In US, officials from Congress, the White House and the Justice Department look set to face difficult questions when trade emissaries from the European Union (EU) arrive in Washington later this month.

In addition, they will endeavour to discover why US-based horseracing websites taking bets operate freely with a trade conflict having vast implications for the United States banking sector on the horizon should things go badly.

According to a recent piece in conservative US publication The American Spectator, UIGEA “ranks among some the worst written sections of the United States Code”. ”No certainty exists that the EU will ever decide to turn the dispute into a formal case before the World Trade Organization,” wrote Eli Lehrer, a senior fellow at the Competitive Enterprise Institute.

That said, even the possibility has serious consequences. Since enforcement of the gambling laws falls almost entirely on the banking sector, it appears likely that the EU could well respond with banking sanctions directed at getting the US to change its behaviour.

Other than the horseracing sites, which serve an almost exclusively American clientele, there are no American gambling sites to sanction. Given the enormous volume of trade between the US and Europe, almost USD 700 billion in 2007, even a tiny series of retaliatory measures would have severe implications for the US economy.

“Even if the EU decides to stay quiet and never complains about UIGEA, it’s pretty obvious that America’s effort to regulate gambling at the Federal level needs to end. Thirty years ago, when casinos existed in only one state, Federal laws cracking down on gambling represented the public will. Today, with gambling legal in 48 states, America’s debate over gambling has ended with the side that favours legalization as the clear winner,” concluded Eli Lehrer.