IE 11 is not supported. For an optimal experience visit our site on another browser.

WTO ruling on Net betting downplayed

A World Trade Organization ruling upholding a challenge to U.S. Internet gambling laws made waves around the world, but most experts say it will have little — if any — any impact on U.S. efforts to clamp down on online betting.
/ Source:

A World Trade Organization decision last week upholding a challenge to U.S. Internet gambling laws made waves around the world, but most experts say it will have little — if any — any impact on U.S. efforts to clamp down on online betting.

No one denies that the tiny Caribbean nation of Antigua and Barbuda hit a public relations home run in winning a favorable preliminary ruling on March 24 from a WTO dispute-resolution panel. The details of the ruling have not yet been made public, but negotiators from both sides say the panel agreed with Antigua's argument that U.S. laws and efforts to combat Internet betting amount to anti-competitive protectionism of its domestic gambling industry.

"America is the home of gambling," Ronald Sanders, Antigua's permanent representative to the WTO, told after word of the ruling leaked to the news media. "Americans who own on-land casinos are exporting their business abroad, building casinos all over the world. Why should they be able to do that but stop Internet gambling from coming into the U.S.?"

The decision generated headlines around the world — including some that erroneous concluded it cleared the way for global Internet wagering — and was denounced by U.S. trade officials and lawmakers

Ruling called ‘absolutely outrageous’
U.S. Trade Representative Robert Zoellick, in testimony before Congress on May 25, called the decision “absolutely outrageous” and vowed to appeal.

Rep. Michael Oxley, R-Ohio., chairman of the House Financial Services Committee and a leader of congressional efforts to prohibit net betting, said it had “significantly reduced (the WTO’s) status and credibility as a reliable arbiter of international trade disputes.”

But none of the experts and interested parties interviewed by indicated that the decision — if it stands up under appeal — will influence U.S. lawmakers’ efforts to prevent offshore gambling companies from doing business with Americans.

“It’s going to have no impact whatsoever on Internet gambling in the United States ...  except for possibly making members of Congress go after it that much harder,” said Frank Fahrenkopf, president of the American Gaming Association, a casino-industry trade group.

The Interactive Gaming Council, which represents many online gambling companies, said it is modestly hoping that the ruling generates dialogue.

Hoping for discussion
“The impact that we’re hoping for is for legislators to at least take notice of this and look at some type of regulation rather than just discuss prohibition, which will never work,” said Keith Furlong, a spokesman for group.

Edward Gresser, a trade expert with the Progressive Policy Institute, a Washington, D.C., think tank, said he considers it likely that the decision will be overturned on appeal, possibly under a WTO rule that allows nations to bar imports that are contrary to the public morals.

Even if it is upheld on appeal — a process that could take two years or more — the United States can be expected to ignore it, he said.

“My guess would be that if it holds up, we would decide this isn’t worth doing and let Antigua do its worst,” Gresser said. Under that scenario, Antigua would have a right to impose retaliatory trade measures against the United States, but any punishment the island nation would exact would be "kind of trivial,” he said.

The lone adverse impact from the ruling would be that it puts U.S. trade negotiators in an awkward position as they pressure recalcitrant countries like China to open their markets.

"When we're telling China you need to abide by the promises you made ... and there are some decisions lost that still haven't been implemented ... having more of those outstanding is not particularly helpful," Gresser said.

Koleman Strumph, a visiting scholar at the Cato Institute, a non-profit public policy research center in Washington, said that he believes the argument that the U.S. protects its legal gambling and ignores a thriving illegal betting industry has merit.

But like Gresser, he said there is little likelihood that Congress will change its approach to net betting.

"This is a blip on the road toward Internet betting," he said, predicting that the United States will eventually abandon attempts at prohibition.