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

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

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.

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