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U.S. Wins Hand in Gambling Feud - InternetNews.
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U.S. Wins Hand in Gambling Feud

Antigua came up craps today as the World Trade Organization (WTO) Appellate Body sided with the United States in an Internet gambling dispute. The decision, according to the office of the United States Trade Representative (USTR), allows the U.S. to continue its ban on online sports and casino wagering.

Home to a number of online casinos, the tiny Caribbean island nation claimed the U.S. ban is a violation of the trade agreement between the two countries. Antigua won an initial decision in the dispute, but the USTR appealed.

Thursday, the Appellate Body ruled that the concerns raised by the U.S. federal gambling laws in the dispute "fall within the scope of 'public morals' and/or 'public order'" under an exception to WTO rules for trade-in services.

"This win confirms what we knew from the start -- WTO members are entitled to maintain restrictions on Internet gambling," Acting U.S. Trade Representative Peter Allgeier said in a statement. "U.S. restrictions on Internet gambling can be maintained."

When the U.S. became a member of the WTO, it submitted a "schedule of services" that it was willing to make mutual trade commitments on. Included in the schedule was the term "other recreational services." Antigua and the initial WTO decision interpreted that to include Internet gambling.

Antigua argued that the U.S. violated the market access provisions of the General Agreement on Trade in Services (GATS) by barring gambling services on a cross-border basis, such as the supply of Internet gambling services from Antigua-based Web sites.

The U.S. countered that a country has a right to exempt certain services from GATS if the country is acting to protect the public. Allgeier said Thursday's ruling "affirmed that WTO members can protect the public from organized crime and other dangers associated with Internet gambling."

Although an estimated 60 percent of all online gambling dollars come from the U.S., the 1961 Wire Wager Act specifically prohibits the use of telephone lines for the purpose of placing a sporting bet. The courts have consistently ruled the Wire Act also covers Web sports and casino wagering. But a recent federal appeals court decision said it was beyond the scope of the original law to include placing a casino bet online.

The Department of Justice is appealing the decision, but even if a future court decision says the law does apply to online casinos, all of them are located offshore and beyond the jurisdiction of the United States.

Although the Wire Act poses enough of a threat to drive online gambling sites out of the U.S., offshore casinos and sports books have grown from about two dozen sites in 1995 to almost 2,000 last year. The House Banking Committee was told in 2003 that Americans will gamble more than $2 billion through the sites.

Congress is also considering strengthening U.S. anti-gambling laws. One proposal calls for banning the use of credit cards and other transfer instruments to offshore gambling sites.