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January-24-2007,
WTO Ruling on Antigua Due Out Soon...By Hartley Henderson

The governments of Antigua and the United States are awaiting an important decision by the WTO which will be announced any day now. The WTO is going to determine if the United States has complied with an appellate body ruling that required the United States to either open its market to all gambling operations from Antigua or else totally stop remote domestic gambling in the United States.

For those not familiar with the case, the following is a brief synopsis. As most know, over the last decade the United States has done everything in its power to try and stop offshore sportsbooks, casinos and money transfer operations from catering to the U.S. market. Gambling enterprises located in Britain, Australia, Canada (Kahnawake) and much of the Caribbean were given a license to operate from those countries and take bets from anyone in the world, including the United States. While Britain and Australia have done nothing to try and help the companies they licensed in their effort to access the U.S. market, the Caribbean countries, and particularly the island of Antigua, have stepped up to the plate for their licensees to demand the U.S. comply with an agreement both countries made in the WTO under GATS (General Agreement on Trades in Services).

In 2003 the island of Antigua initiated a pre dispute negotiation process with the United States to see if the issue of cross border betting could be resolved amicably. Rather than going through a long, drawn out process, the Antiguan government just wanted the United States to come to a fair settlement that would give Antigua gambling services access to the U.S. market as was provided to them under the agreement which both countries signed. Unfortunately, the United States had no interest in negotiating at all and simply declared that their laws make it illegal for other countries to take bets from Americans and there was nothing to talk about. Consequently, Antigua submitted their dispute to a three judge panel at the WTO to resolve the dispute, and the United States submitted their side. Briefly, Antigua argued that they built a model since the late 1990s to offer remote gambling and banking services to all countries by way of the internet and telephone, but primarily internet to help build the Antiguan economy. They argued that the United States' attempts to bar its citizens from accessing the gambling services in Antigua was contrary to the GATS agreement which both countries signed declaring that all services, including gambling, were open to free trade.

The United States suggested that when the GATS agreement was signed, they assumed that gambling was not included. They claimed internet gambling went against the morals of the United States and made the usual arguments that online remote gambling was a concern as it allowed easy access to minors, organized crime and money laundering and because people were able to bet 24 hours a day it could lead to health risks and compulsive behavior. Antigua pointed out that they had in fact dealt with all of these American concerns and had undertaken various measures to ensure that money laundering, betting by minors and compulsive gambling had been addressed. They also showed the incredible hypocrisy of the United States since the U.S. have all the same issues in their own land based casinos and almost every casino is open 24 hours a day. The panel considered the arguments and determined that the United States was wrong to restrict access to their markets and that gambling services were indeed covered under GATS. The panel then demanded the United States open its markets to the Antiguan operations.

The United States delayed any action and then appealed to a WTO appellate board in January 2005, reinstating its "morals" defense. The appellate body reaffirmed the previous ruling of the WTO, but gave the United States a way out. Essentially they stated that the United States could use this morals defense provided they treat domestic remote gambling the same way they do foreign remote gambling. In better words, if the United States made it illegal for Americans to bet on the internet or telephone on all domestic gambling services they could demand the same thing with regards to foreign gambling operations. That meant that the government essentially had to override the Interstate Horseracing Act and force Americans to bet on horses at the track itself. So all simulcast and offtrack wagering would have to be made illegal. Furthermore, any plans to allow remote wagering on domestic casinos and lotteries would have to be abandoned. Both countries declared victory which had many observers scratching their heads. After all, it was clear the United States had absolutely no intention of denying horsemen previous rights in regards to off track betting, and it was obvious the government would try to obfuscate the issue. The appellate board gave the U.S. government until April 2006 to either stop all domestic remote betting or open up its market to Antigua. The deadline passed, and the U.S. did nothing. In October they shoved through the Unlawful Internet Gambling Enforcement Act (UIEGA) and then made an announcement that they had complied with the appellate board's decision and had been in compliance all along.

