A TRANSATLANTIC feud over online gambling is set to intensify after the US brushed off claims from the European Union that it was discriminating against its companies.

The European Commission is taking up complaints from online gambling operators that US gambling laws are being targeted at European companies to protect certain US operators, such as the websites run by the US horse-betting industry.

But in a letter responding to formal commission questions, the US Trade Representative said there was "no basis for any allegation of 'discriminatory enforcement' of US gambling laws".

The dispute is likely to escalate next month when Peter Mandelson, EU trade commissioner, sends a delegation to Washington to press its case with US lawmakers and hold a press conference.

The focus of the dispute is legislation passed two years ago, which strengthened anti-gambling laws banning telephone betting, making it a federal crime to receive money for "unlawful internet gambling". The result was an exodus of European online gambling operators taking US bets and the loss of billions of dollars of revenues.

Despite this, the US Department of Justice is pursuing UK-listed companies, including PartyGaming, Sportingbet and 888 Holdings, for violations of its gambling laws, seeking settlements for their liabilities, and has issued subpoenas against some of the European-based banks that advised them.

The commission is investigating the claims of the Remote Gambling Association (RGA), the industry's trade body, that although US operators are in a similar legal position, they are continuing their operations in the country unhindered.

Clive Hawkswood, of the RGA, said the US was guilty of "unfair and discriminatory treatment of the EU gambling industry and the continuing threat of prosecutions cannot be allowed to go unchecked". -