WTO rules against U.S. in online gaming case

[The Buzz]

Hot off the presses, the WTO has ruled against the U.S. (and for Antigua) in an online gaming dispute. Here's the ruling and a case summary:

Ruling: http://www.wto.org/english/tratop_e/.../285rw-a_e.pdf
Summary: http://www.wto.org/english/tratop_e/..._e/ds285_e.htm

Snooptodd and vinism are hard at work parsing the details of this ruling. They'll be posting more shortly.

Faithfully yours,

Buzzy

[big fish]

this is another piece of good news for the industry. the trend lately has been a positive one, and i am excited about the changes we will be seeing in the coming months/years to improve and regulate this industry. it is long overdue.

thanks buzzy, casino city and gpwa to keeping us up to speed at all times.

[GPWA Aaron]

Here's our story ...

WTO rules against U.S. in Internet gambling case

The World Trade Organization ruled in favor of Antigua and Barbuda in its complaint against the United States in an Internet gambling case today. The ruling rejects a U.S. appeal of an earlier ruling in Antigua and Barbuda’s favor.

Antigua and Barbuda initiated the dispute in 2003, asserting the U.S. was restricting the cross-border supply of gambling services. The WTO ruled in 2005 that the U.S. was violating international trade law by allowing U.S. residents to make online bets on horse races and lotteries while banning bets to offshore gambling companies.

Following a ruling in Antigua and Barbuda’s favor in April, 2005, the U.S. was asked to clarify the legal status of lotteries and betting on horse racing in the U.S. Today’s ruling confirms that the U.S. has not taken sufficient measures to address the WTO’s 2005 ruling.

"It vindicates all that we have been saying for years about the discriminatory trade practices of the US in this area, and we look forward to the US opening its markets," said Antiguan Finance Minister Errol Cort in a story by the BBC.

The impact of this ruling is uncertain at best. Antigua is a small trade partner with the U.S., and doesn’t have the resources to guarantee U.S. compliance with the decision.

[Webzcas]

This is great news.

The InfoPowa report on this is up on BetSage:

United States Loses WTO Appeal

[helpyou]

I hope that soon the something change....

[vinism]

I'm still digging through the ruling (51 pages --- yikes!!). As soon as I can put together a cogent analysis, I'll post it. Some things worth noting:

• Antigua managed to work the UIGEA into this. Not sure what the impact is, but it's still worth noting.
• While this ruling is good for the gaming industry, it will have little real-world impact. Antigua isn't a large of enough trading partner with the U.S. to force change -- unless it gets creative. If the EU files a complaint using this case as a road map, then something could happen.
• It has taken 4 years to get this far. This will not be a speedy process, but at least the train is headed down the right path.

[bb1web]

Hi V,

thanks for the "creative" link. Makes an excellent point of which I whole-heartedly is followed.

The first 1000 or so Microsoft copies that come flowing across our borders for ....say $1.98 .. and attention will be given to WTO ruling.

I know I was just given the "opportunity" to upgrade to vista for a "savings" at the low cost of $159.

gee what bargain. Do you think I"d pass on getting it at 10% that cost?

this is the way to go for Antigua. the only thing that gets the attention of the US govt is money.

[matted]

It was my understanding the WTO can impose fines or other sanctions which all member countries would need to oblige... I dont understand the purpose of an international court when the little guy can never collect anything if they win a dispute.

[bb1web]

the little guy can never collect anything if they win a dispute

Hi all (M),

actually they have won something. The right to pirate software, movies, ...music.

and sell it at pennies on the dollar and not fear the reprisal of the rest of the world. Perhaps the states ......but nobody else.

This is the ONLY way they'll ever get justice ...... and likely won't happen until they actually go thru with taking the low road .... so to speak.

when B Gates starts complaining about all the copies of Vistas being sold at $10 a pop ..... the US govt will start to reconsider their apathy towards the WTO ruling.

[villa10]

The WTO has a strong enforcement power, but until I know acting in the solution of international conflicts originated in the trade of commodities, merchandises etc.

This precedent is very inportant IMO, for the global future of this biz.

Anyway, the american muscle is always there.....

[WinYourWayKyle]

More great news for the online gaming industry within the US. I am looking forward to see what is going to happen in the near future for the world of online gaming.


