Herald Tribune on WTO

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International Herald Tribune U.S. to clarify online gambling ban as WTO members seek compensation for lost revenue

The Associated Press Friday, May 4, 2007

WASHINGTON: The United States will use a World Trade Organization procedure to clarify its ban on online gambling, a government official said Friday, in response to the threat of trading members seeking payment for lost revenue.

Many companies say they were caught off-guard when President Bush signed a measure into law in October, prohibiting U.S. banks and credit card companies from processing payments to online gambling businesses outside the country.

The ban prompted companies, such as Sportingbet PLC and Leisure & Gaming PLC, to sell their U.S. operations. The $12 billion (€8.9 billion) Internet gambling industry is based outside the U.S., mostly in Britain, although half of its customers live in the USA.

A WTO panel opened the door in March to commercial sanctions against the U.S., ruling that the new law unfairly targets offshore casinos. The twin island nation of Antigua and Barbuda in the Caribbean, for example, argues that online gambling had been providing income for hundreds of its citizens.

The Geneva-based global trade referee said Washington could restrict online gambling as long as the restrictions apply equally to U.S. companies offering offshore betting on horse racing.

On Friday, Deputy U.S. Trade Representative John K. Veroneau said federal and state laws have prohibited for-profit interstate gambling operations for decades. "It would be nonsensical for the U.S. to make a commitment to open up interstate gambling for foreign providers."

Veroneau said the WTO process allows the U.S. to clarify its restrictions to "recreational services" offered internationally.

In the early 1990s, when the U.S. was drawing up international commitments to open its market to different services, gambling prohibitions weren't spelled out, he said. A clarification undercuts WTO member claims for compensation in lost revenue as a result of the ban, he added.

In a statement, Antigua and Barbuda urged the U.S. to reconsider its stance and indicated it would pursue "full compensation for our citizens."

Sallie James, a trade policy analyst with the Washington-based Cato Institute think tank, said the U.S. "is in the wrong and it knows it, but it does not want to open up markets on gambling and betting services so it wants to change the law it has to abide by."

Rep. Barney Frank, D-Mass, last month introduced a bill that would reverse the ban on Internet gambling. The bill faces long odds in Congress and likely opposition from the Bush administration.

A message left with the WTO was not returned.