EU Finds U.S. Online Gambling Laws Violate WTO Rules

The European Commission has found that U.S. laws that bar banks and credit card companies from paying online gambling sites violate World Trade Organization rules.

Back in 2006, the United States passed legislation that made it illegal for credit card companies and banks to make payments to online gambling sites—regardless of whether those sites were actually U.S. businesses or not. The law effectively shut down (legal) online gambling in the United States, and took away one of the world’s largest gambling markets from gaming sites. Companies in Europe were hit particularly hard, losing billions of euros in revenue and market value.

Earlier this month, the European Commission launched an investigation into U.S. Internet gambling laws, and now says in a preliminary report that the 2006 U.S. law violates World Trade Organization rules by hampering trade.

The European Commission stresses that it is seeking to work out a negotiated settlement rather than bring a case against the the U.S. before the WTO. In theory, the WTO could impose sanctions on the United States, which member organizations would have to honor.

“It is for the U.S. to decide how best to regulate Internet gambling in its market, but this must be done in a way that fully respects WTO obligations,” said EU Trade Commissioner Catherine Ashton, in a statement. “I am hopeful that we can find a swift, negotiated solution to this issue.”

The EC’s investigation was prompted by a complaint brought by the Remote Gambling Association, which represents several of the largest European online gaming companies.

The EC points to legislation introduced by Rep. Barney Frank (D-MA) which would revise U.S. online gambling laws and “create a level playing field among domestic and international gambling operators.”