Online gambling case pits Antigua against U.S. and challenges WTO

[james01]

Very interesting article from the International Herald Tribune:

But not complying with the decision presents big problems of its own for Washington. That is because Mendel, who is claiming $3.4 billion in damages on behalf of Antigua, has asked the trade organization to grant a rare form of compensation if the U.S. government refuses to accept the ruling: permission for Antiguans to legally violate intellectual property laws by allowing them to distribute copies of U.S. music, movie and software products, among others.

Here is the full article:

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[jetset]

Update

ANTIGUA WTO CLAIM TO ESCALATE?

USA could be faced with a $7 billion bill if WTO takes action

The Caribbean island nation of Antigua and Barbuda, which came out top in a David and Goliath World Trade Organisation tussle with the United States over online gambling (see previous InfoPowa reports) could be about to raise the stakes in its claim for compensation.

In a report in the Antigua Sun newspaper this week a figure of up to $7 billion is mentioned, as the nation's legal representative Mark Mendel warns the U.S. to expect billions more in sanctions as the country prepares to file its claim.

In June, Antigua and Barbuda initiated an effort to impose trade sanctions valued at US$3.4 billion annually on the United States, filing a claim for concessions primarily through the suspension of Antiguas copyrights, trademarks, industrial designs and patents obligations to the U.S.

The US$3.4 billion is just what were entitled to by virtue of them not having complied with the decision, Mendel said, explaining that Antigua has not yet filed a claim to address the GATS withdrawal issue. We havent even told them what that claim will be yet. The only thing I told them is itll be at least as big as our other claim."

The newspaper reports that in addition, the European Union has filed a $15 billion claim against the U.S. for its withdrawal from its GATS commitments. Earlier this year there were also indications from Japan, Brazil and China that claims may be laid.

Mendel told the Antigua Sun that he met with representatives from the office of the U.S. Trade Representative (USTR), at their request, at the beginning of August. He said that the meeting, however, made no progress.

Weve asked them to give us some proposals as to how they could solve things with us and they have yet to really give us any firm proposals, so it was a very inconclusive meeting," Mendel revealed. " I think the reason that they alled the meeting was just so that they could say that they did so.

That meeting was with the branch of the USTR dealing with the GATS commitment. A separate group from the USTR is handling the dispute resolution aspect of the conflict between the two countries. Mendel says that he is still looking to that group to address how the case can be settled.

This Friday (end August), Antigua and Barbudas representatives go back to the WTO to present a justification of the $3.4 billion sanction it officially sought to claim last month.

Mendel has maintained from the start that the $3.4 billion in sanctions are justifiable. As he explained it, the sanctions were calculated by an internationally recognised firm of economists and were based on calculations that took into account the size and value of the global internet gaming market as well as Antigua and Barbudas market share.

He assured the Antigua Sun that the amount in sanctions was completely defensible.

Its a massive number but, after talking to the economists and going through everything, it is a very realistic number, he said. He acknowledged that the figure is several times Antigua and Barbudas GDP, but pointed to the massive wealth created for Antigua and Barbuda and its online gambling companies by the industry, wealth which Mendel said has been almost destroyed by the actions of the U.S.

I think were still in the drivers seat and I feel optimistic about it. Its tough and were the smallest guys in the world taking on the biggest but I think were doing well, he said.

 

[dhayman]

It will certainly be interesting to see how this plays out. My initial gutt says that the Bush Administration will ignore this as usual, and play the hand that the WTO needs the US more than the US needs it. But, the following recent events may make this interesting nonetheless:

o EU jumping on the bandwagon. Antigua and Barbuda by itself, may have
not put enough scare into this thing;

o Tony Blair stepping down. Will his successor be as patronizing to Bush ?
Doubtful....

o Alberto Gonzalez resigning. The DOJ is now scrambling, and surely the
implementation enforcement of UIGEA cannot be on their immediate
agenda radar;

o US clamoring to the WTO about China's improper practices. Is this not
calling the WTO kettle black ?

o IMEGA timing is impeccable. Could they win getting an injunction on
UIGEA ?

Like I said, it will be interesting how this plays out over the next month or so.

 

[jetset]

Update

WTO LATEST (Update)

US considering international claims arising from its intention to withdraw online gambling treaty obligations

The World Trade Organisation argument over online gambling between the United States and Antigua and Barbuda....and by extension now the European Union, Australia, Brazil, Canada, Costa Rica, India, Macao and Japan...continues to develop, according to an article in the Antigua Sun this week.

