WTO may bring hope to US gamblers

[Soriak]

US rolls the dice at the WTO and loses; must change onling gambling laws

The tiny Caribbean nation of Antigua and Barbuda has just won a World Trade Organization (WTO) ruling against the US regarding online gambling. The WTO has ruled that the US "has failed to comply with the recommendations and rulings" of past WTO decisions, opening the way for possible trade penalties against the US.

The case began back in the summer of 2003, when Antigua and Barbuda requested that the WTO form a panel to investigate US laws against cross-border gambling web sites, many of which are based offshore in the Caribbean islands. The claim was that the US had not lived up to its obligations under the "General Agreement on Trade in Services" (GATS), and that it was blocking services between WTO member countries.

In November 2004, the WTO panel concluded that US federal laws (including the Wire Act and the Illegal Gambling Business Act) and several state laws incorrectly breached the GATS agreement, and they required the US to change its ways. In early 2005, the US and Antigua and Barbuda both appealed portions of the ruling. The appeal proved more favorable to the US (it agreed that gambling laws could fall under the "public morals" exception to GATS), but the US was still required to change its rules because it remained in violation of Article XIV of the GATS.

An arbitration panel headed by Dr. Claus-Dieter Ehlermann concluded that a reasonable time period for implementation was 11 months and two weeks, which meant that the US should have made changes by April 3, 2006. In the summer of 2006, Antigua and Barbuda claimed that nothing had yet been done, and they requested a new WTO panel to enforce compliance. That panel has just issued its report, which takes the US to task for not complying with the earlier ruling. "Rather than take that opportunity," the report says, "the United States enacted legislation that confirmed that the ambiguity at the heart of this dispute remains and, therefore, that the United States has not complied."

The biggest problem is the allegedly discriminatory nature of current US policy, which seems to treat US-based horseracing differently from gambling sites operated in foreign countries. Without a level playing field, the US does not have the right under GATS to limit similar services from other countries.

The ruling does illustrate the schizophrenic nature of US policy about gambling, which is that it's not okay—unless it takes place on reservations, "extra territorial" bits of reservations (i.e., places that aren't on a reservation at all), dog tracks, horse tracks, Las Vegas, Atlantic City, or on riverboats plopped down into artificial lakes made expressly for the purpose.

That hasn't stopped the federal government from conducting an active campaign against gambling websites based in other countries and the executives who run them. This weekend, the founder of BetOnSports (based in Antigua) was arrested in the Dominican Republic and extradited to Puerto Rico, charged with purposely providing gambling services to US citizens through the Internet. The company's CEO was previously arrested in the US and has been moved to St. Louis, where his trial will be held.

"Cross-border services" are also an issue in Europe, where Denmark, Hungary, and Finland have all shown resistance to some forms of gambling. The EU is trying to determine if these countries are violating their commitments to allow the free movement of service businesses. As with the US dispute, the issue in Europe is not about the restriction of gambling, but the fact that many countries regulate foreign gambling sites while continuing to allow or promote homegrown lotteries and casinos.

The complete WTO report (PDF) is available for those who want to wade through forty pages of bureaucratic writing at its finest.

[Eomer]

Taking into account how many times the US got it's ass handed to it by Canada in various WTO panels and tribunals regarding softwood lumber before a deal was finally reached, I doubt this means a whole hell of a lot.

[Tallyn]

While I think the federal government has no business regulating gambling (see US Constitution), I hope we retain the current stance and tell the WTO to fuck off. I want no part of agenda-driven international pseudo-governmental organizations dictating what I can and can't do inside my own sovereign nation, thanks.

[Soriak]

Originally Posted by Tallyn

While I think the federal government has no business regulating gambling (see US Constitution), I hope we retain the current stance and tell the WTO to fuck off. I want no part of agenda-driven international pseudo-governmental organizations dictating what I can and can't do inside my own sovereign nation, thanks.

That would only be a reasonable request if the US didn't do the very same with regulations in other countries (GM food in Europe? Lobbying for the RIAA/MPAA?)

