Initial negotiations would focus on measuring the loss to European businesses, he said, warning that talks would likely take some time.

Following a protracted dispute with Antigua and Barbuda, the World Trade Organisation ruled last December that US law unfairly targeted offshore casinos, telling the U.S. it could keep restrictions against sport betting in place if they were also applied to American businesses and notorious Internet gambling carve outs such as horse racing, state lotteries and fantasy sports.

The EU - the world's largest consumer market - joins the tiny Caribbean nation of Antigua and Barbuda in seeking compensation. The twin-island nation argued that online gambling had provided income for hundreds of its citizens and was helping to end its reliance on tourism, which was hurt by a series of hurricanes in the late 1990s.

After losing the case, the U.S. announced that it would take the unprecedented legal step of changing the international commitments it made as part of a 1994 treaty regulating trade in services among the 150 members of the WTO. As a result, the U.S. declined to challenge the WTO ruling, because it says that its legal manoeuver effectively ends the case.

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