The article reports that the US is unlikely to back down from its position on online gambling, despite facing billions of dollars in claims. Instead, it is maintaining that withdrawal from World Trade Organisation (WTO) trade obligations to grant market access to Internet gambling companies is the best way to resolve the ongoing dispute with Antigua and Barbuda.

The Antigua Sun interviewed an official in the office of the US Trade Representative, who curiously insisted on remaining anonymous, but said: We are trying to clarify, by using Article 21 of the GATS agreement (General Agreement on Trade in Services) that our obligations should not extend to gambling."

For the USA, the downside of this strategy (see previous InfoPowa reports) is that the US must reach settlements with all WTO member states which file compensation claims as a consequence of the unprecedented withdrawal of obligations. Thus far, it is understood that the USTR is considering compensatory claims from the European Union, Australia, Brazil, Canada, Costa Rica, India, Macao and Japan. The official denied sight of a $15.5 billion claim allegedly submitted by the EU, and said that publicly discussing amounts under discussion would not help a negotiating process.

We are actively working to negotiate, under Article 21, with all of the WTO members which made claims, and there are eight of them," he said. "We believe we can reach an expeditious solution using this procedure.

Weve been quite pleased, to date, that the members who have made claims seem to be approaching this issue with a sense of seriousness and realism and that they generally seem determined to reach a solution, the trade official told the Caribbean newspaper.

The US trade official emphasised that the WTO requires the parties to keep the details of their talks confidential in order to promote negotiated settlements, but said that the claimant nations are not submitting total values to their claims at this point.

He added that all eight countries have argued that they have, in one way or another, an interest in gambling in the US. Those interests can take various forms and, in fact, they vary quite drastically across these eight members, so their claims obviously reflect the differences in the nature of the way they believe they would be affected by our proposal to clarify that gambling is not included in our obligations, he said.

The deadline for the conclusion of the Article 21 process is 22 September but extensions are understood to be possible. The US withdrawal of of its GATS commitment is being treated as a separate, though connected issue, to the trade claim being pursued by Antigua and Barbuda at the WTO.

Last Friday, Antigua and Barbuda presented a written submission to justify its US$3.4 billion per year claim against the US (see previous InfoPowa report). As Antigua and Barbudas attorney at the WTO Mark Mendel explained it, the methodology paper was a description of how Antigua and Barbuda came up with its damages. The US response to the submission, he said, is due on 19 September and then Antigua and Barbuda will get a chance to respond to the US position on 4 October.

The decision is made by the same panel that we were before last time, which was very sympathetic to us and it will rule on this issue before the end of November, Mendel said.

The USTR official declined to comment on Antigua and Barbudas submission, pointing out that there has been insufficient time to study it carefully, but the US continues to hold the position that the damages being claimed appear disproportionate. Our view is that the figure seems excessive, but were going to have to study the economic methodology thats been put forward and were going to have to have our own economists look at it and we will have a response to it, he said.

 

[SlotsWizard]

the US is unlikely to back down from its position on online gambling, despite facing billions of dollars in claims

That doesn't sound very promising to us neglected US citizens.

I'd like to know how the WTO complainants can come up with a finite figure to settle? Surely if the US continued to "allow" its citizens to play online indefinitely, the total revenue which is now considered lost wouldn't be a fixed amount? I'm curious about how each figure was calculated.

 

[chuchu59]

Maybe the claims are calculated to a certain date only. Hopefully, there will be changes after the elections. The only way forward must be regulation of online gaming and for once they should look at what the UK is doing IMO.

 

[james01]

Here is another update from yesterday:

US refusing to budge in online gaming dispute with Antigua

The United States continues to resist compliance with a World Trade Organization ruling regarding the double standards inherent in US online gambling regulations.

The Antigua Sun printed excerpts of an interview with an official from the United States Trade Representative (USTR) office which outlined the basic US strategy for resisting the ruling. We are trying to clarify, by using Article 21 of the GATS agreement (General Agreement on Trade in Services) that our obligations should not extend to gambling, the unnamed official said.

In addition to reaching settlement with Antigua, the US will also have to negotiate settlements with European Union, Australia, Canada, Costa Rica, India, Macao and Japan. Antigua proposed a controversial compensation model a few weeks ago, whereby the country would be allowed to violate US intellectual property laws with a gross cap of $3.4 billion per year. The US has until September 19th to present its response to that claim, and then Antigua will have until October 4th to present their rebuttal.

