EU urged to turn to U.S. Congress by Online Gaming Firms

31 October 2007

European trade chief Peter Mandelson, has been asked by Online Gaming Firms to change tack over a controversial move by the United States to close it’s multi billion dollar gambling market to foreign firms.

EU companies, many of them world leaders and including PartyGaming, Bwin, Sporting Bet and 888.com, saw their stock market value plunge in 2006 after the United States shut off their biggest market.

In May this year, after being defeated at the World Trade Organisation, Washington took the rare step of withdrawing its WTO commitment to allow foreign firms into its gambling market.

Since then the EU and smaller countries have been haggling with the U.S. administration over compensation it must offer in the form of concessions in other areas of trade.

This week the talks were extended until December 14.

Naotaka Matuskata, senior policy advisor with U.S. law firm Alston & Bird, said Washington was not making meaningful compensation offers and it was time for the EU to turn to the U.S. Congress in an attempt to reverse the online gaming ban.

Matsukata’s firm represents UC Group, a British company which processes online payments including for the gaming sector.

Matsukata, a former USTR official told Reutors during a visit to Brussels, “The EU should explore the legislative options available at this moment, largely because United States Trade Representative’s Office is so dug in.”

Mandelson is due to visit Washington between November 7 and 9. A spokesman said he planned to speak, either by phone or in person, to Barney Frank, chair of the House of Representatives Financial Services Committee.

Frank has put forward legislation to roll back the U.S. online gambling ban although he has struggled to find support.

“The European Commission continues to strive for the best possible compensation deal for European service providers,” Mandelson’s spokesman said, declining to comment further.

Matsukata said Mandelson could focus minds in Congress on the potential pain of compensation demanded by the EU and other countries such as Canada and Japan in other areas of U.S. business if the ban is not reversed.

If Frank’s bill advances, USTR may have to reconsider its position, he said.

EU gambling firms have previously urged Brussels to push for $100 billion (48.85 billion pounds) in compensation, a figure U.S. officials have dismissed as exaggerated.

In 2000, Mandelson’s predecessor Pascal Lamy warned Congress of retaliatory measures after failing to make headway with the U.S. administration over export tax subsidies ruled illegal by the WTO. The U.S. administration eventually scrapped those measures known as the Foreign Sales Corporation programme.

Which means the UIGEA could also be easily scrapped.

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