Possible $100 billion claim from EU

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The online gambling ban could end up costing the U.S. billions.

Online gaming sites established in the European Union are claiming that the United States owes about $100 billion in trade concessions to the EU to make up for its ban on online gambling companies.

A Reuters article cites lawyers for European online gaming firms as saying the EU should press for that large amount of compensation given the plunge in the market value of listed firms when the U.S. government passed the Unlawful Internet Gambling Enforcement Act last year.

There is also the value of the business lost since then to be accounted for.

About half of the world's current online gambling consumers are located in the United States, and the loss of that market caused a $7 billion drop in the estimated value of the industry in the EU.

Some of the online gambling industry's top companies are located in the EU, such as PartyGaming, owner of PartyPoker; Sportingbet, Paradise Poker owner; 888.com, owner of Pacific Poker; and Bwin, operator of PokerRoom.

"One major question is how strong the EU will be in pushing the U.S. for all the concessions available to it," said Craig Pouncey, a trade lawyer with law firm Herbert Smith, in the Reuters article.

Another lawyer from the law firm Arnold & Porter said the EU should be demanding at least 20 to 30 times what Antigua and Barbuda is asking for, and that nation is on record claiming $3.4 billion for compensation.

So far the United States has countered with an offer of $500,000, saying the amount Antigua is asking for is far too high. But the EU is much larger and may have a little more weight to put behind its claims.

Peter Power, a spokesman for EU Trade Commissioner Peter Mandelson, told Reuters that the EU and the United States were still in negotiations and that the U.S. offer so far is insufficient.

The Financial Times reported earlier this week that the United States had proposed opening up opportunities in the storage, warehouse services and technical testing sectors to make up for withdrawing from trade agreements involving online gambling.

Not only will this concession not come close to filling the gap left from the loss of the online gambling market in the United States, the United States had already offered these concessions in Doha talks in the WTO.

"The level of damage is impossible to quantify in a dollar sense," Power said in the Reuters article. "It is clear the EU industry is damaged ... and adequate compensation is now the subject of negotiations."

The latest deadline for the United States to agree on compensation for the EU is Oct. 22. However, the dispute could drag on for years, and in the meantime, U.S. casino operators and Internet companies such as Yahoo will be free to offer online gambling in Europe.

Other nations who intend to file claims against the United States for pulling their trade commitments in regards to online gambling include Australia, Canada, Costa Rica, India, Japan and Macau.

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