The US official claimed that negotiations with all members were going smoothly. Weve been quite pleased, to date, that the members who have made claims seem to be approaching this issue with a sense of seriousness and realism and that they generally seem determined to reach a solution; and we continue to believe that this Article 21 process is really the path that is most likely to lead to a resolution of this issue, the trade official told the SUN. Antiguas lawyers disagreed strongly with this assessment, arguing that the US seemed to have called the meeting simply to give the appearance of cooperation.

The final decision on the issue will be issued by the end of November. Mark Mendel, attorney for Antigua, likes his sides chances when the matter comes to hearing. The decision is made by the same panel that we were before last time, which was very sympathetic to us, Mendel told the Sun.

 

[jetset]

Small Nations Wield Large Sticks

SMALL NATIONS CAN WIELD BIG STICKS

Silicon Valley and Hollywood lobbying US government over possible WTO consequences

The World Trade Organisation dispute which the tiny island nation of Antigua has won against the unbalanced posture of the United States on Internet gambling has generated mainstream world press coverage for the pastime like never before, and continues to do so.

This week, a Newsweek report on the David vs. Goliath nature of a struggle that has the United States on the back foot was picked up by several leading mainstream publications, again drawing attention to the consequences for the American government of taking the unprecedented step of withdrawing its WTO treaty obligations agreed in the Uruguay Round.

Titled "The Caribbean Hold 'Em," the Newsweek piece recaps the events leading to today's situation (see previous InfoPowa reports) and opines that the issue has proved that small nations can wield large digital sticks.

The final WTO ruling, which the organisation is expected to begin enforcing next (October) month, could oblige America to overhaul its prohibitive stance on online casinos, not just in relation to Antigua but to a host of othersincluding the EU, Japan and Australia, reports Newsweek.

That would double the size of the $15 billion-a-year online gaming industry almost overnight, it quotes the Safe and Secure Internet Gambling Initiative, a pro-gaming pressure group. And since the WTO might allow nations that have been hurt by U.S. gaming laws to flout American intellectual-property law in response, the dispute is already spreading to Hollywood, Silicon Valley and beyond.

The article quotes now internationally known Antigua legal representative Mark Mendel: "I was laughed at when I first brought the case. They totally underestimated me."

More important, the United States underestimated the remarkable power that even tiny countries wield in today's digitised global economy. Usually, when trade laws are broken, the WTO allows export sanctions to be imposed on the violating nation. But since Antigua hardly has the muscle to bring any meaningful sanctions against the United States, trade experts expect that the WTO will likely take another approach and allow Antigua to flout intellectual-property law.

If America doesn't fold on gaming, opines Newsweek, next year Antiguans could well be selling billions of dollars of legally pirated copies of everything from Microsoft software to Disney movies without paying the copyright owners a penny.

"Intellectual property is the perfect sanction item," says Nao Matsukata, a former senior trade official for the United States. "It gives small countries like Antigua absolute leverage." The WTO has allowed the use of IP as a stick once before, in the famous EU-Ecuador banana squabble (the threat of it was enough to make the EU cut a deal). But experts expect it will become common policy in the future, and see online gaming as a test case for its effectiveness.

It's no surprise that lobbyists from Silicon Valley and Hollywood are now storming Capitol Hill, pushing for a deal. Last month the Motion Picture Association of America urged the U.S. trade representative to negotiate with Antigua in order to prevent bootlegging.

But the Bush administration is staunchly refusing to bend on virtual gaming. The (surprisingly weak) legal line is that America never intended to include gambling under its WTO obligations, which were signed in the mid-1990s.

No dice, says the WTO. "The United States has a legal commitment; they can't just say 'oops' and be done with it. What kind of precedent would that set?" asks one WTO insider, who spoke to Newsweek on condition of anonymity because he did not want to be quoted discussing an ongoing case.

Ultimately, this leaves the United States with a very weak hand to play. It could continue to deny that the WTO has legislation over its internal gambling laws. But that would undermine the overall credibility of the organization by showing it to be unable to enforce its rulingsand America needs a strong WTO to mediate prickly conflicts with, say, China, over things like Internet censorship and the mass manufacturing of fake designer goods.

Eight other WTO members, including the European Union, Australia and Japan, are now lining up to claim compensation from the United States over online gaming.

