US-EU Gambling Dispute Potentially Headed for WTO?

According to an European industry group, the dispute over U.S. enforcement actions against European Union online gambling companies could be headed to the World Trade Organization very soon.

“It looks very much as if this matter will … be sent to the WTO at the end of the commission’s investigation,” Lode Van Den Hende, outside counsel for the Remote Gambling Association (RGA), told reporters as EU officials were in Washington to probe U.S. Justice Department enforcement actions. That would pave the way for possible European sanctions on the US, although it could take years for any case to make its way through the WTO litigation system.

The EU team, which met on Tuesday with representatives of the US Trade Representative’s office, the Justice Department and other US agencies, will make its recommendations in a publicly available report in November.

The European Commission, acting on industry petition, began a formal investigation in March into whether Washington was singling out EU companies for enforcement actions while allowing U.S. online companies to operate freely. The dispute arose out of an earlier case in which the Caribbean country of Antigua and Barbuda challenged American restrictions on Internet gambling as a violation of the services market-opening commitments Washington made in the 1994 Uruguay Round world trade pact.

The United States initially said it never intended to allow online gambling services as part of that pact. But after that argument failed, it announced it would exercise a rarely used right under WTO rules to change its commitments. That required it to negotiate a compensation package with other WTO members with online gambling interests — such as the EU. Washington struck a deal with Brussels last year, but details have not been made public.

“We conducted negotiations with the EU which resulted in a mutually acceptable agreement last December to facilitate the U.S. amending its (services) schedule to clarify that we do not have WTO obligations with respect to gambling,” said Gretchen Hamel, a spokeswoman for the US Trade Representative’s office.