India rejected an initial compensation offer by the United States over a World Trade Organisation dispute settlement body recommendation that the ban imposed by Washington on Internet gambling went against its open-market obligations.

An Indian company -  Party Gaming in Hyderabad - a back office for internet gambling providers in Gibraltar has suffered huge losses because of the American ban. The company also had to terminate 1200 employees because of the ban imposed by Washington on all internet gambling services.

Antigua and Barbuda, which raised the dispute against the US, won the case in 2003 and  demanded compensation to the tune of $3.4 billion in trade sanctions.

In an extraordinary move, the US said it did not intend to include gambling when it committed to liberal access trade in recreational services during the previous Uruguay Round of trade negotiations.

Earlier in the year, the US said it would withdraw the commitment on recreational services and entered into what are called Article XXI consultations with a half dozen countries on the issue. India, the European Union, Canada, and Japan are among the members who participated in the consultations.

Under WTO rules, a member has to compensate other members if it wants to withdraw a market access concession. All the six countries demanded substantial access in the US market in areas where they are competitive. The US was ready to provide access for only storage and technical standards testing.