WTO Ruling Said to Open U.S. to Internet Gaming
Wednesday, March 24, 2004 01:34 PM ET Printer-friendly version
BRUSSELS -- The World Trade Organization has issued a preliminary ruling in a dispute between the U.S. and Antigua and Barbuda that the Caribbean nation believes will open the U.S. to offshore Internet gambling.
The United States Trade Representative had no immediate comment and complicated WTO decisions sometimes leave both principal parties in a dispute claiming victory, but Antigua said the decision had gone in its favor. "This is an important decision for our country," said Sir Ronald Sanders, Antigua's chief foreign affairs representative. "It shows that the WTO process works, even for a small country against a large one."
Although full details of the decision may not be known for several weeks, the WTO appears to have ruled that U.S. laws violate agreements allowing for free trade in services. That means that the U.S. may now have to either open its borders to foreign Web-based gambling companies or face sanctions.
It could be a few years, however, before the U.S. would actually have to comply with the WTO judgment.
Washington would likely appeal a judgment against it and the WTO could give the U.S. a year or longer to comply with the ruling.
The case was originally brought by Antigua and Barbuda last year. The tiny Caribbean nation, hoping to diversify its economy in the mid-1990s, promoted itself as a home to offshore Web gambling sites and has succeeded in attracting several major companies in the industry. But increasing U.S. efforts to restrict Web-based gambling has crippled their efforts and hurt the economy.
The dispute marked something of a milestone in how the WTO sets trade law. It was the first time that the WTO has ruled on a case involving the Internet. And while most WTO disputes center around technical issues such as antidumping procedures, this ruling had direct bearing on a country's ability to regulate what it considers moral vices.
In the case, Antigua argued that the U.S. was bound to allow foreign Internet gambling companies access because of a 1991 United Nations list of service- sector industries deemed open to free trade, including recreation and entertainment. But the U.S. contended that the WTO's landmark 1995 General Agreement on Trade in Services meant that it could keep gambling establishments out.
Although each U.S. state sets its own gambling laws, the Justice Department maintains that gambling on the Internet is illegal. Few individuals have ever been prosecuted for gambling on the Internet, but people who run the Web sites have, and several major credit card companies have agreed not to handle transactions involving offshore Web-gambling companies. Unable to settle bets with a credit card, players face the impediment of sending or receiving funds via wire transfer.
Opponents of Internet gambling argue that it provides an opportunity for minors to gamble and that it can provide an overpowering temptation for people with gambling problems. Web gambling is one of the fastest growing sectors of the gaming industry.
According to Christiansen Capital Advisors LLC, total revenue at Internet gambling companies world-wide last year was about $6 billion, up from $651 million in 1998. More than 1,000 sites now ply the Web looking for bettors.
In addition to Antigua, countries including Costa Rica, Panama, Belize and Australia host Web addresses that target U.S. gamblers. Other countries in Asia and some in Europe allow some forms of Internet gambling aimed at their own citizens.
Should the U.S. fail to comply with the ruling, Antigua could become the first nation to use sanctions aimed at a nation's intellectual property rights. Typically, the WTO allows countries that win disputes to raise tariffs against the loser if it fails to comply with the dispute settlement body's ruling.
But Antigua, with a population of only 67,000 people, could inflict little damage on the U.S. economy by slapping tariffs on U.S. imports. To account for such a possibility, WTO rules make it possible for a small country such as Antigua to produce products protected by intellectual property rights agreements -- such as software -- without fear of punishment.
Wednesday, March 24, 2004 01:34 PM ET Printer-friendly version
BRUSSELS -- The World Trade Organization has issued a preliminary ruling in a dispute between the U.S. and Antigua and Barbuda that the Caribbean nation believes will open the U.S. to offshore Internet gambling.
The United States Trade Representative had no immediate comment and complicated WTO decisions sometimes leave both principal parties in a dispute claiming victory, but Antigua said the decision had gone in its favor. "This is an important decision for our country," said Sir Ronald Sanders, Antigua's chief foreign affairs representative. "It shows that the WTO process works, even for a small country against a large one."
Although full details of the decision may not be known for several weeks, the WTO appears to have ruled that U.S. laws violate agreements allowing for free trade in services. That means that the U.S. may now have to either open its borders to foreign Web-based gambling companies or face sanctions.
It could be a few years, however, before the U.S. would actually have to comply with the WTO judgment.
Washington would likely appeal a judgment against it and the WTO could give the U.S. a year or longer to comply with the ruling.
The case was originally brought by Antigua and Barbuda last year. The tiny Caribbean nation, hoping to diversify its economy in the mid-1990s, promoted itself as a home to offshore Web gambling sites and has succeeded in attracting several major companies in the industry. But increasing U.S. efforts to restrict Web-based gambling has crippled their efforts and hurt the economy.
The dispute marked something of a milestone in how the WTO sets trade law. It was the first time that the WTO has ruled on a case involving the Internet. And while most WTO disputes center around technical issues such as antidumping procedures, this ruling had direct bearing on a country's ability to regulate what it considers moral vices.
In the case, Antigua argued that the U.S. was bound to allow foreign Internet gambling companies access because of a 1991 United Nations list of service- sector industries deemed open to free trade, including recreation and entertainment. But the U.S. contended that the WTO's landmark 1995 General Agreement on Trade in Services meant that it could keep gambling establishments out.
Although each U.S. state sets its own gambling laws, the Justice Department maintains that gambling on the Internet is illegal. Few individuals have ever been prosecuted for gambling on the Internet, but people who run the Web sites have, and several major credit card companies have agreed not to handle transactions involving offshore Web-gambling companies. Unable to settle bets with a credit card, players face the impediment of sending or receiving funds via wire transfer.
Opponents of Internet gambling argue that it provides an opportunity for minors to gamble and that it can provide an overpowering temptation for people with gambling problems. Web gambling is one of the fastest growing sectors of the gaming industry.
According to Christiansen Capital Advisors LLC, total revenue at Internet gambling companies world-wide last year was about $6 billion, up from $651 million in 1998. More than 1,000 sites now ply the Web looking for bettors.
In addition to Antigua, countries including Costa Rica, Panama, Belize and Australia host Web addresses that target U.S. gamblers. Other countries in Asia and some in Europe allow some forms of Internet gambling aimed at their own citizens.
Should the U.S. fail to comply with the ruling, Antigua could become the first nation to use sanctions aimed at a nation's intellectual property rights. Typically, the WTO allows countries that win disputes to raise tariffs against the loser if it fails to comply with the dispute settlement body's ruling.
But Antigua, with a population of only 67,000 people, could inflict little damage on the U.S. economy by slapping tariffs on U.S. imports. To account for such a possibility, WTO rules make it possible for a small country such as Antigua to produce products protected by intellectual property rights agreements -- such as software -- without fear of punishment.
