For quite some time the European online gambling companies had been exhorting the European Union to take action against the United States against the latter’s discriminatory policies. The European gambling companies were acting through the Remote Gaming Association (RGA). However before the European Union could initiate meaningful action against the United States it had to carry out its own investigation to ascertain whether there was merit in the complaint of the RGA. The investigation has taken 12 months and is now complete. It reveals that the US government has violated international trade rules. The report states, “US laws deny access and discriminate against foreign suppliers of gambling and betting services inconsistently with US WTO obligations.”

The major bone of contention is the UIGEA. European gambling companies were forced to withdraw from the American online gambling market on the enactment of the UIGEA and incurred heavy losses as a result. The issue has however been aggravated by the fact that the United States is prosecuting European gambling companies for activities in the period preceding the UIGEA. The biggest three gambling companies, Party Gaming, Sportingbet and 888, are negotiating with the Department of Justice and are willing to pay huge fines in order to close all pre-UIGEA cases. The EU report refers to these cases and states that they are legally not justified and discriminatory.

On the basis of this report several persons have called upon the United States to legalize and regulate online gambling. EU Trade Commissioner Catherine Ashton said, “It is for the US to decide how best to regulate Internet gambling in its market, but this must be done in a way that fully respects WTO obligations.” Rt Hon. David Blunkett, Member of the UK Parliament, endorsed Ashton’s views. He added that regulation at this time would assist in the realization of much needed public finances.

Though the investigating team found that the European Union could justifiably initiate proceedings against the United States in the WTO, it has recommended a negotiated solution. Ashton aims to opt for this option. The RGA, which initiated the entire proceedings, said through its CEO Clive Hawkswood, “If the U.S. can give the EU some assurances it will no longer take action [against the European gambling companies], then we’d be very happy.”

Whereas the finding would appear to be another setback for America, it is unlikely to cause any material shift in their stand. The United States has lost a series of cases in the World Trade Organization (WTO) on the same issues, when Antigua and Barbuda took them on. They have refused to pay the fines imposed and have even removed gambling from the purview of their obligations under the WTO. Further they have rebuffed Antigua’s attempts to arrive at a reconciliatory settlement. The European Union is considerably more powerful than Antigua and it remains to be seen how much it can push the United States. 

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