EU Trade Commissioner Peter Mandelson has said the US must change its Internet gambling law (the Unlawful Internet Gambling Enforcement Act), as it bars European companies from offering services in the US market.

Mandelson said, “What we need to see is a change in US legislation that removes that discrimination against EU operators.”

“It’s not in the interest of American consumers to have good responsible competitors in this market excluded by regulatory mechanisms.”

This week Peter Mandelson is in Washington trying to persuade Congress to repeal the ban on Internet gambling.

In October 2006, the then Senate Majority Leader Bill Frist engineered the SAFE Ports Act which doesn’t actually ban Internet gambling but instead bans financial transactions with online gambling companies.  The sea ports bill also included some anti-terrorism legislation which probably explains why the bill was passed, as previously the ban on financial transactions with online gambling companies was rejected in a separate bill.   

The ban on financial transactions to online gambling companies in the US had an inevitable negative impact on the online gambling industry with companies having to withdraw from the United States market.  Only a few weeks after the Unlawful Internet Gambling Enforcement Act (UIGEA) was signed into law, shares of online gambling companies in Europe fell sharply.

Peter Mandelson has supported European online gambling firms who have asked the EU to pursue claims of $100 billion in compensation for being frozen out of the US market.

He said, “When a member of the WTO defaults on its commitments, compensation is due.  That’s the case of online gambling.”

“We’re in talks about the magnitude of that compensation.  I think what we’re asking for is reasonable and realistic.  The numbers aren’t quite as large as has been advertised, but they need to be substantial.”

The US had made a commitment to opening up the gambling market in the 1994 Uruguay Round trade agreement and the legislation it has introduced since then has broken this agreement.  There is speculation that the US may overturn its gambling laws and pressure from the EU may just help to see this happen.

Mandelson made a speech later on at the Carnegie Endowment which presented a broader view of trading relations between the EU and the US.

He said, “Close ties between Europe and the United States are still the main foundation of world politics and the global economy.  We have a deep store of shared values, experiences and interests.”

“The EU is beginning to transform itself from an internal market into an outward looking political actor – as [French] President Sarkozy reflected in his speech to Congress this week.  The EU and the US cannot dictate every contour of the global age, but that does not mean we will be dictated to either.”
 

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