Ed Brayton is a journalist, commentator and speaker. He is the co-founder and president of 
Having already lost round one, the US has now lost the appeal as well in the WTO dispute filed by Antigua and Barbuda over the American ban on internet gambling.
The U.S. ban on offshore Internet gambling payments is illegal, the World Trade Organization said today, upholding a previous decision that allowed for possible sanctions...Today's ruling "vindicates all that we have been saying for years about the discriminatory trade practices of the United States,'' Antiguan Finance Minister Errol Cort said in an e- mailed statement.
The problem is this: American law specifically exempts several forms of internet gambling that all operate solely within the US - buying state lottery tickets, off track betting on horse racing, etc - while banning access and financial transfers to any gambling sites that exist overseas and offer gambling on a wide range of events. This is contrary to the World Trade Organization rules - the WTO that the US pushed for and ratified the treaty for. And this fight has been going on for a while, with the US government dragging its feet:
Antigua, the smallest government ever to lodge a WTO complaint, scored an initial victory against U.S. online gambling restrictions when the WTO found in April 2005 that the U.S. had pledged to open the industry to competition 10 years earlier. Today's ruling rejects a U.S. appeal against that.The U.S. agreed that today's ruling finds it failed to comply with the two-year-old decision.
Still, the U.S. says the report allows it to maintain a ban on Internet gambling to "protect public order and public morals'' as long as it doesn't discriminate against foreign companies, Gretchen Hamel, a spokeswoman for the U.S. Trade Representative's office in Washington, said in an e-mailed statement.
"We are currently reviewing our options,'' Hamel said.
Of course, the notion that the current law on internet gambling exists to "protect public order and public morals", while explicitly exempting several forms of internet gambling, is simply absurd. And the fact that our government has clearly been ignoring the WTO's rulings and playing word games may well result in serious retaliation approved by the organization. Here's what could happen:
Analysts questioned whether U.S. would allow online gambling based on today's ruling."I have no idea at this stage what measures they could put in place to force America's hand,'' said Julian Easthope, an analyst of online gaming stocks at UBS AG in London.
Antigua may seek sanctions in the form of withdrawing intellectual property protection for U.S. trademarks or copyright. Known as "cross-retaliation,'' such sanctions are legal at the WTO when an economy can't afford to impose sanctions in the form of higher customs duties on goods.
"We're really hoping that as their options run out and the U.S. sees that they can't delay any more, they'll enter into negotiations with us,'' Mark Mendel, chief legal counsel to Antigua said in a telephone interview from the Caribbean.
If the WTO approves retaliation sanctions and it begins to seriously affect US trademarks abroad - say, allowing other nations to violate the trademark of Microsoft and make copies of their software for sale - that will force the hand of the government. That is, if Bush doesn't declare Antigua to be a terrorist nation and throw their prime minister in Gitmo.
Comments
Ed:
You wrote: The problem is this: American law specifically exempts several forms of internet gambling that all operate solely within the US - buying state lottery tickets....
You mean I can buy a state lottery tictet or two on line right here in deepest darkest Utah? Why wasn't I told??? Thank you for the information.
Posted by: flatlander100 | April 1, 2007 4:03 PM
I would remind you Ed that to many politicians, the idea of being able to do something without the state profitng from it is immoral.
Posted by: James | April 2, 2007 1:46 AM
The real problem for the US is if the EU decides to become a party to the proceedings. As things stand Antigua does not have the ability to impose any scations that would harm the US economy. The EU does of course, and since the EU has a number of companies that have been effected by the US law in question it can decide that it will back Antigua and impose sanctions against the EU.
Posted by: Matt Penfold | April 2, 2007 8:24 AM
Matt sez:
But the article states:
Imagine profits draining from MGM, Sony, Microsoft as
Antigua becomes a legal international distribution centre for "pirated" music, movies, games and software. Hmmm, I wonder if pharmacuticals are included as "intellectual property".
When it comes down to it, it may be in Antigua's best interest for the US maintain its current position.
Posted by: MDHutton | April 2, 2007 10:13 AM
MDHutton,
It would only be legal in Antigua, so anyone obtaining software etc from Antigua cheaply via such sactions would only be able to use it in Antigua. In other words it would not become a legal distrubtion hub. It might of course become a centre for illegal distribution but there is already no shortage of those.
Posted by: Matt Penfold | April 2, 2007 10:20 AM
The WTO can, in fact, authorize retaliatory sanctions beyond just Antigua. The EU doesn't have to be a party to the proceedings in order for the sanctions to include the EU (though it may be less likely that the WTO would do so).
Posted by: Ed Brayton | April 2, 2007 11:43 AM