Cheers and Best Of Luck,

[MrYook]

I think the combination of the WTO ruling, Barney Frank drafting legislation
for a reversal, and the extreme opposition to the UIGEA by the banking
industry gives us fairly good odds of seeing this problem disappear.

The banking industry doesn't want to invest a great deal of money and
resources into monitoring all of their transactions. This new law does
nothing to benefit them and costs them a great deal to fully implement.

Also, it would be nice to see Antigua set-up a bunch of web sites that
offer all of the top software products from U.S. companies for free.

[matted]

The AP finally picked up on this story... Here is the article
xhttp://news.yahoo.com/s/ap/20070331/ap_on_hi_te/wto_internet_gambling;_ylt=AvPWTMeyKMvvqdma6VEYVR3 MWM0F

All it says is that if Antigua prevails (if the US appeals) they can impose sanctions - but it is very unclear what that would include. The other interesting note is the whole underpinning of the case is the fact American's can bet on horses via off-track and internet means... But not via a racebook in antigua. The US either has to ban remote horse betting completely or allow it. They can still prohibit internet casino/sports/poker because US citizens cannot run these operations legally.

[bb1web]

Also, it would be nice to see Antigua set-up a bunch of web sites that
offer all of the top software products from U.S. companies for free.

ain't it the truth Jerry!

[vinism]

I've read through the ruling, and snooptodd talked to an attorney about the ruling. And based on the information we've culled, the following are the most likely scenarios to come from this WTO ruling:

1. The U.S. ignores the ruling.

Why this might happen: If the U.S. chooses to pretend this ruling never happened, Antigua could levy sanctions. But any sanctions Antigua might be able to impose will have negligible impact on the U.S. economy.

Why this might not happen: If the U.S. wants other nations to honor WTO rulings when it files suit, then the U.S. needs abide by this one.


2. The U.S. bans all interstate bets on horse racing.

Why this might happen: By taking this step, the U.S. could comply with the WTO ruling without opening the country up to any other sector of the gaming industry.

Why this might not happen: This would be a major blow to the U.S. horse racing industry -- and therefore a step that won't be taken lightly. In addition, the horse racing industry is well-connected in Washington and the legislation will be difficult to pass through.

3. The U.S. opens up the horse betting market to foreign operations.

Why this might happen: This would bring the U.S. compliance with the WTO ruling, strengthening its hand in other negotiations.

Why this might not happen: The U.S., in general, doesn't like being told what to do by the WTO. In addition, when you include the emotional arguments that inevitably come along with any gambling discussion and the possibility that the U.S. horse racing industry might battle for status quo, and you get a dicey proposition for success.

4. Another country follows in Antigua's footsteps and files suit against the U.S.

Why this might happen: Now that the Antigua precedent has been set, future suits will move more quickly. And if the trading partner is large enough (say the U.K. or the EU), then the U.S. will be forced to act.

Why this might not happen: Does the EU or the U.K. or anyone else want to spend political capital on fighting the U.S. on a horse racing case? It's probably not worth it for them to pursue right away. But in a couple of years, who knows....

All of that said, it's important to note that this case is only about horse racing. The WTO has upheld the U.S. right to ban other types of gaming on moral grounds.

[The Buzz]

Sometimes Buzzy likes to stir the pot ... here's a link to what Focus on the Family has to say about the WTO ruling ...

http://www.citizenlink.org/CLNews/A000004281.cfm

[WebMeisterQ]

to eradicate or restrict a moral evil like gambling

I can't believe I just read that article. I can't believe there are people on this earth who think that way. I can't believe....oh man I gotta get out of this country its driving me insane....LOL

[chill]

"Congress was wise enough to recognize Internet gambling as a formidable threat to our national security and to families in our nation."

Yeah right, by attaching it to the back of an important new law

[matted]

Another reason why the American population got a clue and voted the GOP out of congress. Too late for 2004, but sets up a good 2008!

[The Buzz]

A nice editorial by Sallie James of the Cato Institute on the WTO ruling ... not really news, since Cato has been on the side of regulating online gaming in the US right from the start, but a nice piece regardless ...

http://www.tcsdaily.com/article.aspx?id=041307B