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The US ban on internet gambling received its most heavyweight opponent last month. The European Commission released the ‘Trade Barrier Regulation Report’, outlining the damaging effects the ban has had on European gambling firms. The EU also announced its intention to take a case to the World Trade Organization if the dispute was not resolved.

In an attempt to avoid legal proceedings, the US Trade Representative Ron Kirk recently met with EU Trade Commissioner Catherine Ashton. Among the four issues on the table was the US’ stance on online gambling. “Today was not a day to resolve any problems, but rather to set out the approach we are going to take, who would do what, and to agree to keep in touch,” said Ashton. Both sides would like to avoid a WTO hearing, which has the potential to award billions of dollars in compensation to the EU.

Any pro-EU result would land the US government in a sticky situation. Previous gambling related hearings have gone against them. In particular a case filed by Antigua, the US was ordered to pay $21 million. The previous administration took a hard line on these issues and refused to pay any of the compensation, but resisting the EU would be a harder task.

Both sides claim they are looking for a “creative solution”, and hope to make further progress when they meet again in September. An issue with the potential to drastically alter the debate is the progress of Barney Frank’s anti-UIGEA bill. If successful, his bill, which is slated for a hearing in September, would effectively destroy the UIEGA.