TELECOM Digest OnLine - Sorted: US Intends to Keep Internet Gambling Ban

US Intends to Keep Internet Gambling Ban

Doug Palmer, Reuters (
Fri, 04 May 2007 16:42:20 -0500

USTR By Doug Palmer

The United States will maintain a ban on Internet gambling services
despite an adverse World Trade Organization ruling, the U.S. Trade
Representative's office said on Friday.

The move opens the door for other WTO members -- ranging from tiny
Antigua and Barbuda to the 27-nation European Union -- to seek
potential damages at the WTO.

However, Deputy U.S. Trade Representative John Veroneau told reporters
the United States did not believe there was any basis for other
countries to receive compensation.

Veroneau argued that a case brought by Antigua and Barbuda several
years ago took advantage of a drafting error made by the United States
as part of its commitments in the early 1990s to open its recreational
services market.

Even though U.S. law has banned interstate gambling for years, the
United States failed to make clear its commitments "did not extend to
gambling," Veroneau said.

"Neither the United States nor other WTO members noticed this
oversight in the drafting of U.S. commitments until Antigua and
Barbuda initiated a WTO case ten years later," Veroneau said.

The Caribbean islands, which have built up a $130 million online
gambling industry to make up for declining tourism revenues, argued
that the U.S. measures hurt them while leaving some U.S. domestic
operators alone.

The United States has argued at every step of the case it never
intended to open its gambling market. Last year, the U.S. Congress
passed additional legislation to ban online gambling.


The new law makes it illegal for banks and credit card companies to
make payments to online gambling sites.

Last month the chairman of U.S. House Financial Services Committee,
Democratic Rep. Barney Frank (news, bio, voting record) of
Massachusetts, introduced legislation that would lift the online
gambling ban. But he conceded there is not enough support currently to
pass the bill.

In March, the WTO said the United States had failed to comply with an
April 2005 ruling against a portion of its ban having to do with
online gambling on horse racing.

Having exhausted other options to fight the case, the United States
will exercise a rarely used right under WTO rules to modify its
services commitments and explicitly exclude gambling, Veroneau said.

Other countries will have 45 days to file a claim for compensation if
they believe they are damaged economically by the U.S. move.

That would lead to 3-month period for the WTO to decide on
compensation, in the form of reduced U.S. market access in some
services sector of the WTO member seeking damages, USTR officials

The United States believes there is little, if any, basis for other
countries to seek compensation because countries did not bargain for
access to the U.S. gambling market as part of world trade talks in the
early 1990s, Veroneau said.

Also, the long-standing U.S. ban on interstate gambling makes it
"nonsensical" for countries to believe the United States was opening
that market, even though it did not explicitly say that it was not,
Veroneau said.

(additional reporting by Peter Kaplan)

Copyright 2007 Reuters Limited.

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