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September 14, 2007
Rumblings from the WTO over the 'Net Gambling Ban
The ban on Internet gambling that passed last year could create a heap of trouble between the U.S. and the World Trade Organization.
Antigua and Barbados are pressing their WTO complaint that the ban violated the treaty because it effectively favors U.S. gambling interests over non-U.S. companies that house gaming servers in their countries. And the U.S. Trade Representative is not finding it as easy as he thought to simply state that Internet gambling is not covered by the treaty.
Turns out it just might be part of entertainment services covered by the treaty. And twice, in 2004 and 2005, the WTO ruled against previous U.S. attempts to curtail online gambling by preventing U.S.-based banks from processing transactions with gambling sites.
Although it does not seem likely the ban will be overturned anytime soon, another WTO ruling unfavorable to the U.S. could mean a fine between of up to $10 billion, according to Mark Mendel, attorney for Antigua in the WTO proceeding. And although a trade dispute over Internet gambling may seem trivial, international trade officials are watching the dispute closely and treating it seriously.
Got a whole lot of money that’s ready to burn
So get those stakes up higher!
Now the U.S. can ignore any ruling, but for a country that requires on WTO legitimacy on its own trade disputes, such resistance could be economically costly if not downright tow-faced. It could also provide leverage for other, more repressive countries, who seek to exploit the economic potential of 21st century information networking, yet clamp down on Internet use inside their borders.
“As the trade organization’s first to deal with the Internet,” wrote a New York Times story on the case last month, “[it] is likely to serve as a major precedent in establishing rules of commerce in an online age and dealing with such prickly issues as China’s attempts to block online content it finds offensive.”
What’s worse, Antigua and Barbados are threatening to retaliate by refusing to honor licensing and copyrights on U.S.-produced music, movies and videos.
If the WTO makes its three times running against the U.S., other than lifting the ban, the only alternative the government would have would be to ban all Internet gambling, which includes horse racing, state lotteries and other state-sanctioned games of chance—revenues many states now rely on and won’t want to close off.
Or maybe it’s time to end the hypocrisy. Sometimes the law provides great clarity. Since the WTO deals on the national level, it fails to make distinctions between states and regions. If gambling is legal in Nevada, it’s legal in the U.S.
Congress should see it this way, and stop reaching into people’s homes to police their online recreational choices. In an editorial yesterday, The Las Vegas Review-Journal touched on all the libertarian arguments. But its wrap-up was surprisingly frank, considering even the best of us, when we argue for legalization of so-called vices – drugs, prostitution and, of course, gambling online and off -- resort to the “make-it-legal-so-it-can-be-taxed” argument.
"Of course, one of the arguments for lifting the ban will always be the hope that the federal government can slap on additional taxes.
"But how would such taxes be enforced, without rigorous snooping on all private Internet commerce -- whether gambling-related or not?
"The more basic question is how we arrived at a default setting where everything has to be either taxed and regulated, or else banned outright. What ever happened to freedom?
"Why should anyone have to pay Congress a share of the take -- like the victims of some protection racket allowing the local mob boss to 'wet his beak' -- for the privilege of merely being let alone? Why can't Congress simply keep its mitts off the Internet and let Americans choose whether and how to risk their own money in games of chance?"
Posted by steve.titch at September 14, 2007 06:59 PM
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