U.S. settles one Internet dispute

The United States and the European Union have reached a settlement agreement stemming from a complex trade dispute over the ability of foreign companies to take Internet bets from U.S. customers.

The settlement has implications for the horse racing industry because the U.S. is involved with other countries in the dispute, and there is a remote possibility that a settlement with them could include either allowing all forms of wagering over the Internet or banning all types of Internet gambling, including on horse racing. Currently, a legislative exemption allows Internet betting in the U.S. only on horse racing.

The dispute arose when Antigua successfully challenged the U.S. position on Internet gambling under an agreement with the World Trade Organization. The U.S. government had said that gambling operations in Antigua could not take bets from U.S. residents, but the WTO ruled that the United States could not prohibit overseas countries from taking bets in the U.S. because Internet gambling on horse racing was legal in this country. As a result of that ruling, the U.S. said it would no longer abide by the WTO's treaty on international trade with regard to Internet gambling. Consequently, the European Union, Antigua, and several other countries said that the U.S. was required to provide compensation for loss of services.

Under the settlement with the E.U., announced on Wednesday, the U.S. will broaden its commitments for international trade in several areas. The U.S. still has not reached a settlement with Antigua and other countries.