||U.S. cannot block Internet gambling
Deseret Morning News
WASHINGTON — The
World Trade Organization ruled Thursday that the United States cannot
block other countries from offering Internet gambling to U.S. residents,
even if they live in states like Utah and Hawaii where gambling is
terms of an international trade agreement, Utah could now find itself
legally defenseless to stop Internet gaming within its borders.
Deseret Morning News
"This WTO ruling opens a box of Pandoras, but it is not that
surprising given the scope of the WTO's invasion into domestic spheres of
policy making," said Lori Wallach, director of Public Citizens Global
At issue is a legal dispute between
the United States and the tiny island nation of Antigua, which replaced
its sugar and banana economy with Internet gambling targeted primarily at
When the United States cracked down and
Antigua casinos began fleeing to other nations with even fewer
restrictions, Antigua went to the WTO claiming the Americans were in
violation of a trade agreement where the United States had in 1993 signed
off on cross-border supply of gambling and betting services.
And Utah's prohibition against gambling was a central part
of Antigua's argument.
A WTO dispute panel ruled
last November that the Antiguans were correct. On Thursday, the WTO's
appellate body rejected the United States' appeal.
"Justice has been served and potential compliance issues facing various
U.S. corporations and the U.S. Department of Justice will now be resolved
in a manner favorable to fair and responsible international commerce,"
said Mark Mendel, lead counsel for Antigua.
WTO ruling is expected to end threats of prosecution from the U.S. Justice
Department, which according to the Antiguans, had intimidated U.S.
companies seeking to do business with offshore gaming companies, Mendel
The WTO decision, in general terms, means
that laws used by particular states to limit or forbid gambling are seen
as a violation of "market access" principles of the WTO's General
Agreement on Trade in Services.
Utah's prohibition amounts to the use of a zero-quota on the supply of
Internet gambling services, and that's a violation of market access," said
Peter Riggs, director of the Forum on Democracy and Trade.
Wallach said the ruling has far-reaching ramifications for
all states by imposing WTO rules on gambling. For example, it would
prohibit states from having exclusive arrangements with Indian tribes for
casinos, and it would eliminate the monopolies many states have on state
lotteries to support education.
If there is a
silver lining to the WTO ruling, and Wallach says it is a fleeting one, it
is that a clerical error by attorneys for Antigua failed to spell out
Utah's law in the legal paperwork. So the WTO refused to rule directly on
the Utah law, even though it left open the possibility that Utah's
prohibition could be wrapped into the larger WTO ruling.
"This is the place where federalism and the WTO go head-on in a
record collision," she said.
The bottom line of
the ruling, Wallach said, is that the United States lost and must now
change its law prohibiting Internet gambling or face trade
That could have implications down the
road should foreign casinos, racetracks or other gaming operations seek to
set up shop in the United States, even in states where gaming is not
The WTO ruled that the United
States is seen as having made a commitment on gambling, Riggs said.
Another part of the GATS agreement indicates the United States also made
commitments to a "commercial presence."
commercial presence category which would allow foreign gambling companies
to argue that they have a right to establish casinos," Riggs said.