EU Commissioner Pressures U.S. On Internet Gambling

EU Commissioner Peter Mandelson is pressing the United States to open its gambling market to European operators or compensate for losses.

Mandelson visited Washington, D.C. this week for meetings on "Transatlantic Economic Cooperation," and met with U.S. Trade Representative Susan Schwab.

He 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.

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. Rep. Frank has introduced the Internet Gambling Regulation and Enforcement Act, which would regulate Internet gambling and could bring the U.S. into compliance with WTO rules.

U.S. trade partners have said that the American withdrawal sends a message that the United States sets different standards for itself and its trade partners. Gambling operators inside the country also want the federal government to allow Internet gambling companies into the market, now dominated by operators in Las Vegas.