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The European Union launched an investigation on Monday into whether U.S. prosecutions of foreign online gambling companies were discriminatory, possibly paving the way for action at the World Trade Organization.
"The U.S. has the right to address legitimate public policy concerns relating to Internet gambling, but discrimination against EU companies cannot be part of the policy mix," EU Trade Commissioner Peter Mandelson said in a statement.
EU To Investigate U.S. Online Gambling Crackdown [uk.reuters.com]
As everyone agrees I think, the US has every right to ban things on grounds of morality, etc, but not with the 'unless you're a US company' rider.
rather than pandering to a rather narrow part of its electorate in a flagrantly protectionist and inconsistent manner.
IMO That really has nothing to do with it , gambling is alive and well in most parts of the US. At the very least most states have... drum roll please... state sponsored lotteries. They just legalized casinos recently in the state where I live and they are getting 50% or better of the take. That is why they don't want to see online gambling.