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U.S. Ordered to Clarify Online Casino Rules

The World Trade Organization (WTO) has given the United States until April to clarify its laws permitting Internet betting on horse racing but banning all other types of online gambling.

Washington hopes the clarification will end the long-running trade dispute with the tiny Caribbean island nation of Antigua, which is attempting to rebuild its hurricane ravished economy with online casinos.

Don't bet on it being resolved anytime soon, experts say.

Antigua, the smallest member of the WTO, says the apparent inconsistency serves as a basis for Americans to legally gamble through online, offshore gambling casinos. More than two years ago, it filed a trade complaint with the WTO against the United States.

For Washington, it's the trade complaint that won't go away.

In April, the WTO issued a ruling that widely agreed with the United States.

The decision said Washington has the right to keep gambling services off its list of free trade obligations to other WTO members under the organization's rules permitting countries to refuse to deal in goods and services it bans at home.

Antigua, though, gained some measure of satisfaction in the decision when the WTO noted that the United States does permit online wagering when it comes to horse racing. It ordered the U.S. to clarify its current online gambling rules.

Factoring in that congressional action might be necessary, the U.S. told the WTO it would have an answer in 15 months. Antigua insisted on a shorter time frame for the U.S. response and the WTO agreed, giving Washington until April 6, 2006.

If Antigua is not satisfied with Washington's response, it can continue the trade dispute.

In its April ruling supporting the U.S. ban on gambling, the WTO found "the possibility that the [Interstate Horseracing Act] exempts only domestic suppliers of some remote betting services for horse racing from the prohibitions" on remote gambling in pre-existing federal laws.

"The one narrow issue we have to resolve is this: When a WTO member invokes a WTO exception, such as public morals, WTO rules say they have to do it without 'arbitrary or unjustifiable discrimination,'" Neena Moorjani, a spokeswoman for the U.S. Trade Representative (USTR), told internetnews.com.

Moorjani added, "We have to clarify is that there is no arbitrary or unjustifiable discrimination in the treatment of horse racing."

The dispute dates back to 2000, when Congress changed the language in the Interstate Horseracing Act to accommodate national betting through simulcasts at tracks throughout the country.

As part of the change, Congress expanded the definition of an interstate off-track bet to include pari-mutuel wagers transmitted between states by way of telephone or other electronic media such as the Internet.

According to the American Gaming Association (AGA), 11 states currently allow Internet gambling on horse races. In April, Frank J. Fahrenkopf, Jr., president and CEO of the AGA, called the WTO decision "very confusing and very interesting." Monday, Fahrenkopf issued a no comment on the latest WTO decision.

In hearings before Congress two years ago, the House Banking Committee was told Americans will gamble more than $2 billion every year through offshore gambling sites. It is estimated that as much as 60 percent of all offshore gambling dollars come from Americans.