EU: US Erred by Barring Foreign Internet Gambling Sites

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U.S. authorities want to make online gambling a purely domestic issue by opting out of international trade rule commitments, but the E.U. insisted Wednesday that the U.S. must honor those rules in the meantime.

U.S. laws restricting Internet gambling and the way they have been applied to prosecute European Web site owners are discriminatory and break World Trade Organization (WTO) rules, the European Commission said in a final report on the issue that was published Wednesday.

Trade commissioner Catherine Ashton said the E.U. doesn't want to dictate how the U.S. should regulate its market, especially in such a sensitive area as online gambling, but she added that the U.S. "must respect its WTO obligations," and that she hopes to reach an amicable solution to the issue with Obama administration officials.

In 2006, the U.S. tried to clamp down on foreign gambling Web sites by passing the Unlawful Internet Gambling Enforcement Act (UIGEA). The U.S. Department of Justice is still investigating the activities of European companies that were active in the U.S. before the UIGEA came into effect, even though all of them pulled out of the U.S. market after the UIGEA became law.

At the end of 2007, the U.S. signed an agreement with the E.U. to compensate European companies affected by the UIGEA. However, the U.S. continued to sue European gambling firms.

In the meantime, the U.S. has decided to withdraw its WTO commitments regarding online gambling and betting services. Once this withdrawal occurs, the U.S. would no longer be obliged to guarantee future access to its gambling and betting market, the Commission said.

However, the report published Wednesday concludes that a withdrawal only affects future access to the market, but does not allow the U.S. to disregard its obligations regarding past activities.

The Commission represents all 27 E.U. countries in trade issues. It began investigating the online gambling market in the U.S. following a complaint by a trade group called the Remote Gambling Association (RGA). The RGA complained that while prosecuting foreign gambling Web sites, the U.S. continued to allow their U.S.-based competitors to operate.

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