EU Probe Seen Backing WTO Action vs US on Gambling

2/19/09 - Reuters - View Source

BRUSSELS - An investigation by the European Commission into a U.S. clampdown on European online gambling firms is expected to recommend action at the World Trade Organisation, sources familiar with the probe's findings said.

But the sources said the EU executive, which oversees trade policy for the 27-nation bloc, would try to find a solution with the new U.S. government before taking any case to the global trade watchdog.

"The report next month will back the EU's position, but the Commission intends to deliver its findings to Washington which it hopes will persuade the U.S. to start bilateral talks to find a solution without going to the WTO," one source told Reuters.

"A case would take a very long time tied up at the WTO and in the current spirit of avoiding protectionist moves in line with the G20 (Group of 20 emerging and industrial nations) statement, action should be avoided."

European Internet gambling companies lost billions of euros in market value after the U.S. Congress moved in 2006 to shut down the U.S. market by making it illegal for banks and credit card companies to make payments to online gambling sites.

Many publicly traded European companies, such as PartyGaming (PRTY.L: Quote, Profile, Research, Stock Buzz) and 888.com (888.L: Quote, Profile, Research, Stock Buzz), withdrew from the United States after Congress passed the 2006 Unlawful Internet Gambling Enforcement Act, but they face possible criminal prosecution for activities before then.

The European Commission, acting on an 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.