Arbitrators now are considering damage claims from Antigua, an online gaming haven that said a U.S. law seeking to block betting over the Internet was an illegal form of protectionism.

Other members of the World Trade Organization, including the European Union, Japan and Australia, also are claiming compensation for lost online gaming revenues in the billions of dollars.

Compensation "could prove expensive to the U.S. economy," the lawmakers said in a letter to Susan Schwab, the U.S. trade representative. "However, we are perhaps more concerned about what this withdrawal says about U.S. credibility as a trading partner."

"We are very concerned about the precedent this sets" for nations that also might be tempted to withdraw from trade obligations that become politically difficult, they said.

The letter was signed by eight House members, including Reps. Shelley Berkley, D-Nev.; Barney Frank, D-Mass., chairman of the House Financial Services Committee; and John Conyers, D-Mich., chairman of the House Judiciary Committee.

The lawmakers, who variously sponsor or support bills to roll back or study the Internet gaming restrictions, urged Schwab to consider working with Congress on "possible legislative solutions."

"Traditionally when a U.S. law has been found to be out of compliance, the administration has consulted with Congress," the House members said. But in this case, they said, the U.S. Trade Representative agency took a "drastic step" on its own.

The letter comes after a House Judiciary Committee hearing on Internet gaming Wednesday that included discussion of the trade implications of restricting online bets. It seeks to frame the issue broader than merely whether online gambling is good or bad from social or moral standpoint, said a lobbyist familiar with the matter.

"No matter how you might feel about gambling, this administration's action, or inaction, on this case sets a dangerous precedent for our trade obligations going forward," said the lobbyist. "This is an issue of more than just gambling."

Contact Stephens Washington Bureau Chief Steve Tetreault at stetreault@ stephensmedia.com or (202) 783-1760.