Europe accuses US in online bets dispute

A transatlantic dispute over internet gambling flared up again on Monday after the European Union said it suspected the US of discriminating against its operators.

Peter Mandelson, the EU trade commissioner, ordered an investigation into a complaint by EU internet operators that they had been locked out of the market while domestic betting companies continue to trade.

The US ostensibly banned online interstate betting in 2006, withdrawing a commitment to open competition at the World Trade Organisation. But federal prosecutors have not targeted websites operated by the US horse-betting industry, which maintains they operate legally.

Mr Mandelson said: “The US has the right to address legitimate public policy concerns relating to internet gambling, but discrimination against EU companies cannot be part of the policy mix. We are interested in a constructive and mutually satisfactory solution to this issue.”

The Commission will also examine whether the Department of Justice is pursuing companies for activities they claim were legal until the rule change. It has up to seven months to investigate and seek a deal. If it is not satisfied it could take a case to the World Trade Organisation under rules against unfair trade barriers.

Clive Hawkswood, of the London-based Remote Gambling Association, which brought the complaint, said that if the Commission found there was discrimination it would put pressure on the US to reopen the lucrative market and drop criminal cases against industry executives.

He said: “There is a list of wanted people but we do not know who is on it. So a lot of people have to avoid the US even to change planes, perhaps unnecessarily.”

Peter Dicks, chairman of Sportingbet, was arrested in September 2006 in Louisiana, where online gambling is banned, but charges have since been dropped.

The EU is also relying on domestic pressure from within the US for change. Barney Frank, the chairman of the House financial services committee, is expected to convene a hearing on the gambling issue early next month. Legislation he proposed last year that would create a regulatory framework – making the practice legal – has scored a few more endorsements in recent weeks, but it is far from clear whether the proposal could garner enough political support to become law.

Banks say the current rules could be unworkable. The Financial Services Roundtable, an industry lobby group, said banks charged with blocking gambling payments under the new law would also be forced to interrupt transactions from US-based gambling sites. The Commission has accepted a US offer to open up its warehousing, courier and testing service sector as compensation for closing the online gaming market. Washington says it is merely making legally binding the present situation.