Page last updated at 21:19 GMT, Monday, 10 March 2008

EU in US online gaming enquiry

Playing card and betting chips
The US internet gambling ruling proved controversial

The EU has started an enquiry to examine if US policies affecting foreign online gambling firms breach trade rules.

The European Commission is to assess European firms' complaints that they have been discriminated against.

A 2006 ruling effectively banned foreign internet firms from operating in the US.

European firms have complained that the US has targeted foreign gambling firms while allowing US rivals to operate.

'Double whammy'

Industry association the Remote Gambling Association (RGA) lodged a complaint on the topic in December with the European Commission.

It claimed the Department of Justice (DoJ) was trying to prosecute foreign gambling operators while allowing US firms to operate, especially those involved in horse betting.

"As the industry trade association, we cannot simply sit on the sidelines and watch while our members... suffer the double whammy of being prosecuted for activities whilst US industry is not," RGA head Clive Hawkswood said.

The EU said: "Despite statements by the DoJ that internet gambling was not allowed, many local companies were actively supplying this type of service".

"The US has the right to address legitimate public policy concerns relating to internet gambling, but discrimination against EU firms cannot be part of the policy mix," said EU trade commissioner Peter Mandelson.

By stopping US banks and credit card companies from processing payments to online gambling operations outside the country in 2006, the US effectively closed the market for overseas gambling firms.

But in 2007 the WTO ruled that the US was breaking trade laws by targeting online gambling firms, without applying the rule in the same way to US firms offering online betting on horse and dog racing.

The World Trade Organization (WTO) ruled last December that the US ban was illegal in a case taken by Antigua and Barbuda allowing it to impose $21m in annual trade sanctions against the US.

This raised the issue of whether others would also try to challenge the US position.

The EU, which is set to examine the complaints over the next five to eight months, says it is looking forward to debating the issue with the US authorities and reaching a "mutually acceptable solution".

It could trigger the EU to lodge a complaint against the US with the WTO.

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