1. #1
    SBRforum Staff
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    WTO ruling won’t help internet gamblers

    Ruling won’t help internet gamblers

    By: Elihu Feustel
    http://www.sportsbookreview.com

    The recent WTO ruling against the USA might recoup a little money for Antigua, but it won't help the regular Joe in the US trying to make a wager over the internet.

    Much excitement has been made over a series of WTO rulings in favor of Antigua and Barbuda against the U.S. involving internet gambling. A complaint was first brought before the WTO in 2003. Various US laws and actions were interfering with Antigua’s ability to export gaming services, notably the Interstate Wire Act, and US penalties on banks and credit card companies.

    Of Antigua and Barbuda’s $800 Million GDP, roughly 10% of it was generated by the exporting of gambling services. A vast majority of that was generated in the U.S. If the U.S. continued its crackdown on internet gambling, it could cost Antigua in excess of $70 Million per year in lost exports.

    In the January 2007 ruling, the WTO confirmed that the U.S. was unfairly competing against online horse-racing wagering, and that the U.S. had not brought its laws into compliance with the earlier 2005 ruling. Notably, the ruling excluded sports betting.

    So what does that mean for average gamblers? Unfortunately, very little.

    The current ruling is limited to horse racing, which is a small segment of online gambling, perhaps 20%. If the U.S. continues discriminating against foreign race books, Antigua could potentially lose about $16 Million in exports per year. Normally, the WTO allows an injured country to enact tariffs or penalties in the same industry where the discrimination occurred. As this is not practical - - the U.S. does not export gambling services - - Antigua has requested a different form of retaliation: consent to ignore certain U.S. intellectual property rights. If things played out most favorable to Antigua, they might be permitted to do so in a limited fashion. The objective would be the recovery of the lost exports, or about $16 Million per year.

    How would the U.S. react to such a scenario? It would do nothing - allowing Antigua to recover its loss as dictated by the WTO, but maintaining the U.S. ban on internet gambling. This would not be the first time the U.S. has blatantly disregarded a WTO ruling and simply paid a penalty.

    In 2001, the U.S. lost in a dispute versus Europe regarding anti-dumping laws (or the 'Byrd Amendment'). The history of that dispute is eerily similar to this one: the U.S. lost, asked for time to become compliant, and did absolutely nothing to become compliant with the WTO order. In the end, the U.S. paid $180 Million per year in retaliatory tariffs rather than change its laws.

    While the recent WTO rulings in favor Antigua aren’t going to make internet gambling any easier, there is some hope for would-be gamblers. The European Union may file a WTO complaint, which could not be ignored as easily as the current one. A number of factors make this more likely now than in years past: Antigua’s partial victory; the burgeoning European sportsbook industry; and the U.S. abduction of executives of publicly traded companies (Neteller and BetOnSports).

    But until this happens, gamblers will have to visit their favorite brick and mortar casino, or move to Canada.

  2. #2
    JC
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    Quote Originally Posted by SBRforum Staff View Post
    [URL="http://www.sportsbookreview.com/Article/200702252736.aspx"]In the January 2007 ruling, the WTO confirmed that the U.S. was unfairly competing against online horse-racing wagering, and that the U.S. had not brought its laws into compliance with the earlier 2005 ruling. Notably, the ruling excluded sports betting.

    That is just factually incorrect. Please read the decision and not just the US press releases.

    The WTO found that the Wire Act, the Travel Act, and the Illegal Gambling Business Act were not in compliance with the United States' commitments under the GATS.

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  3. #3
    daringly
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    Quote Originally Posted by JC
    That is just factually incorrect. Please read the decision and not just the US press releases.

    The WTO found that the Wire Act, the Travel Act, and the Illegal Gambling Business Act were not in compliance with the United States' commitments under the GATS.
    Your statement is not inconsistent with what was in the article. All acts were not in compliance as you discussed. On procedural grounds, the sports betting was not an issue - the US does not allow interstate sports betting for anyone, ergo no discrimination. With horse racing, there is interstate internet betting. If that were not the case, the US would not be discriminating.

    As the discrimination is "limited" to horse racing, it is likely that any retaliatory tarriffs or penalties would look only at horse racing. I find this ironic, because horse racing is more in need of protection than other forms of gambling - the states incur a loss supporting the horse industry, which gambling has historically supported.

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  4. #4
    JC
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    Quote Originally Posted by daringly View Post
    Your statement is not inconsistent with what was in the article. All acts were not in compliance as you discussed. On procedural grounds, the sports betting was not an issue - the US does not allow interstate sports betting for anyone, ergo no discrimination. With horse racing, there is interstate internet betting. If that were not the case, the US would not be discriminating.