"The EU is almost licking its chops," Antigua's lawyer Mendel told Newsweek. "In total, this could come to $100 billion in sanctions. "

He added that giant American bricks-and-mortar casinos like Harrah's and MGM are making plans to move into the online sector as soon as the U.S. trade stance becomes clear.

They could get a sign as early as this week. September 22 is the first WTO deadline for America to cut a deal with Antigua and the other nations. But one WTO insider predicts that the only announcement on that day will be that the deadline has been extended.

"This won't happen fast; America is going to dig its heels in," says Sallie James, trade-policy analyst at Washington's Cato Institute.

"But if I had to bet, I would say that by this time next year America will have changed its laws." And in this case, that means all bets will be on.

 

[thelawnet]

Antigua ALREADY violates US copyright - the government when I was there (and probably still now) stole US TV signals via satellite and distributed them and sold them as 'cable TV'.

 

[jetset]

Online horseracing betting under the spotlight

Looks like the horserace industry and the DoJ may be heading for a disagreement on online gambling.....

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[lots0]

As far as I can see that MSNBC article is just more evidence that the US DOJ does not enforce the laws, the DOJ does not care about the laws, the DOJ cares about it's power to do what the man in control wants, no matter what the laws or the Constitution says...

 

[Mousey]

All of which serves to show that all these damnable online gambling laws are poorly written, vague, clarify nothing, amend nothing, which, in the end, lets the Feds prosecute whoever they damn well please because none of these stupid laws have been challenged in court recently.

And I think it's pretty stupid that American laws hold horse racing (betting) as 'sacred' and try to protect and bolster it. It's the same in our state with dog racing. The horse track died long ago (govt. wouldn't allow slots at the track), but a couple of dog tracks are hanging on by the skin of their teeth ONLY due to the fact that they've brought in those bingo or VLT slots. For some reason (which I cannot fathom) dog tracks are 'important' and need to be 'rescued'. But gambling is 'illegal' in Alabama.

If nothing else, I hope the problems with Antigua and the WTO force our lawmakers to clarify and update the antiquated laws the USAO is applying to online gambling.

 

[jetset]

It really is a bugger's muddle over there - absolute clarity is desperately needed.

 

[jetset]

First US WTO compensation offer rejected

The horsetrading over the compensation that the US should pay for withdrawing from it's WTO obligations has begun....and the first offers from the Americans are being rejected, according to this report:

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[jetset]

WTO TROUBLES COULD BRING THE UNITED STATES TO ITS SENSES


Hammering small island nations is one thing....taking on major trading partners like the EU is another

With World Trade Organisation members likely to be submitting compensation claims in the billions to the United States over its stance on Internet gambling, the international mainstream media is now taking serious notice of a dispute which hitherto appeared to involve only the tiny island nation of Antigua and Barbuda.

The plucky Caribbean nation has been fighting a lone battle against its massive neighbour for over three years now, conclusively beating the United States at every stage in its claims that the discriminatory nature of US online gambling law was in contravention of its World Trade Organisation treaty obligations (see previous InfoPowa reports)

But the latest American strategy - to take the unprecedented step of withdrawing its online gambling obligations, is what set the US on a collision course with at least seven other WTO member countires, including the European Union bloc which encompasses most of Europe's leading nations.

EU officials have already indicated that the initial and tentative US compensatory offers are a long way off fair and reasonable compensation for the billions in corporate losses which the US policy on online gambling has caused around the world.

Most leading news magazines and papers are now covering the debacle in depth, analysing possible solutions which could be deployed to let the United States off the hook. Increasingly, the adoption of legislation such as Congressman Frank's Internet Regulation and Enforcement Act (IGREA) is seen as a way out for an increasingly beleaguered America.

IGREA seeks to regulate and license online gambling in the United States and would not only solve the discriminatory problem caused by the USA's ambivalent policies allowing horserace, lotteries and fantasy sports online betting, but could make redundant the Unlawful Internet Gambling Enforcement Act which bans financial transactions with online gambling companies.

The UK newspaper The Guardian commented on the possibility in an article this week, opining that the ban could be overturned as negotiations between Washington and Brussels on compensation have apparently stalled.

The newspaper commented that lawyers for the EU are seeking compensation for the severe losses suffered by the British and European companies banned from operating in their biggest market last year, after the Bush administration signed off on UIGEA.

However the gambling companies, which saw billions wiped off their share prices after the ban, would not receive any cash if US proposals for better trade concessions on warehousing were accepted, and instead Brussels wants Washington to open up other areas of its services industry to European firms, such as insurance or reinsurance.

