Gambling firms call for change in US law or €70bn in compensation

EUROPE’S online gambling companies are pressing the EU to insist the US changes its laws to allow them operate there or demand $100 billion (€70bn) in compensation.

But instead insurance companies, storage, warehouse services and technical testing sectors are likely to gain from the current row.

The US lost a WTO case to the tiny Caribbean islands of Antigua and Barbuda last year having denied their companies access to the $15 billion US internet gambling market.

This has opened the way for others, including the EU, Australia and Japan to demand their companies be free to operate in the US also.

However the EU instead wants the US to open up alternative markets to European companies as compensation.

Last Saturday was the deadline for agreement before the WTO began to impose sanctions, but the EU got an extension of a month to study a last minute proposal from the US.

Peter Power, spokesperson for EU Trade Commissioner Peter Mandelson, said the offer was not sufficient to compensate for the significant losses of EU and British gaming companies in particular.

“That is why we have agreed to continue talking for another month to find a better agreement,” he said.

But lawyers and others representing European gaming operators have accused the commission of not pursuing the matter as diligently as they should.

Nao Matsukata, a former Bush administration trade official, said the WTO decision is the most significant case ever with enormous implications for both the EU and the US.

“The potential benefit for European industry and damage to US companies is unprecedented,” he said.

It also creates a dangerous precedent because the US wants to retrospectively renege on a commitment it made to its trading partners to open up its services market, he said.

The US allows domestic online gambling including many operated by individual states but from last year has clamped down on foreign companies.

The issue is fast hotting up in the US as the WTO is now expected to allow Antigua to retaliate by ignoring intellectual property law, which would see legal “pirate” copies of videos, software and music.

The alternative is legislation from US Democrats to regulate and allow foreign companies access to the US internet gaming market. Mr Mandelson hopes to meet him shortly.