The Centre for the New Europe hosted an excellent discussion here in Brussels yesterday on US protectionism of online casinos. The United States opted into a protocol on trade covering gambling at the World Trade Organization, but is now restricting trade. While US consumers may buy from a number of domestic online gambling sites such as YouBet.com, foreign firms are prevented from offering similar services. US credit cards are blocked, thanks to US Federal Law, from being used on known overseas gambling sites. And the country is ignoring a WTO ruling that it is not compliant with its obligations.

“This is not a good position for the United States,” said Sallie James from the Cato Institute. The US, she said, had benefited from the WTO’s dispute resolution system, and ignoring the system would undermine something that was good for the US. She also pointed out making overseas sites operate “in the shadows” so as to avoid credit card blocking would make consumers more vulnerable to fraud.

The US may lose out in a rather significant way as a result of its non-compliance. Antigua, which has online gambling as its second-largest industry, has a $3.4bn (€2.4bn) claim against the US for the damage it has suffered because of US non-compliance. It’s likely that for domestic political reasons, the US Government will stonewall. But people are now talking about Antigua being allowed to offset the loss from US discrimination by removing copyright protection for US-produced music and software.

Nao Matsukata, a former director of policy for the US Trade Representative, said that a lot of US credibility and also of the WTO as an institution, comes from the fact that when there is a WTO ruling against the US, the country follows the ruling. If the US is going to simply ignore rulings, emerging economies will follow suit and the whole system will break down.

Now the European Commission is being encouraged to take a stronger stance itself against the US. Europe is at the heart of the international market in internet gambling, with European companies producing the significant innovations. So the European gambling industry, much of it based in the UK, is arguing for $100m (€70m) in compensation. They will be lucky to get that, but with a tough line, the EC might just persuade the US to grant market access… eventually.