[Soriak]

Not to mention A&B might be able to just suspend US IP protections in their country as a sanction (with support from the WTO) and legally distribute pirated DVDs, Music and software. I think it'd take all of 24hrs to get gambling legalized again

[Eomer]

While I think the federal government has no business regulating gambling (see US Constitution), I hope we retain the current stance and tell the WTO to fuck off. I want no part of agenda-driven international pseudo-governmental organizations dictating what I can and can't do inside my own sovereign nation, thanks.

Cute. The US can use the WTO and it's panels to knock down trade barriers and change government policy in it's favor (pardon, in favor of "trade") all around the world, but god forbid it work the other way every now and then...

[Eurylacos]

Originally Posted by Tallyn

While I think the federal government has no business regulating gambling (see US Constitution), I hope we retain the current stance and tell the WTO to fuck off. I want no part of agenda-driven international pseudo-governmental organizations dictating what I can and can't do inside my own sovereign nation, thanks.

haha, the WTO isn't trying to dictate anything. if anything it's your government which is trying to dictate what what you can't do and rather the WTO telling you what you can.

anyway, the point of contention isn't what you can or can't do. If the US government bans gambling, it must be banned for everyone. When the US selectively picks on foreign gambling companies, that is illegal.
surely you can agree that the government has no business taking part in discriminating against foreign business, can you?

[Jadn]

It's all bullshit - the only reason the U.S. has such a problem with it in the first place is because they can't tax it.

[Peacecraft]

Originally Posted by Jadn

It's all bullshit - the only reason the U.S. has such a problem with it in the first place is because they can't tax it.

As far as I know they were/are taxing it. All of the people I know that play online poker for a living had to pay taxes on the money they won last year since it's considered part of their income.

[Malakriss]

The US ban on internet gambling was a publicity stint to get back at the corrupt lobbyists who got ratted out. They shot it down the year before, got caught with a hand in the cookie jar, and then the republicans attached it to the Port Security Bill for easy in-your-face passing.

[Vorph]

Originally Posted by Jadn

It's all bullshit - the only reason the U.S. has such a problem with it in the first place is because they can't tax it.

They tax it, and anyone who didn't report large gains from Party Poker, et al. is a fool.

It's just another morality issue brought on by the religious wackos.

[Jadn]

They tax any money won, of course, but there is no tax on the companies making the profit, and theres no sales tax on it. Whats that...we're losing American dollars and can't tax it? Fuck it, let's make it illegal!

[Phelps McManus]

I guess I am the only one confused by all this angst. Gambling is banned in the US (with exceptions). The government cracked down on offshore outfits who were providing gambling services to the entire US population. They didn't "ban it for everyone". Foreign companies that provide gambling to foreign countries (and NOT the US) would be unaffected.

If we wanted gambling to be offered to everyone in the US, we would push for a vote to change the current laws. Foreign companies can't just bypass our laws because they are based in countries where their business is legal. You don't see companies in Amsterdam mailing pot to the States, or companies in Canada selling us IP-infringing communication devices.

Calling unfair bias because we have indian reservations and dog tracks is not legitimate comparison. It is easily distinguished as requiring people to travel to the venue where it is legal. Nothing stops foreign companies from servicing Americans who travel to their venue. Nothing stops foreign companies from owning or operating Vegas Casinos or Mississippi river boats.

[Vorph]

Originally Posted by Phelps McManus

I guess I am the only one confused by all this angst. Gambling is banned in the US (with exceptions). The government cracked down on offshore outfits who were providing gambling services to the entire US population. They didn't "ban it for everyone". Foreign companies that provide gambling to foreign countries (and NOT the US) would be unaffected.

You answered your own question. It's the "with exceptions" part that goes against GATS, and banning all gambling for everyone would actually be allowable.

[Tallyn]

Originally Posted by Eomer

Cute. The US can use the WTO and it's panels to knock down trade barriers and change government policy in it's favor (pardon, in favor of "trade") all around the world, but god forbid it work the other way every now and then...

To be fair, I think this is a total crock too. We have no more business telling other people how to run their lives than they do telling us. I'll be the first on the bandwagon ranting about how the US is run by a bunch of hypocritical powermongers.