[IP] WTO Turns Up Heat on US Online Gambling Ban
Begin forwarded message:
From: "Robert J. Berger" <rberger@xxxxxxx>
Date: November 10, 2004 9:55:47 PM EST
To: Dewayne Hendricks <dewayne@xxxxxxxxxxxxx>, Dave Farber
<dave@xxxxxxxxxx>
Subject: WTO Turns Up Heat on US Online Gambling Ban
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.
--
Robert J. Berger - Internet Bandwidth Development, LLC.
Voice: 408-882-4755 eFax: +1-408-490-2868
http://www.ibd.com
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