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Online gaming: EU deal secured by Mandelson
Published:  01 January, 2008

Operators of online gambling services remain barred from selling their services to US citizens, who make up around half the world's online gamblers. Despite a recent deal between the EU and USA, firms are no closer to receiving compensation for losses incurred as a result of the US government's effective prohibition on online gambling, which came into force last year in a move that several countries argue breaks World Trade Organisation (WTO) rules.

In early December, European Commissioner Peter Mandelson secured trading concessions from the USA in lieu of financial compensation for the loss of trade suffered by European online gaming operators. Japan and Canada are also set to benefit from concessions in place of compensation claims.

Details of the nature and value of the trade concessions were not immediately made public, but for Europe they appear to open new market opportunities in the USA for European postal and courier companies, as well as for services in some fields of scientific research and development, and for testing and analysis services.

The deal doesn't open any market opportunities for online gaming companies, which lost significant revenue last year when the USA government made it illegal for US credit card companies and banks to process payments for online gambling services located outside the US.

The European Union, along with national governments, continues to press the USA to move from prohibition towards regulation, and to open up the online gambling market once more to suppliers from outside the USA.

"What we really need is for the legislation to be put right and for foreign operators to stop being excluded and discriminated against in the way the present US legislation does," Mandelson said.

The argument against prohibition of online gaming also continues to rumble on within the USA, with at least two bills moving forward that aim to relax the current total ban. And some states are looking at the possibilities of allowing online gambling in-state to their residents. The Nevada Gaming Control Board, for instance, recently commissioned a study on online gambling from the International Gaming Institute at the University of Las Vegas, which examines attitudes to legalising online gambling and aims to find out how many Nevada residents currently gamble online. Due to be finished early in 2008, the report "...will be valuable information for policymakers," according to Gaming Control Board Chairman Dennis Neilander.

While the European Union appears to have reached an agreement, several countries, first among which is Antigua and Barbuda, continue to press their claims for financial compensation from the USA for preventing them from selling gambling services to US citizens. They argue that the USA moves go against the WTO's General Agreement on Tariffs and Services, to which the USA signed up in 2000. When the WTO ruled against the USA in the case brought by Antigua, the US government retro-actively removed gambling services from a world trade agreement it entered into in 1994.

Antigua, which is seeking to claim $3.4 billion in compensation from the US, looks likely to have to wait until 2008 for the WTO's ruling on its claim, which was promised for early December.


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