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G. Srinivasan

New Delhi, June 13 The transatlantic ties binding the world’s two trading majors, the US and the 27-member European Union (EU) have now come under renewed strains with the latter alleging that the US laws deny access and discriminate against foreign suppliers of gambling and betting services inconsistently with US’ WTO obligations.

In a new Trade Barriers Regulation (TBR) report just released in Brussels, the EU has argued that the US laws on remote gambling and their enforcement against EU companies constitute an obstacle to trade that is incongruent with WTO rules.

Though WTO proceedings would be vindicated on the basis of the report, following a complaint from the European Remote Gambling Association (RGA), the European Commission is keen on seeking a satisfactory solution to its concerns through dialogue with the new US Administration.

The issue concerns mainly the supply of gambling and betting service delivered via remote communication and primarily the Internet. The size of the online market is substantial, with estimates of the total size of the world remote gambling and betting market surpassing $14 billion in 2007, out of a total global market of gambling and betting of $335 billion. Of this, around $6 billion corresponds to the EU online market, while the size of the US online market is estimated at $4 billion.

Interestingly, the total size of the EU gambling and betting market is estimated at $116 billion and the US market at $110 billion.

What makes the case curious is that a host of factors are likely to bolster considerable growth in the demand for remote gambling. These include increasing penetration of computers, the Internet and broadband connections; development of more user-friendly and increasingly integrated technologies; safer electronic financial transactions; increase in leisure spending.

All these factors contribute to the continued buoyant growth of the market in the next few years, with estimates of the size of the online gambling market for 2010 exceeding $22 billion.

Against this backdrop, the report found that the US laws on remote gambling and their enforcement against EU companies constitute a barrier to market access, adversely affecting EU economic interests.

Besides, EU companies are discriminated against: US companies are allowed to freely operate online gambling on horse racing in the US, while European companies and individuals cannot offer any type of online gambling and even face legal action.

EU contended its companies thought that it was legally possible to purvey Internet gambling services in the US, given the lack of clarity of the domestic legal framework coupled with the WTO-General Agreement on Trade in Services commitment undertaken by the US in the Uruguay Round to permit non-discriminatory access to its gambling market. As a consequence, until 2006, a number of European companies offered this sort of service to US consumers but following changes in the US regulatory framework, EU companies recanted from the US market in 2006.

But the US authorities launched legal proceedings against them based on the gambling and betting services they had offered until 2006.

The report duly takes note of the intention of the US to withdraw its WTO commitments on gambling and betting services.

Once this takes place, the US would no longer be obliged to guarantee future access to its gambling and betting market.

But the report found that a withdrawal only affects future access to the market but does not allow the US to regard its onus in respect of past activities.

Hence the EU argument that the obstacles to trade can be considered as causing and threatening to cause adverse trade effect, having a material impact on a sector of economic activity and on a region of the community.

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