EU and US at odds over internet gambling
greystoke9
http://www.globalpost.com/dispatch/technology/090622/eu-and-us-at-odds-over-internet-gambling
By Tom Abate - Global Post
Published: June 25, 2009 12:18 ET
Updated: June 25, 2009 12:18 ET
-A+A
SAN FRANCISCO �ｿｽ The European Union recently took a shot at the United
States in little-noticed trade war over internet gambling, charging that
the United States unfairly interferes with internet gambling in ways that
run contrary to World Trade Organization rules.
The EU is not the only WTO player at odds with the United States over
online gambling. China, Canada, Japan, Mexico and the Caribbean island
nation of Antigua are also using trade rules to either force the U.S. to
ease its prohibitions against internet gambling �ｿｽ which seems unlikely
though there is a bill to that effect in Congress �ｿｽ or else get
compensation in the form of trade concessions if they can't.
The stakes are considerable. The EU report that raised the charges
estimated that �ｿｽremote gambling and betting�ｿｽ was a $14 billion industry in
2007, headed for $22 billion in 2010. �ｿｽThe EU has established a worldwide
lead�ｿｽ in this market, according to the report, which said 15,000 Europeans
were already employed by remote gambling firms based mainly in the United
Kingdom, Malta, Gibraltar and Ireland.
�ｿｽInternet gambling is a complex and delicate area, and we do not want to
dictate how the U.S. should regulate its market,�ｿｽ said EU Trade
Commissioner Catherine Ashton in a statement. �ｿｽHowever, the U.S. must
respect its WTO obligations. I hope that we will be able to reach an
amicable solution to this issue.�ｿｽ
A spokeswoman for the U.S. trade representative said her office was
studying the EU report and was already in discussions with European
officials over the gambling issue.
�ｿｽThe United States has really bungled this,�ｿｽ said Professor I. Nelson
Rose, who teaches at Whittier Law School in California and is an expert on
international gambling.
Rose said the roots of the dispute go back to 1994 when the United States
signed the General Agreement on Trade in Services (GATS) �ｿｽ but failed to
put gambling on the list of services it planned to exclude from the free
trade provisions. �ｿｽHad we done that we wouldn't have this problem now,�ｿｽ
Rose said.
The subsequent rise of the internet led to the creation of cross-border
gambling sites aimed at the United States, where gambling is regulated by
a patchwork of federal and states laws. Rose said U.S. authorities at both
the state and federal level have generally sought to discourage internet
gambling using every tool at their disposal.
The issue came before the World Trade Organization in 2003 when Antigua,
which hosts internet gambling sites, complained that these various U.S.
efforts to restrict online gaming constituted an unfair trade practice.
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The WTO ruling handed down in 2005 was a victory for Antigua but on very
narrow grounds, Rose said. Antigua had wanted the trade group to declare
that all U.S. restrictions on internet gambling were trade barriers. That,
the WTO declined to do, accepting the U.S. argument that its laws were
designed to protect its citizens from predation and were applied to
domestic as well as international firms. But the WTO noted that the United
States allowed long-distance horse betting under the Interstate
Horseracing Act and ruled that it was unfair to disallow international
gambling on horse racing as a result.
Rose said the Bush administration could have ended the dispute by asking
Congress to make the horseracing act international. Instead, the
administration issued a statement in May 2007 informing the WTO that it
intended to, belatedly, put internet gambling on the list of exceptions.
Rose said that, under the WTO process, this allowed treaty members with
internet gambling industries to file claims against the United States
seeking compensation, which the EU and others did.
Those claims are still winding their way through the slow WTO process and
the ultimate consequences for the United States remain unclear.
The U.S. continues to take a hard line on internet gambling. Shortly
before the EU report was released in June, federal attorneys in the
Southern District of New York ordered four American banks to freeze more
than $30 million in payments to thousands of online poker players who used
sites like pokerstars.com, which is based in the Isle of Man in the U.K.
Congressman Barney Frank, a Democrat from Massachusetts, has introduced
legislation to legalize and regulate internet gambling. How the bill will
fare in a U.S. Congress preoccupied with broader economic issues is
anyone's guess.
Meanwhile the online gambling controversy continues to fly just under the
radar of public opinion.
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