Implications of the WTO decision

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After one of the more interesting days in recent history for the offshore industry, its time to take a step back and examine the WTO decision implications. Lots of hype emerged and, amazingly, both sides claimed victory.

Read the rest of Wild Bill's latest column by going to the RX home page at www.therx.com

Charlie
 

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GREAT read WILDBILL thanks



this part sums it up


For us, the offshore customer, the ruling couldn't have made it clearer. There is no law against online betting passed by the U.S. government. Some states might have laws in existence, but since not too many state Attorney Generals are breathing down the necks of media outlets and banks, we probably can take a little more measure of safety in the ruling.
 

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Such a mess. Indiana is still in the process of making internet gambling and/or promoting illegal gambling a felony. I doubt this changes that. We don't know what it means because this Govt today does about as they please. Only time will tell. I'll try and enjoy today. :drink:
 

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Any claims of a US victory in the matter are the result of the amazing spin the United States is putting on this opinion. Either the USTR doesn't understand the opinion, or doesn't want the general public to understand it.

Antigua won. In the last paragraph of the opinion, the US is ordered to gets its measures (The three federal anti-gambling statutes, we call the "federal trio") into compliance with the GATS.

What is causing all of the confusion is that the US raised an affirmative defense under Article XIV of the GATS. There are two prongs to this defense. The Appellate Body ruled that the US met the first prong, the need to have these measures in order to protect public morals. However, the US failed under the "chapeau" which looks at among other things how other laws in the US are treated under these measures.

The panel needed to look no further than the IHA (Horse Racing Act) to see that the US could hardly claim a moral aversion to remote betting when they had such widespread remote betting in its own country under the IHA. Therefore the Article XIV defense failed.

So the US needs to bring the "Federal Trio" laws into compliance. The US is trying to spin this is such a way that they have the right to have these anti-competitive laws on moral grounds, they failed to mention that defense was NOT accepted.

The US is publicly claiming if it tweaks some of its horse racing laws it can be in compliance. Not so, the opinion DOES NOT say adjust your laws so you may have another shot at the morals (Article XIV) defense. It says adjust your offending measures, the "Federal Trio."

They lost, there are no further appeals.
 

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It just sickens me that the USA is outright lying when they declare we "won" the appeal. It is an attempt to fool the masses who won't bother to read the WTO ruling or maybe a flagrant thumb in you your eye at the WTO by the U.S. government that they don't care what you rule, we are going to decalare we won.
 

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Well that was the shortest "sticky" I have ever seen.
 

Doin' the life thing...
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Jay C;

How long can Wshington delay the implementation of the WTO ruling through these spin techniques?
What are the penalties the world's most powerful economy could face if they choose to not abide by this ruling? I have a superficial idea of the legal battles a denial to comply with the ruling could generate, but what measures could the WTO take to 'make' the U.S. abide?

In plain slang... what can the WTO and Barbuda & Antigua do, if Washington says 'UP YOURS! That one who has the gold makes the rules'?
 

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Well the next steo will be in a couple of weeks when the full WTO will meet to formally adopt the decision. Then there is some sort of compliance committee that is formed.

More later.

Antigua plans to use this decision as an asset in both Federal and International Courts.
 

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Jay C said:
Well that was the shortest "sticky" I have ever seen.

FWIW Jay, we usually only keep them up 2 hours.

Have a good night.
 

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Jay C;

Thanks for answering our questions. Please let me ask a couple more:

1. If the U.S. is called to abide by this ruling, major internet search engines, including Google and Yahoo, financial institutions and credit card service providers would have to do business with Antiguan internet gaming sites on the same basis as they do with US domestic gaming interests, including hundreds of American casinos, prolific state lotteries and many others. Is this what Barbuda & Antigua are primarily looking forward to obtaining?

2. If what Wild Bill says it's true, and "there is [really] no law against online betting passed by the U.S. government..."

Then why did the Search Engines drop all forms of Pay-Per-Click campaigns from gambling-related websites? And what can be done by the WTO to make sure the US does not incur in further protectionism? is that what this really all about?

3. It has been 8 years of fighting already...How much longer do you foresee will go on before Barbuda & Antigua get what they're looking for, empirically?

