On 10th June 2009 the European Commission published its report on US laws on remote gambling and their enforcement against EU companies. It concluded that the US measures constituted an obstacle to trade that was inconsistent with WTO rules therefore WTO would be justified , however it did not include any recommendation for action and also suggests that the issue should be addressed by the US Administration, with a view to finding an amicable solution.
Summary of reports findings:
US laws on remote gambling and their enforcement against EU companies constitute a barrier to market access which have adverse effects on EU economic interests.
EU companies are discriminated against: US companies are allowed to freely operate online gambling on horse racing in the US, while European companies and individuals cannot offer any type of online gambling and even face legal action. This is incompatible with US WTO commitments on trade in services, and specifically with GATS Articles XVI (on market access) and XVII (on national treatment).
The report concludes that there are serious adverse effects for the EU. They include revenue and stock market value lost by affected companies as a result of their absence from the US market, and also the threat of serious sanctions hanging over them that affect their normal operation outside the US. Moreover, the report also addresses concerns relating to services supplied to the gambling industry, such as financial services (e.g. those associated with payments for online gambling) or professional services.
In addition the TBR report also addresses the question whether a possible withdrawal by the US of its WTO-GATS commitments on gambling and betting services would have an impact on a potential WTO case. The conclusion is that a case would still be possible despite a withdrawal. The reason is that the withdrawal would only remove the relevant US obligations for the future, but not in respect of past trade. In the present case, legal proceedings against EU companies are based on Internet gambling that they supplied in the past, under the cover of US WTO-GATS commitments. If the US continues to act against EC companies with respect to their past activities, a WTO case will remain feasible even after the withdrawal of commitments.
For full report click here