EU Seeks Compensation from US

[gordonprice1947]

http://www.casinogamblingweb.com/gam...ion_46566.html

[Doolally]

This is interesting stuff. I didn't think the EU would actually come forward in support. Seems like a good move (on the face of it anyway!)

[vinism]

Here's a link to the Associated Press version of the story.

http://money.cnn.com/news/newsfeeds/...LINE000612.htm

The most important thing to note is:

But an E.U. official said the concessions Europe was looking for would likely be "commitments" to open up other trade sectors, meaning gambling sites wouldn't win their way back into the U.S.

So it doesn't look like the EU is standing up for online gambling here. Instead, they're using it as leverage to open up other sectors of the U.S. market.

[ogpaper]

So it doesn't look like the EU is standing up for online gambling here.

It isn't, but...

Although it looks awful on the surface for the gambling industry, it's actually very good news. If the "other trade sectors" are something the US would not like to open to the EU - they may have to take one for the team and repeal the ban, just so they would avoid opening those sectors...

Until we find out which those sectors will be, it sound good to me...

[matted]

Hopefully it opens the door for others to come out and request compensation. No one likes to be first - I presume that applies to governments as well. Any news of opposition lining up against the US is good in this case!

[mojo]

I'd have to search but wasn't today (6/19) the deadline to file a complaint? If so, was EU the only one to do it?

[vinism]

I believe June 22 is the deadline. Regardless, it looks like the EU and Antigua and Barbuda are the only ones filing complaints. And while the EU is looking to open up other non-gambling sectors for compensation, Antigua is playing hardball. They've asked for $3.44 billion in compensation. And until they're paid, Antigua is withdrawing intellectual property protection for U.S. trademarks, patents and industrial designs.

http://www.iht.com/articles/2007/06/...ess/gamble.php

This idea was first floated in Slate magazine in November, and they do a great job of explaining just how effective this can be. Here's a sample of the explanation:

Want a cheap copy of Microsoft's latest software or a nice medical device that, annoyingly, is protected by a U.S. patent? Come to Antigua. In such a scenario, Antigua couldn't simply be ostracized as a rogue state. It would have every right under WTO rules to pursue such a course. In fact, Antigua could go down this road only in response to the United States' continuing refusal to honor its international obligations. While there undoubtedly would be complicated issues and restrictions on the scope of any suspension the WTO approves, the United States shouldn't assume that the world body is too timid to hand Antigua this sort of stick with which to retaliate, since it has authorized intellectual-property-based reprisal before. Antigua's frank calculation here, of course, is that while the administration might be comfortable stiffing the Antiguan trade representative, it would probably take notice if, say, an irate Microsoft or Disney started insisting that it get this problem solved.

[mojo]

That explains it, thanks vin. I was a wondering how it would work. It will be interesting to watch. You got to hand it to Antiqua for persistance and not giving up. I was thinking of getting a newer version of windows and I want to get Happy Feet for the kids.

[mojo]

Wow! A parade vin! Surely the US must have to react now..you'd think.

"And so, today, what is expected to become a parade of countries demanding sanctions against the United States as a result of its refusal to comply with WTO rulings on gambling services began to form, as Japan and India piled it on with more demands for compensation," Hansen points out. "Every other signatory affected will have a right to demand sanctions, and those sanctions may, depending on the circumstances, be applied against any American industry, from automobiles to semiconductors."

http://www.gambling911.com/online-gambling-062107.html

[vinism]

Oooh! I love parades. Unfortunately, it looks like these complaints are going to lead to either more free trade in other sectors of the economy, or the U.S. dropping some disputes. I'll have a story posted soon in which an analyst calls this mostly political and trade wrangling, with no impact on online gaming.

[vinism]

As promised...

Industry reaction to WTO compensation claims muted

June 21, 2007
by Vin Narayanan

Antigua and Barbuda asked the U.S. government Wednesday to pay $3.44 billion to settle a World Trade Organization dispute over online gambling. The European Union filed a compensation claim against the U.S. on Tuesday, asking the U.S. government to open up other financial sectors as payment for retroactively eliminating online gambling from its General Agreement on Trade in Services (GATS) schedule. And on Thursday, Japan and India filed similar compensation claims. But industry experts don't expect any of the claims to change the U.S. government's stance on Internet gambling.

"Nothing that's happened with this case in the past has changed the U.S. approach," said Mark Balestra, director of publishing of the River City Group, which monitors and tracks the online gaming industry. "So it's hard to imagine anything will change it in the short term."

And the Office of the United States Trade Representative has shown no signs of shifting course.

"We look forward to learning the basis upon which WTO members -- who neither requested nor made WTO commitments on gambling and betting in the Uruguay Round and had no basis to believe that the United States had made such a commitment -- intend to support their claims of interest," said USTR spokeswoman Gretchen Hamel of the claims made by Japan and the EU.

"We will continue to work with Antigua and Barbuda to try to find a mutually satisfactory resolution to this dispute," Hamel also said.

In March, the WTO ruled that the U.S. could not allow domestic companies to offer horse racing wagers and lotteries over the Internet without giving companies from other countries an opportunity to provide those services.

The impact of the WTO case on U.S. policy will be minimal in the long run as well, according to Dan Ahrens, portfolio manager of the Ladenburg Thalmann Gaming and Casino Fund.

"The WTO thing puts some more arrows in (Congressman) Barney Frank's quiver, but it has no real impact," Ahrens said.

"(In order to have change,) you have to have a Democrat in the White House, Democrats controlling Congress and a study completed showing the financial impact of revenue generated from taxing the online gaming industry," Ahrens said.

Frank (D-Mass.) has introduced legislation that would repeal the UIGEA and regulate Internet gambling. Rep. Shelley Berkley (D-Nev.) has proposed legislation that would create an independent study of the online gaming industry.

"Frank's bills aren't getting approved," Ahrens said. "But there's a good chance of getting the study approved. Then something might happen."

[mojo]

Awww vin, they rained on our parade!

"We look forward to learning the basis upon which WTO members -- who neither requested nor made WTO commitments on gambling and betting in the Uruguay Round and had no basis to believe that the United States had made such a commitment -- intend to support their claims of interest,"

The US continues to dance around the issue. While maybe the WTO ruling and resulting events have little or no impact on the UIGEA, it has an impact on how many of us view the process. It is merely another politcal way to barter.

Studies can be done but I think an important element of getting this reversed is putting safeguards against minors and compulsive gamblers in place. Of course once you do that, more studies will need to be done.

Thanks for the great info vin!

[vinism]

Update: The following nations/organizations have filed compensation claims against the U.S. in the WTO case: EU, India, Canada, Australia, Antigua and Barbuda, Costa Rica and Macau. Japan has filed a letter of interest, but has not asked for compensation.

[CityGuard]

Japan has filed a letter of interest, but has not asked for compensation.

Vin, could you explain what a letter of interest is and any significance that it has?

[vinism]

A letter of interest means Japan has a position on the issues surrounding the case that they want to be heard. It's not know what that position is at this point. We expect to find out over the next several days as the WTO looks at the different letters lodged by various countries. In some ways, these can be looked at as "friend of the court" filings (amicus curiae for the Latin inclined). Essentially, it is someone who is not a party to the litigation, but who believes that the court's decision may affect its interests somehow. So they provide information on how the issues surrounding a case may affect them, or offer guidance on what they think should happen.