4. While this is a sound success for Barbuda & Antigua, do you know of any plans by the government of these islands to protect players from future Alladin Golds? What measures are being taken to avoid this place to become Scumbag Haven?

Thanks, Jay C
 

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Walk of Life said:
Jay C;

Thanks for answering our questions. Please let me ask a couple more:

1. If the U.S. is called to abide by this ruling, major internet search engines, including Google and Yahoo, financial institutions and credit card service providers would have to do business with Antiguan internet gaming sites on the same basis as they do with US domestic gaming interests, including hundreds of American casinos, prolific state lotteries and many others. Is this what Barbuda & Antigua are primarily looking forward to obtaining?

2. If what Wild Bill says it's true, and "there is [really] no law against online betting passed by the U.S. government..."

Then why did the Search Engines drop all forms of Pay-Per-Click campaigns from gambling-related websites? And what can be done by the WTO to make sure the US does not incur in further protectionism? is that what this really all about?

3. It has been 8 years of fighting already...How much longer do you foresee will go on before Barbuda & Antigua get what they're looking for, empirically?

4. While this is a sound success for Barbuda & Antigua, do you know of any plans by the government of these islands to protect players from future Alladin Golds? What measures are being taken to avoid this place to become Scumbag Haven?

Thanks, Jay C

I'll take a stab at a couple.

1) In theory, maybe. Credit card companies ban credit card transactions because of the number of chargebacks on the player side of the issue. It wasn't the fact that they were online gambling companies, it's because people were losing tons and then charging back the transactions. Because of this, I doubt credit card companies could be forced into allowing these transactions. Google and Yahoo may have to allow ads, but I doubt that as well. These are autonomous companies that can probably choose to do business with whoever they want to. Since online gambling provides a nice source of revenue for them, I believe that if their lawyers feel they can now take ads, they will. But I'm not sure this is enough.

2) Search engines dropped online gambling ads because of non-court actions by the JD. No company was taken to court, but eBay paid a $10 million settlement for PayPal, the Discovery channel has $3.2 million in TV ad revenue for Paradise Poker seized, and more and more businesses were getting subpeonas. The PPC ad companies just felt that it was a headache that they didn't want to deal with even if it was not explicitly legal. Incidentally, this is Casino City Press's case that they're suing the JD over. They're saying the JD is tacitly enforcing a policy that isn't a law, not by using the judicial system, but simply by using fear tactics, threats, and seizures. Casino City's argument is that the JD is basically "creating" law which it's not supposed to do.

3 + 4... don't know...

I doubt that even if this ruling is a victory for Antigua and a loss by the U.S. that it will make any difference in our somewhat short term. The U.S. has a history of not following pacts it's made in international organizations when it has not felt like doing so. The U.S. violates UN agreements when it wants to. It signed the Geneva convention with the exception of still allowing the death penalty in our borders.

What I believe may happen, however, is that a victory by Antigua may mean Costa Rica, England, India, Gibralter, Canada, South Africa, Australia and other countries may file suit with the WTO. If some of the "big boys" win their cases then the U.S. may have to do something.
 

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Walk of Life said:
Jay C;

How long can Wshington delay the implementation of the WTO ruling through these spin techniques?
What are the penalties the world's most powerful economy could face if they choose to not abide by this ruling? I have a superficial idea of the legal battles a denial to comply with the ruling could generate, but what measures could the WTO take to 'make' the U.S. abide?

On a different topic, but illustrative of the US trade position in general, let me remind you of the longstanding softwood lumber dispute between Canada and the US. Last year the WTO found that over $4 billion in duties (yes billion) collected by the US was illegal and ordered it returned to Canada. The US refused and the WTO has now sanctioned the application by Canada of duties against US products (a trade war).

Bottom line is as Dave Matthews says "The U.S. has a history of not following pacts it's made in international organizations when it has not felt like doing so." and I see no reason why it should respond to this issue in any way whatsoever.

My opinion is that Washington can delay the implementation of the WTO ruling forever, if it so chooses.
 

