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US and EU Sign Compensation Deal for Online Gambling Ban
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18-Dec-2007, 20:30
The European Union has accepted an agreement presented by US officials, which is designed to compensate the EU for losses it has been suffering ever since Washington decided to block American players from online gambling activities.
The new agreement states that the US will provide the EU with trade concessions in warehousing and mail services. The agreement also opens up new US market opportunities for a range of European companies in sectors such as research and development, as well as testing and analysis services.
The current dispute began after in 2006 the Bush administration blocked American banks and credit card companies from processing payments to online gambling sites. Though these restrictions also applied to most American based gambling companies, the US continued to allow its citizens to place bets with American companies offering online horse and dog racing. For this reason, the Word Trade Organization (WTO) delivered its final ruling in March 2007, stating that the US ban was in fact illegal.
The WTO ruling states that while the US has the right to protect its citizens from activities which it views as immoral - it may not do so at the expense of foreign companies alone. Without equally applying the new restrictions to American-based companies, the US is breaching existing international trade laws. Discrimination against non-US based companies contradicts existing trade agreements signed between the US and other countries, and cripples the opportunity for free trade.
Though the new agreement will positively affect the way postal and courier companies such as Germany's ‘DHL’ and ‘Deutsche Post World Net AG’ do business in the US, it comes as a disappointment to European online gambling companies whose interests and needs were widely ignored.
European gambling firms such as ‘PartyGaming’ and ‘bwin Interactive Entertainment’ have been voicing their obvious discontent with the agreement. They believe the European Union executives should not have accepted the current settlement. Instead, they think the EU should fight for their right to compete in the world’s biggest gambling market.
The disappointment is easily explained by simply looking at the figures. Online gambling is a rapidly growing market, currently valued at about US$15.5 billion. Roughly half of the world’s online gamblers are based in the US. Loosing such a big slice of the market is a harsh blow to these European companies.
Clive Hawkswood, chief executive of the ‘Remote Gambling Association’ which represents Europe's online gaming sector, commented on the agreement. "The Commission can still press for an opening up of the market, but the leverage of the outstanding (compensation) negotiations has been taken away," said Hawkswood.
Experts believe that the overall value of the trade package falls far short of US$100 billion, which is the figure claimed to be lost by European online gambling sites. EU officials say that the precise value of the deal is unknown, and can not be quantified up to the euro at this moment. However, EU officials did state that the deal creates new U.S. market opportunities for European companies looking to expand investment and trade in the international mail business. But unless the European online gambling companies are looking to invest in the courier business, the current agreement doesn’t really offer anything to the companies that ignited the dispute in the first place.
Antigua & Barbuda, India, Japan, Macau, Australia, Canada and Costa Rica are other members of the WTO seeking compensation for the loss of income they suffered after the US gambling restrictions were enforced. These countries have also filed compensation claims against the US. Unofficial sources state that the US and Canada are close to an agreement.