WTO Turns Up Heat on US Online Gambling Ban

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WTO Turns Up Heat on US Online Gambling Ban
By  Roy Mark  November 10, 2004
http://www.internetnews.com/ec-news/article.php/3434111

A World Trade Organization (WTO) panel ruled today that
U.S. prohibitions on Internet gambling are unfair trade
practices and that the country should open its borders to
international casinos. The office of the United States Trade
Representative (USTR) said it would "vigorously" appeal the
"deeply flawed" decision.

  In the ruling, the WTO affirmed a March preliminary decision
  favoring the Caribbean island nation of Antigua and Barbuda,
  home of numerous Internet gambling casinos. Antigua argued that
  the U.S. committed to honor cross-border gambling as part of
  its 1995 agreement to join the 148-member WTO.

  When the U.S. became a member of the WTO, it submitted a
  "schedule of services" the country was willing to make mutual
  trade commitments on.

  Included in the U.S. schedule was the term "other recreational
  services." Antigua and the WTO interpret that to mean Internet
  gambling.

  "Their claim is that our obligations and our commitments under
  our General Agreement on Trade and Services (GATS) agreement
  included an obligation to Internet gaming services," a senior
  U.S. trade official said. "We fundamentally reject that. We
  vehemently disagree with the panel's finding that the term
  includes gambling services."

  Richard Mills, a USTR spokesperson, said in a press statement,
  "Throughout our history, the United States has had restrictions
  on gambling, like many other countries. Given these
  restrictions, it defies common sense that the United States
  would make a commitment to let international gambling operate
  within our borders. Antigua is arguing for a result that was
  never imagined, much less bargained for."

  The case now goes to a seven-member WTO appeal panel. The USTR
  said a decision is likely in the spring of 2005.

  "This is not a situation where Antigua is claiming some
  discrimination against their service providers, per se," the
  USTR official said. "Federal and state laws against interstate
  gambling apply to everyone. It is not a case where
  U.S. companies can do one thing but Antigua and Barbuda
  companies can not."

  The 1961 Wire Wager Act specifically prohibits the use of
  telephone lines for the purpose of placing a sporting
  bet. Since the Internet uses telephone lines, courts have
  consistently ruled the Wire Act also covers Web sports
  wagering, but a recent federal appeals court decision said it
  was beyond the scope of the original law to include placing a
  casino bet online.

  The Department of Justice is appealing the decision, but even
  if a future court decision says the law does apply to online
  casinos, all of them are located offshore and beyond the
  jurisdiction of the U.S.

  Congress is also considering strengthening U.S. anti-gambling
  laws. One proposal calls for banning the use of credit cards
  and other transfer instruments to offshore gambling sites.

  "Contrary to what the [WTO] panel asserted, there is no
  obligation for WTO members to conduct international
  consultations before taking action to protect public morals and
  public order and enforce criminal laws," Mills said. "WTO
  members were already restricting gambling and other activities
  affecting public morals and public order long before they
  created the WTO."

  The original WTO agreement was negotiated by the Clinton
  administration.

  "I have no doubt they had no idea and expectation that they
  were making a commitment in our GATS schedule to open up
  gambling services," the senior trade official said. "If you
  think about it, it's ludicrous to think they would have thought
  that since nearly every state in the country bans these types
  of services and there are a number of federal laws that ban
  interstate gambling."

  It is estimated that as much as 60 percent of all offshore
  gambling dollars come from Americans. Although the Wire Act
  poses enough of a threat to drive online gambling sites out of
  the country, offshore casinos and sports books have grown from
  about two dozen sites in 1995 to almost 2,000 last year.

  The House Banking Committee was told last year Americans will
  gamble more than $2 billion through the sites in 2003.


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