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Here's an original article:

http://news.ft.com/cms/s/e04b5500-a779-11d9-9744-00000e2511c8.html

Antigua and US both claim win in WTO gambling row
By Alan Beattie and Frances Williams
Published: April 7 2005 16:31 | Last updated: April 7 2005 16:31

For its supporters, it is the battle of David against Goliath; for its opponents, Mammon against morality. Antigua and Barbuda on Thursday received the final ruling in its World Trade Organisation gambling case against the US.

Antigua had alleged that the US Department of Justice illegally tried to stop internet betting companies based in the tiny Caribbean island state marketing themselves to American gamblers. In the event, both sides claimed vindication after Thursday’s ruling, which found that some of the US's measures were justified but had not been applied fairly.

Washington said it could maintain prohibitions aimed at internet gambling if it tightened up its laws; Antigua maintained the US would have to outlaw all forms of remote gambling, including interstate betting on horse races, to comply with WTO rules. "I can't see the US doing that," said Mark Mendel, Antigua's lead attorney, on Thursday.

If Antigua's interpretation is correct, the implications could be substantial. True, the only bite in the WTO's ruling is the scope for reciprocal trade sanctions. The loss of markets in Antigua, with an economy 0.007 per cent the size of the US, is unlikely to trouble Washington unduly. Antigua claims that the US actions destroyed most of the 5,000 jobs the country's industry previously provided out of a national workforce of just 30,000.

But there are several reasons why the ruling could have wider implications. One is that, as a first case concerning online services, the ruling could encourage other countries to see how far the WTO's services agreement can be pushed.

Another is that the European Union, with rather more clout than Antigua, could bring a copycat case to the WTO. European internet gambling companies, many headquartered in Gibraltar, have made inroads into the US despite the ban. Christiansen Capital Advisors, a US-based consultancy, reckons the growing global online betting market will take nearly $10bn in wagers this year, around half from American gamblers.

And there is another, particularly intriguing, aspect to the case. As well as claiming that it never intended gambling to be included under the WTO services agreement, the US trade representative's office created precedent by invoking a special clause allowing trade restraints to "protect public morals or to maintain public order". Many and varied threats were cited including underage betting, compulsive gambling, the risk of fraud, and the fear that online casinos would facilitate money laundering, organised crime and even terrorism.

The case has pitted traditional morality against international casino capitalism.

"Don't forget that this country was founded by the Puritans," says Keith Furlong, deputy director of the New Jersey-based Interactive Gaming Council. The gambling industry argues that regulation, not a total ban, is the way to keep gambling addiction and organised crime at bay.

Though Hawaii and Utah still have outright bans on gambling, Mr Furlong says about 10-20 per cent of American politicians, often egged on by Christian conservative groups, are virulently opposed.

Utah in particular is one of the most socially conservative states in America, influenced by the Church of Jesus Christ of Latter Day Saints, or Mormons.

As so often with trade issues, a small and concentrated campaign can exert a powerful influence. Mr Furlong laments: "These are people with whom it is hard to have a constructive conversation."

Mr Mendel says: "Americans can't really argue they have a total moral aversion to gambling. That is a hangover from 40-50 years ago. No American is more than two hours from a casino."

But many American land-based casinos are concentrated in enclaves like Las Vegas, Atlantic City and native American reservations. It evidently touches a particular nerve for betting to be available on the family PC.

"Internet gambling magnifies the destructiveness of gambling by bringing the casino into your home," says Spencer Bachus, a Republican congressman from the southern state of Alabama, who has tried to pass anti-internet gambling legislation through the US Congress.

"For the WTO to prohibit a state from enacting laws on what it considers basic questions of right and wrong is simply unacceptable," thundered a recent editorial in the Mormon-owned Deseret [sic] Morning News. "If that happens, the Bush administration should tear up the general trade agreement and renegotiate it with states' rights in mind."

Whether the small print of Thursday's decision is enough to save the WTO from the disapprobation of red-state America remains to be seen. The ruling backed the US's “public morals” argument while criticising its implementation. But one thing is clear. If the decision further opens up America's living rooms to gambling, it would be rash to bet against a severe backlash from the heartlands.
 

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Just caught up with my reading.

Thanks for the answers David Mattews and WoodyO.
:103631605
 

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