The online gambling laws are rigged
Tuesday, August 08, 2006
To the list of formidable problems the U.S. government must surmount to halt online gambling, add the tiny islands of Antigua and Barbuda.
The Caribbean nation recently won a significant victory against the United States before the World Trade Organization. The WTO's ruling pointed up the hypocrisy inherent in the U.S. government's effort to make the world safe from some, but certainly not all, kinds of Internet gambling.
We take issue with the federal government allowing some types of gambling, particularly government-run lotteries, while banning others.
Washington has recently been talking and acting awfully tough in its effort to curb Americans' participation in a business that last year generated $12 billion worldwide. The Justice Department has recently resurrected a so-called Wire Law, passed in 1961 as one of the attempts to curb organized crime, to prosecute people who use phone lines to broker gambling transactions. The House in early July sent to the Senate the Internet Gambling and Prohibition and Enforcement Act, which would outlaw using credit cards to pay for online bets.
A couple of weeks later, federal agents descended on Dallas-Fort Worth International Airport and arrested the chief executive of BetOnSports.com who was on a flight layover. David Carruthers, whose online gambling site has its headquarters in Costa Rica and offices on Antigua, is in custody in St. Louis facing federal fraud and racketeering charges.
The political rhetoric supporting a federal crackdown suggests the Internet makes it all too easy for a bettor to lose his soul and that online gamblers must be protected from themselves. Online gaming site owners such as Jay Cohen contend that the government will be no more successful regulating Internet gambling than it has been regulating the Internet or gambling.
While doing 21 months in a federal prison in Nevada for having run World Sports Exchange Ltd., Cohen learned that the crackdown in Antigua might have violated a trade treaty the United States signed before the WTO.
Cohen convinced the government of Antigua and Barbuda, with a population smaller than College Station, to complain to the WTO and promised that various online gaming companies would pick up the estimated $1 million tab for arguing the case.
The argument was simple and persuasive: Why should the United States be allowed to impose a standard for gambling internationally that it did not domestically? Cohen had been sent to prison for breaking the Wire Law. The law, however, has a loophole that allows companies to broker wagers on horse racing. The Internet is chockablock with horse racing sites based here in the good old US of A. Some states are allowed to skirt the law so its citizens can play their lotteries online.
The federal government has gone to great lengths to protect the rights of American Indians to operate gambling operations on tribal lands. The government has done nothing to counter the proliferation of state-run lotteries, which are now legal in all but eight states. Texas, for example, runs the third-largest state lottery, behind only New York and Massachusetts. In fiscal year 2005, Texas collected $3.6 billion in wagers, pocketing $1.1 billion for the state school fund.
The WTO was not convinced that the U.S. government could take the moral high ground on gambling and ruled in favor of Antigua. Although the WTO has no mechanism to force the United States to alter its trade practices, the ruling might prompt other countries that have been welcome hosts for Internet gambling to complain.
Even if other countries pile on, the economic effect in America will be negligible. But the Antigua case serves as a reminder that the federal government must be consistent when it prosecutes online gaming operators. And it shouldn't pass legislation regulating only some forms of gambling.
http://www.statesman.com/opinion/content/editorial/stories/08/8gambling_edit.html
Tuesday, August 08, 2006
To the list of formidable problems the U.S. government must surmount to halt online gambling, add the tiny islands of Antigua and Barbuda.
The Caribbean nation recently won a significant victory against the United States before the World Trade Organization. The WTO's ruling pointed up the hypocrisy inherent in the U.S. government's effort to make the world safe from some, but certainly not all, kinds of Internet gambling.
We take issue with the federal government allowing some types of gambling, particularly government-run lotteries, while banning others.
Washington has recently been talking and acting awfully tough in its effort to curb Americans' participation in a business that last year generated $12 billion worldwide. The Justice Department has recently resurrected a so-called Wire Law, passed in 1961 as one of the attempts to curb organized crime, to prosecute people who use phone lines to broker gambling transactions. The House in early July sent to the Senate the Internet Gambling and Prohibition and Enforcement Act, which would outlaw using credit cards to pay for online bets.
A couple of weeks later, federal agents descended on Dallas-Fort Worth International Airport and arrested the chief executive of BetOnSports.com who was on a flight layover. David Carruthers, whose online gambling site has its headquarters in Costa Rica and offices on Antigua, is in custody in St. Louis facing federal fraud and racketeering charges.
The political rhetoric supporting a federal crackdown suggests the Internet makes it all too easy for a bettor to lose his soul and that online gamblers must be protected from themselves. Online gaming site owners such as Jay Cohen contend that the government will be no more successful regulating Internet gambling than it has been regulating the Internet or gambling.
While doing 21 months in a federal prison in Nevada for having run World Sports Exchange Ltd., Cohen learned that the crackdown in Antigua might have violated a trade treaty the United States signed before the WTO.
Cohen convinced the government of Antigua and Barbuda, with a population smaller than College Station, to complain to the WTO and promised that various online gaming companies would pick up the estimated $1 million tab for arguing the case.
The argument was simple and persuasive: Why should the United States be allowed to impose a standard for gambling internationally that it did not domestically? Cohen had been sent to prison for breaking the Wire Law. The law, however, has a loophole that allows companies to broker wagers on horse racing. The Internet is chockablock with horse racing sites based here in the good old US of A. Some states are allowed to skirt the law so its citizens can play their lotteries online.
The federal government has gone to great lengths to protect the rights of American Indians to operate gambling operations on tribal lands. The government has done nothing to counter the proliferation of state-run lotteries, which are now legal in all but eight states. Texas, for example, runs the third-largest state lottery, behind only New York and Massachusetts. In fiscal year 2005, Texas collected $3.6 billion in wagers, pocketing $1.1 billion for the state school fund.
The WTO was not convinced that the U.S. government could take the moral high ground on gambling and ruled in favor of Antigua. Although the WTO has no mechanism to force the United States to alter its trade practices, the ruling might prompt other countries that have been welcome hosts for Internet gambling to complain.
Even if other countries pile on, the economic effect in America will be negligible. But the Antigua case serves as a reminder that the federal government must be consistent when it prosecutes online gaming operators. And it shouldn't pass legislation regulating only some forms of gambling.
http://www.statesman.com/opinion/content/editorial/stories/08/8gambling_edit.html
