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Welcome to
the News desk.
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Stalled compensation talks could hasten end to US online
gaming ban |
27/09/2007 |
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David Gow
in Brussels
The US ban on British online gaming companies such
as PartyGaming and Sportingbet could be overturned as negotiations between
Washington and Brussels over compensation stalled.
Lawyers for the EU
are seeking compensation for the severe losses suffered by the British and
European companies banned from operating in their biggest market last year,
after the Bush administration cracked down on what it sees as an immoral
activity.
The companies, which saw billions wiped off their share
prices after the ban, would not receive any cash and instead Brussels wants
Washington to open up other areas of its services industry to European firms,
such as insurance or reinsurance. But such a deal could cost the US billions of
dollars and it might opt to allow overseas operators back into its market under
licence.
A bill to regulate and
tax online gambling offered by all operators has been drafted by the liberal
Democrat congressman Barney Frank.
An EU trade official said: "The UK
operators and others who have lost out would get nothing. But the Frank bill
would go a long way to meeting our demands."
European and US lawyers
warned yesterday that the dispute posed a "systemic risk" to the credibility of
the World Trade Organisation after it ruled earlier this year that America
acted illegally by excluding online gaming operators from the tiny Caribbean
island of Antigua.
At the same time, the White House allowed domestic
operators to offer gambling over the internet and withdrew its entire $100bn
gambling industry from its free trade commitments.
Raul Herrera, a
Washington-based trade attorney, said the compensation merited by the EU would
be a multiple of 20 or 30 times the $3.4bn of sanctions prepared by Antigua, a
country with a GDP of only $1bn but home to dozens of online gaming operators
that once controlled half the American market. That would imply compensation of
up to $90bn
But the EU official said this was exaggerated. "If there's
compensation it will not be cash but in the form of the US opening up its
services industry or part of it, say insurance or re-insurance, to others and
not just the Europeans under WTO rules. "
The EU online gaming
industry, mainly based in the UK, employs 15,000 but faces a growing challenge
from US operators such as Yahoo!, Google and Sands.
The US banned the
Antiguans to protect "public morals", saying internet gambling posed
uncontrollable risks to young people and encouraged fraud and money laundering.
The same arguments have been used by some EU countries to protect their
domestic operators, but the US defence at the WTO foundered because America
allows internet betting on horse races and some lotteries.
Jonathan
Cohen, a New York-based public affairs consultant acting for EU operators, said
the US legal regime was "wildly inconsistent" as it allowed online fantasy
sports leagues and racecourse betting but specifically banned other services
provided by European firms.
Clive Hawkswood, chief executive of the
Remote Gambling Association, said the European industry suffered from
outrightly protectionist measures from the US. "It is using unjustified trade
barriers to stop EU operators and a proper licensing system would attract many
EU operators."
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