But such a deal could cost the US billions of dollars and it might therefore opt to allow overseas gambling operators back into its market under licence.

The Guardian was told by an EU trade official: "The UK operators and others who have lost out would get nothing. But the Frank bill would go a long way to meeting our demands."

Experts at a Brussels press conference this week, including Naotaka Matsukata, former director of policy planning for the US trade Representative and Craig Pouncey, Brussels-based trade lawyer with Herbert Smith, said that the US and Europe were heading for a major clash over the dispute.

The US$3.4 billion claim by Antigua and the much larger claim of over US$100 billion by the seven other economies seeking compensation are some of the largest penalties in the history of the WTO, said Matsukata. This is by far the most significant WTO case ever and its implications for both the US and the EU are enormous. Given the size of the US gaming market, both the potential benefit for European industry and the corresponding potential damage to US companies is unprecedented.

The EU, Macau, India and Australia are among the countries seeking compensation over the US actions.

European and US lawyers warned this week that the dispute posed a "systemic risk" to the credibility of the World Trade Organisation after it ruled earlier this year that America acted in an illegal and discriminatory manner by excluding online gaming operators from the tiny Caribbean island of Antigua.

At the same time, the White House allowed domestic operators to offer gambling over the internet and withdrew its entire $100 billion gambling industry from its free trade commitments.

The EU online gaming industry, mainly based in the UK, employs 15 000 but faces a growing challenge from US operators such as Yahoo!, Google and Sands.

Jonathan Cohen, a New York-based public affairs consultant acting for EU operators, said the US legal regime was "wildly inconsistent" as it allowed online fantasy sports leagues, lotteries and racecourse betting but specifically banned other services provided by European firms.

Clive Hawkswood, chief executive of the Remote Gambling Association, said the European industry suffered from outrightly protectionist measures from the US. "It is using unjustified trade barriers to stop EU operators and a proper licensing system would attract many EU operators," he said.

 

[Mousey]

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Thu Sep 27, 2007 2:07pm EDT
By Doug Palmer

WASHINGTON (Reuters) - The United States brushed off suggestions on Thursday that it may have to provide $100 billion in compensation to the European Union and other trading partners because of its restrictions on Internet gambling.

A U.S. trade official, speaking on the condition she not be identified, said she could not reveal how much compensation -- in the form of increased foreign company access to the U.S. market -- trading partners were demanding in the talks.

"We can say that some of the numbers being put forward are based on faulty and exaggerated assumptions," she said.

Lawyers for European online gaming firms -- among the biggest in the world -- said on Wednesday the EU should press for as much as $100 billion in compensation, given the plunge in market value of publicly-traded firms after Congress tightened Internet gambling restrictions last year.

"This is by far the most significant WTO case ever and its implications for both the U.S. and the EU are enormous," Naotaka Matsukata...

*********
(Personally, I think the US has its head up its a$$ and doesn't realize, or just doesn't give a damn about, the great damage they've done to legitimate, publicly traded, businesses. What about all the jobs lost? All the future business cut off like a faucet when those casinos blocked US players? Makes me )

 

[SlotsWizard]

... Makes me )

Got a bucket for me? Let's together.

 

[lots0]

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Europe and the United States are on the brink of a major trade dispute worth billions of pounds over Washington’s decision to renege on international trade commitments and protect its domestic gambling industry by preventing foreign companies from entering the lucrative market.

I think a lot of us saw this coming.

The US Trade Delegation can ignore or blow off the Press, but they are going to have a hard time blowing off the other Trade Delegations.

From what I have been reading the EU and the other Countries that have filed claims are convinced they are in the right and that one way or the other the US should hafta pay up to them.

This all comes down to playing fair... and as far as the online gambling issue goes the US so far has been playing dirty, very dirty, with everyone involved...

And it's looking like the US may hafta pay up.

 

[SlotsWizard]

This all comes down to playing fair... and as far as the online gambling issue goes the US so far has been playing dirty, very dirty, with everyone involved...

And it's looking like the US may hafta pay up.

And unfortunately that's probably the route they're going to take - just buy their way out of their obligations instead of doing the right thing.

For some reason I have been under the impression that this November was election month and that our new democratic president would begin next year. Imagine how thrilled I was to figure out I was wrong. I can't believe our 8-year sentence isn't up yet.

