SOURCE: Information Week

The European Union wants compensation from the United States for money its companies have lost because of the United States' ban on Internet gambling.

Supporters of legalized Internet gambling think the move, announced Tuesday, will increase pressure on lawmakers to regulate, rather than ban, Internet gambling. The European Union is the latest in a handful of foreign governing bodies that have called the U.S. ban illegal and are demanding compensation.

The United States prohibits foreign Internet gambling companies from doing business with U.S. citizens, but allows domestic companies to accept online bets for horse racing. This week, the European Union joined Antigua and Barbuda to claim that constitutes a violation of fair trade rules. All are seeking compensation for benefits they claim foreign countries have lost. The World Trade Organization also issued a ruling earlier this year, saying the ban violates international trade agreements.

Jeffrey Sandman, spokesman for the Safe and Secure Internet Gambling Initiative, said Wednesday that the European Union's demands -- to receive compensation for not being allowed to accept bets on horse racing -- are a step on the U.S. path toward compliance with the WTO.

Sandman said that the United States must address the "hypocrisy in the way it treats Internet gambling," which allows people to bet on horses but not poker, pinochle, or other activities. He said the government must do one of two things: The United States must pay billions in trade compensation to other countries for not complying with WTO trade agreements, which will affect U.S. industries with no involvement in gambling. To avoid that, the government should regulate Internet gambling and level the playing field among domestic and foreign-based Internet gambling operators, he said.

"We support the European Union's effort and hope it will serve as a wake-up call for lawmakers that regulated Internet gambling is needed to bring the U.S. into compliance with the WTO, avoid affecting unrelated industries, better protect consumers and generate billions of dollars for important government programs," Sandman said in a prepared statement.

The Safe and Secure Internet Gambling Initiative supports the Internet Gambling Regulation and Enforcement Act, recently introduced by U.S. Rep. Barney Frank (D-Mass.) to regulate Internet gambling. It would require any online gambling operator wanting to do business in America to obtain a license and protect consumers from compulsive and underage gambling, while ensuring the integrity of financial transactions.

"Without regulation, there is no way to protect against such abuses," Sandman said.