Gaming firms urge EU to aim high in U.S. trade row


Dormant account
May 13, 2007
Source: Reuters

Gaming firms urge EU to aim high in U.S. trade row

European online gaming companies which have been shut out of U.S. markets urged the European Union on Wednesday to demand as much as $100 billion in compensation in the hope that Washington might yet be pressed into reversing its ban.

The tiny Caribbean island of Antigua, which built up an online gambling industry before the U.S. ban, successfully challenged U.S. online betting restrictions at the World Trade Organisation and the United States lost its appeal this year.

Now Antigua, the EU and other countries are trying to negotiate compensation deals with Washington.

The United States is offering concessions in other areas of trade to offset the online gambling restrictions.

Lawyers for European online gaming firms -- which are among the biggest in the world -- said the EU should press for as much as $100 billion in compensation, given the plunge in the market value of listed firms when Washington shut off the world's biggest market last year and the value of business lost since then.

The move wiped $7 billion off the value of the industry, which includes PartyGaming (PRTY.L: Quote, Profile , Research), Bwin (BWIN.VI: Quote, Profile , Research), Sporting Bet (SBT.L: Quote, Profile , Research) and (888.L: Quote, Profile , Research).

"One major question is how strong the EU will be in pushing the U.S. for all the concessions available to it," said Craig Pouncey, a trade lawyer with law firm Herbert Smith.

Antigua wants compensation of $3.4 billion -- a figure the United States says is far too high -- and the EU should demand at least 20 or 30 times that amount given the size of its online gaming industry, said Raul Herrera from law firm Arnold & Porter.

An EU industry representative said the United States should allow European countries back into the market.

"They have got themselves into a terrible mess and there is an easy way out for them," Clive Hawkswood, head of the Remote Gambling Association, told a news conference in Brussels.

He said regulation would ease what the United States says are its concerns about money-laundering and consumer protection.

Washington this year invoked a rarely used right under WTO rules to retroactively exclude gambling from its promise to open up its services market.

"The U.S. (compensation) offer to date is insufficient and we continue to negotiate in order to improve it," said Peter Power, a spokesman for EU Trade Commissioner Peter Mandelson.

The latest deadline for the United States to agree on compensation is Oct. 22.

"The level of damage is impossible to quantify in a dollar sense," Power said, when asked about the $100 billion figure. "It is clear the EU industry was damaged ... and adequate compensation is now the subject of negotiations." The lawyers said the dispute could drag on for years while U.S. casino operators and Internet companies such as Yahoo! (YHOO.O: Quote, Profile , Research) and Google (GOOG.O: Quote, Profile , Research) are free to do business in Europe.