That brings us to the current situation. In the near future the appellate board will make a ruling on whether the U.S. has indeed complied with its demands. It's hard to fathom any way that the appellate board could rule the U.S. is in compliance. Without doubt, the United States will argue the exemption given to horseracing in the UIEGA precludes it from having to abide by the requirements of the appellate board with regards to remote domestic gambling on horseracing. But the UIEGA is clearly irrelevant to the board's decision. The appellate board made it clear that you can't have two sets of laws - one for domestic services and one for the exact same foreign service and then argue that the foreign service isn't legal because it's immoral. Furthermore, the passing of the UIEGA may be seen by the WTO as a poke at the organization. Thus it is almost certain that the WTO will rule that the United States has not complied with its decision, and the U.S. will then be allowed one last appeal which would be decided on by late spring. At that point, considering the United States has still not adhered to the findings of the appellate body and the WTO finds it is still not in compliance, Antigua will have to determine how to proceed from there, including sanctions and other avenues given to it by WTO treaties. George Bush has indicated that he would like to start abiding by WTO decisions, but that is left to be seen.

While this case is clearly about the ability of a small country to affirm its free rights and build its own industry, there is actually a much larger issue at stake. When the case was brought forward by Antigua to the WTO, Canada, the European Communities, Japan, Mexico and Chinese Taipei reserved their rights to participate in the panel proceedings as third parties. The reason is clear. All those countries at some point or another have used the WTO to help resolve trade disputes or at least plan to use the WTO dispute mechanism, and this case is essential in determining how effective the WTO really is. The WTO was formed with the help of the United States to ensure that all countries are treated fairly in the trading of services. All governments wanted to ensure that a policy of "might makes right" was never used to force demands by larger countries on smaller ones and that all countries, regardless of size, operated on a level playing field. Now that the United States is the country that clearly is the aggressor against the tiny island of Antigua with a population of only 68,000 people, it is to be determined if the Americans are prepared to abandon the institutions and organizations it helped build by introducing its position as the last world superpower.

Is the United States determined to exercise its power to secure special favours from the WTO and other organizations, which clearly is contrary to the reasons the organizations were set up in the first place? This is not the first time the Americans have dragged their feet with regard to trade disagreements. In a trade disagreement with Canada over softwood lumber, for example, the Americans continued to deny numerous findings against them by the WTO which ordered that the Americans give back duties that the country put on lumber entering the United States from Canada. That issue was resolved this year, but only after the United States was given concessions. Whether the U.S. was right or wrong in that case, or indeed in this case, is not relevant. The WTO was set up as an arbitrary means to settle disputes and all countries in the WTO, including the United States, agreed to abide by the dispute settlement process outlined. How can anyone possibly deal with a country that insists that other jurisdictions immediately abide by decisions when it benefits them, but delays and makes every attempt to transcend the findings when the rulings go against them?

The WTO dispute resolution mechanism is not, and never was, intended to be a one way street. Furthermore, this argument that the United States did not realize that gambling was included in the GATS when they signed it is not relevant. Ignorance of the law is not an excuse, and clearly a country which seems to have more lawyers per square foot than trees could have read the agreement and brought up any objections before they signed on the dotted line. If they are allowed to get away with this, then who will they bully next into giving up their rightful claims under the WTO?

The gambling industry is crucial to Antigua who built a model around it, and the goverment of Antigua seems determined to carry out what they believe are their rights as an independent country. This is not just about an industry, this is about the lives of thousands of people, and also about principal. The jobs from sportsbooks and casinos pay well and provide a good living to Antiguan citizens. If the Antiguan government gives in now it could set a dangerous precedent, which would essentially uncover the WTO dispute mechanism as a sham. At some point the United States must realize it is not the center of the universe and they can't dictate to other countries how to operate. Both the U.S. government and the Antiguan government signed an agreement, and both should stick to it. Rather than dilly dallying in an effort to get their way, Uncle Sam should simply abide by the decision. So in the near future we should either find out that the U.S. has closed up every single off track betting parlor and all remote domestic gambling operations or have admitted this isn't feasible and instead opened the Antiguan gambling industry to America. It's unlikely the U.S. will do either, but if they truly believe in the democratic process they should.

01-24-07
Hartley Henderson
MajorWager.com
henderson@majorwager.com



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