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

“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

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.

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