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|WTO rules US ban on offshore Internet gambling to be
| Nick Mathiason
In a judgment published late
on Friday the World Trade Organisation (WTO) ruled that the unilateral
prohibition imposed by the US on offshore Internet gambling is illegal.
However the decision is unlikely to have much effect in the short term
at least as the Bush administration has simply ignored a 2005 WTO
finding that concluded the US was in breach of WTO rules by banning payments by
individual US citizens to gambling Web sites whilst simultaneously allowing
gambling within the country itself.
It was back in 1995 when the US
government first promised the international organisation that it would open-up
its gambling industry to competition. However, under extreme lobbying pressure
from powerful interests in places such as Las Vegas and Atlantic City, for the
next ten years nothing was done to fulfill the pledge.
The original complaint against the US was made by
the tiny Caribbean nation of Antigua and Barbuda and years later, in a second
David v Goliath re-run, representatives of the 70,000 citizens of the islands
appealed against the US governments decision reached in October 2006,
that made it illegal for US residents to make credit card payments to overseas
This time around the WTO has found that the US
action is discriminatory and in breach of the organisations rules and has
said that if the ban is not lifted sanctions may be applied.
ban the offshore Internet gambling sector was estimated to be worth US$12
billion a year, with US punters accounting for $6 billion of that
In its response to the WTO, the Bush administration did not
contest the finding that the government had failed to comply with the earlier
2005 ruling requiring American gambling to be opened to competition but instead
took refuge behind a claim that it had been forced to prohibit Internet
gambling to protect public order and public morals.
However, despite the cynical whipping-up of a spitball of synthetic
moral froth by certain parties and religious interest groups in Washington DC
and elsewhere, the reality is that the US ban has always been more about
protectionism than any spiritually higher purpose.
Thus the US
government has been forced to cast about in an effort to find some
justification for its actions and finally settled on the bizarre argument that
the prohibitions that were in place before the enactment of the October 2006
law apply to both foreign and US betting services alike while the WTO's
decision applies only to gambling on horse racing.
Upon reading a
little further into matters, one finds, altogether unsurprisingly, that it is
legal for the US to discriminate against overseas companies in relation to
gambling on horse racing.
Further in its response, the Bush
administration says the October 2006 law is not covered by the WTO ruling and
that the governments 1995 commitment to open gambling to foreign
companies was "an oversight on the part of the Clinton administration.
This is as classic an example of retrospective buck-passing as has been seen in
many a year.
'The WTO judgment say the US government "had an opportunity
to remove the ambiguity between legal betting on horse racing across state
borders and strictures and prohibitions on other types of gambling but instead,
rather than take that opportunity, the US enacted legislation that confirmed
that the ambiguity at the heart of this dispute remains.
Meanwhile the Antiguan finance minister, Errol Cort, said the WTO
ruling "vindicates all that we have been saying for years about the
discriminatory trade practices of the United States."
Barbuda are now theoretically able to ask that sanctions be imposed on the US.
The most likely and most damaging would be the WTO-sponsored withdrawal of
overseas protection for US trademarks and copyrights. Such action, known as
cross-retaliation (and the Caribbean islands in question are
definitely cross and do want to retaliate) are entirely permissible under WTO
rules in cases (such as Antigua and Barbuda) where countries cannot afford to
impose higher import taxes in incoming goods.
Meanwhile, elsewhere in
the Caribbean, Gary Kaplan, the founder of the UK Web-based sports bookmaker
BetonSports, was arrested in the Dominican Republic and rendered to
US authorities. Last year, Mr. Kaplan, his company and 10 other individuals
were indicted by a US grand jury on illegal Internet gambling charges .