    As the discrimination is "limited" to horse racing, it is likely that any retaliatory tarriffs or penalties would look only at horse racing. I find this ironic, because horse racing is more in need of protection than other forms of gambling - the states incur a loss supporting the horse industry, which gambling has historically supported.
    Your whole statement is incorrect. Antigua challenged the US on blocking both sports and casino (and everything else). It was the US that raised a moral defense which failed.

    The AB made no distiction between sports, horse racing, and casino games. Instead they grouped them all as remote gaming. FYI the US does offer remote gaming on sports in Nevada and the WTO looks at the country as a whole and not by state.

    Anyway as long as the US offers any remote gaming, horse racing or otherwise, intra-state or interstate, their morals defense fails. Antigua's case is not about horse racing. It's about remote wagering, sports, casino, and as part of sports, horses.

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  5. #5
    daringly
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    JC -

    I don't dispute any facts you have given. I simply disagree with what it means.

    The morals defense failed because of the US treatment of horse racing. Will retaliatory damages be limited to horse racing, or all forms of internet gambling?

    While I understand your argument, and I am in favor of internet gambling (as you are), I think Antigua's damages will be limited to lost horse-racing profits.

    If you have a source that suggests Antigua will could recover for all sorts of gambling, I'd love to see it.

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  6. #6
    JC
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    Read the Appellate Body report. The following laws were found not to be compliant, the Wire Act, the Travel Act, and the Illegal Gambling Business Act.

    The only place horse racing comes up in the report is in response to the US's Artcile XIV defense. Article XIV is a morals defense. Their morals defense failed, therefore Antigua won on what they call the "Federal Trifecta" mentioned above.

    Antigua never made a challenge to any US horse racing laws, they were only brought up in response to the US's Article XIV defense.

    The AB divided the world into remote gambling and non-rtemote gambling, not horses, sports, and casino. If the US sanctions ANY form of remote gambling within their borders, it has to allow Antiguan companies access to the US market.

    Antigua has not filed for any remedies yet. They are not just seeking financial compensation. If and when they do file for remedies it will be in response to the damage caused to Antigua's entire remote gambling industry.

    READ the APPELLATE BODY REPORT. Item #51.

    http://www.antiguawto.com/WTOListPg.html

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  7. #7
    daringly
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    Quote Originally Posted by JC View Post
    The AB divided the world into remote gambling and non-rtemote gambling, not horses, sports, and casino. If the US sanctions ANY form of remote gambling within their borders, it has to allow Antiguan companies access to the US market.

    Antigua has not filed for any remedies yet. They are not just seeking financial compensation. If and when they do file for remedies it will be in response to the damage caused to Antigua's entire remote gambling industry.

    READ the APPELLATE BODY REPORT. Item #51.

    http://www.antiguawto.com/WTOListPg.html
    I have read that report more than once. The US can comply (which it won't), or the WTO will authorize Antigua to retaliate. The US is fine eating $180m/year in fines for the Byrd amendment... Do you think anyone will care if they are paying $16m, or even $80m (if you use the ENTIRE gambling industry instead of horse racing)?

    There is no strong lobby group in favor of internet gambling. Brick and mortar casinos have a strong lobby group opposing foreign internet gambling. The "conservative christian right" opposes internet gambling. The only incentive to open up US markets is the WTO "stick". The amounts at stake wouldn't justify a politician ruining his carreer to submit a bill legalizing internet gambling.

    Odds the US will comply with the WTO ruling regarding the trifect? About +2000 for the yes. The WTO can't make the US change law - only issue rulings, and allow penalties and tarriffs when the US doesn't comply. Antigua has been posturing - making mention of asking leave to disregard certain IP rights. Even then, this will be limited to their actual economic loss.

    Will Anitugua be able to recover just horse-racing profits, or all lost gambling profits? The difference is academic - even the full amount wouldn't be enough to affect US policy. But as an academic point... The US would likely have won the whole thing if it didn't allow remote horse-racing. I would be very surprised if damages in excess of that are allowed.

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  8. #8
    pags11
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    JC,

    you seem to know your shit...respect...

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  9. #9
    pavyracer
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    Good article. This is so true 4 years after it was originally written.
    Last edited by pavyracer; 03-22-11 at 12:31 PM.

  10. #10
    cloudagh
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    JC is a lawyer I imagine. Unfortunate the USA did not want to play by the rules.

  11. #11
    sparkyasu
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    y does it matter if no one ever gets arrested?

  12. #12
    wrongturn
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    Quote Originally Posted by sparkyasu View Post
    y does it matter if no one ever gets arrested?
    ??? You don't know how Neteller and BetOnSports were forced to shutdown or out of U.S.?

  13. #13
    szk1983
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    what does this mean? will this effect US gamblers?

  14. #14
    forsberg21
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    Land of the free and home of the brave... MY @$$

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