US, EU and Japan reach net gambling deal

The United States has reached a deal with the European Union, Japan and Canada to keep its Internet gambling market closed to foreign companies, but is continuing talks with India, Antigua and Barbuda, Macau and Costa Rica, US trade officials said.

"We are pleased to confirm that the United States has reached agreement ... with Canada, the EU and Japan," Gretchen Hamel, a spokeswoman for the US Trade Representative's office, said in a statement several hours after the EU had announced details of the deal it had reached with Washington.

The decision is a disappointment for European online gambling companies who hoped a case brought by Antigua several years ago at the World Trade Organization gave them a foothold to get back in the US market after being kicked out by Congress last year.

In an April 2005 victory for Antigua, the WTO said a US law allowing only domestic companies to provide horse-race gambling services discriminated against foreign firms.

But rather than open up the US online horse-race gambling market, Congress tightened restrictions on other forms of internet gambling last year by making it illegal for banks and credit card companies to make payments to online gambling sites.

The Bush administration also announced in May that it was retroactively excluding gambling and betting services from market-opening commitments it made as part of the 1994 world trade agreement, saying that US trade negotiators had made a mistake by not expressly excluding them at the time.

That opened the door for the European Union and other trading partners to seek compensation from the United States in the form of increased access to another US service market.

Hamel said the deal reached with the EU, Japan and Canada "involves commitments to maintain our liberalized markets for warehousing services, technical testing services, research and development services and postal services relating to outbound international letters".

European gambling companies had argued the EU was entitled to as much as USD 100 billion in compensation for being denied access to the US market. But EU officials never publicly embraced that amount and US official called it an exaggerated figure.

Hamel declined to say how much the deal was worth. "We're not going to get into that," she said.