US reaches online gambling deal with EU

The US has reached a deal with the EU, Japan and Canada to keep its Internet gambling market closed to foreign companies.

It is continuing talks with India, Antigua and Barbuda, Macau and Costa Rica.

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 EU and other trading partners to seek compensation from the US in the form of increased access to another US service market.

European gambling companies had argued the EU was entitled to as much as $100bn 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.

A spokeswoman for the US Trade Representative's office declined to say how much the deal was worth.