Tuesday, January 30, 2007

Internet gambling has been on a roller coaster ride since the Unlawful
Internet Gambling Enforcement Act was passed back in October. The Neteller
arrests last week and the following pull outs of all major third party
billing companies has seriously damaged the $12b a year industry. The roller
coaster ride got another twist as a result of the report that follows. The
United States has suffered a new setback in a four-year-old legal battle
with Antigua and Barbuda over U.S. restrictions on Internet gambling, a U.S.
trade official said on Thursday. At issue is an April 2005 World Trade
Organisation ruling against U.S. prohibitions on online horse race betting.
Since then, the U.S. Congress has passed additional legislation to ban
betting over the Internet. Gretchen Hamel, a spokesman for the U.S. Trade
Representative's office, confirmed press reports that a WTO panel "did not
agree with the United States that we had taken the necessary steps to
comply" with that ruling. At the same time, Hamel downplayed the decision
contained in a preliminary, confidential report to the two parties. "The
panel's findings issued today involve a narrow issue of federal law" and the
United States will have opportunity to submit comments to the WTO before it
issues its final, public report in March, Hamel said. "Nothing in the
panel's interim report undermines the broad, favourable results that the
United States obtained from the WTO in April 2005," she said.
The issue is a touchy one for the Bush administration, which supports free
trade but whose conservative allies in Congress pushed through a bill late
last year to ban most forms of Internet gambling. Gretchen Hamel, a
spokesman for the U.S. Trade Representative's office, confirmed press
reports that a WTO panel "did not agree with the United States that we had
taken the necessary steps to comply" with that ruling. At the same time,
Hamel downplayed the decision contained in a preliminary, confidential
report to the two parties. "The panel's findings issued today involve a
narrow issue of federal law" and the United States will have opportunity to
submit comments to the WTO before it issues its final, public report in
March, Hamel said. "Nothing in the panel's interim report undermines the
broad, favourable results that the United States obtained from the WTO in
April 2005," she said.

The issue is a touchy one for the Bush administration, which supports free
trade but whose conservative allies in Congress pushed through a bill late
last year to ban most forms of Internet gambling.

Antigua and Barbuda, with few natural resources, has sought to build up an
Internet gambling industry to provide jobs to replace those in its declining
tourist industry.

It argued in a case first brought to the WTO in 2003 that U.S. laws barring
the placing of bets across states lines by electronic means violated WTO
rules.

An April 2005 ruling by the WTO's Appellate Body, which both sides claimed
as vindication, focussed on the narrower issue of horse racing, saying that
foreign betting operators appeared to suffer discrimination.

Antigua and Barbuda complained the United States had not complied with the
decision and the WTO agreed in July 2006 to look into the matter, resulting
in the ruling on Thursday.

The United States will decide after the final panel decision ruling in March
whether to appeal.

The Bush administration may not have to ask Congress to pass new legislation
in any case, Hamel said.

"The panel report clarifies that compliance does not necessarily require new
legislation, but could instead involve other steps, such as administrative
or judicial action," she said.