EU calls US betting law 'protectionist'

US legislation on online betting was described as “protectionist” by the European Union’s top financial regulator on Tuesday and may trigger legal action before the World Trade Organisation.

The legislation makes it illegal for banks and credit card companies to process online bets placed by American citizens with foreign gambling sites.

Charlie McCreevy, the EU internal market commissioner, said: “In my view it is probably a restrictive practice and we might take it up in another forum.” He added that the case could go to the WTO, and also suggested he would pursue the matter with his American counterparts on a visit to the US in March.

Though it is not clear whether the Union will follow through on Mr McCreevy’s threat of WTO action, his remarks highlight the deep divide between Brussels and Washington over gambling restrictions. The Commission has long argued that gambling and sports betting operations should enjoy the same rights as other service providers, and has repeatedly attacked European countries that impose undue restrictions on the industry.

The US, by contrast, has launched a broad regulatory crackdown on foreign gambling and sports betting operators, culminating in the arrest last year of two senior British industry executives for alleged violations of US anti-gambling provisions. The country’s tough stance has already sparked one legal defeat for the US at the WTO in a case brought by Antigua and Barbuda, two Caribbean island states with big offshore internet gambling operations.

The Geneva-based body ruled that the US had violated international trade agreements by allowing online horse-betting by US sites but not from abroad. However, that case, in which the EU supported many of the complainants’ arguments, is not directed specifically at the October 2006 law that targets banks and credit card companies. Commission officials said they would in any case wait for a final compliance ruling in the Antigua case before making any further legal moves.

Both EU and US trade officials are currently engaged in a last-ditch attempt to restart talks on a sweeping global trade deal – known as the Doha round – a factor that could severely limit Brussels’ appetite for fresh bilateral trade spats. While Mr McCreevy’s advisers believe the October 2006 law includes several “WTO incompatibilities”, the extreme sensitivity surrounding gambling policy may reduce the chances of the Commission bringing a case.

Mr McCreevy stressed that there was no “major momentum” behind a new WTO complaint, and his officials pointed out that a final decision on such a move would in any case rest with Peter Mandelson, the EU trade commissioner.

However, Mr McCreevy’s intervention still marks a notable escalation in the Commission’s approach towards the US gambling crackdown. It also stands in contrast to the Brussels body’s silence on the arrests of the UK gambling executives in the US in July and September last year.