 

[lots0]

that's probably the route they're going to take - just buy their way out of their obligations instead of doing the right thing.

I hope not, but American politics has become so dirty, so corrupt that buying off the opposition has become the norm.

What bothers me the most about these WTO "Negotiations" is the US Trade Delegation that is in involved with these negotiations seems to constantly "give away the farm" as far as US Interests go and almost always side with whoever has the most money to spread around. (In this case the US land based Casinos)

 

[SlotsWizard]

I hope not, but American politics has become so dirty, so corrupt that buying off the opposition has become the norm.

What bothers me the most about these WTO "Negotiations" is the US Trade Delegation that is in involved with these negotiations seems to constantly "give away the farm" as far as US Interests go and almost always side with whoever has the most money to spread around. (In this case the US land based Casinos)

Things might be looking up...

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[jetset]

WTO ONLINE GAMBLING DEBACLE TO BE DISCUSSED IN EUROPE

CENTRE FOR NEW EUROPE TO DEBATE WTO ISSUE

Brussels free trade think-tank to consider implications of US withdrawal of treaty obligations

The groundbreaking World Trade Organisation Internet gambling case that is threatening a major trade clash between the United States and the European Union will be the subject of a forum this week sponsored by the Centre for the New Europe, a leading Brussels-based public policy think tank with a special interest in free markets and open trade.

According to analysts, the US could be liable for up to $100 billion in trade concessions to European industries because of illegal trade restrictions placed by the US against European and other international gaming operators. The amount of the dispute is the largest in the history of the WTO.

Those speaking at the forum will be:

* Stephen Pollard, the President of the Centre for the New Europe;

* Nao Matsukata, former director of policy at the office of the United States Trade Representative under the Bush Administration;

* Lode Van Den Hende, trade specialist at Herbert Smith who represents European gaming interests;

* Dr. Sallie James, trade policy specialist at the Cato Institute, a major think tank in Washington, D.C.

The possible trade concessions are the result of Antigua's victory earlier this year at the WTO, which ruled that the US violated its treaty obligations by excluding online Antiguan gaming operators while allowing domestic operators to offer various forms of online gaming. Instead of complying with the ruling, the Bush Administration withdrew the gambling industry from its free trade treaty commitments.

As a result of the Bush Administration withdrawal - the first time a WTO member nation has withdrawn any of its WTO commitments - all 151 WTO members are allowed to seek compensation for the withdrawal equal to the size of the entire US land-based and online gaming market, estimated at nearly $100 billion. The EU, along with India and five other countries, has filed notice that it intends to seek compensation.

"This is by far the most significant WTO case ever and its implications for both the US and the EU are enormous," said Nao Matsukata, a former Bush Administration trade official. "This is also a watershed moment for the WTO because a major world power is thumbing its nose at the institution and disregarding its obligations," he added.

Already, several publicly listed online European gaming operators, such as PartyGaming and 888 Holdings, have lost billions of dollars in revenues and market value because of the US laws excluding overseas operators. Meanwhile, US giants such as Yahoo! and the Las Vegas-based Sands Corporation are beginning to market online gaming services in Europe.

The size of the dispute is astounding, experts say. The potential trade concessions are roughly twenty times larger than what had been the biggest previous WTO case, a $4.3 billion tax issue between Europe and the US that was resolved by the US adjusting its tax code. Most WTO claims involve far lower sums, such as Ecuador's $191 million claim against Europe over banana tariffs.

The EU has developed the world's leading Internet gaming businesses and is considered to have a strong lead over the US in this sector, with operations in the UK, Gibraltar, Malta, Austria, Bulgaria, Ireland, Estonia, and Sweden, employing an estimated 15 000 workers.

Unless the matter is settled, the size and nature of the trade concessions will be determined by WTO arbitration.

"One major question is how strong the EU will be in pushing the US for all of the concessions available to it," said Craig Pouncey, a Brussels-based trade lawyer with Herbert Smith.

The size of the entire US gambling market - which includes both online and traditional "bricks and mortar" casino operators - is in play because the US withdrawal applies to all of its gaming commitments globally. Some forms of online gambling (fantasy sports, state lotteries, horse betting) in the US are legally exempted from anti-online gambling legislation. 48 out of the 50 US states allow some form of gambling, while the industry employs more than 350 000 people and generates billions of dollars of tax revenues.

The online gaming dispute also has broader implications for Internet Commerce. It is the first WTO case supporting a small country's right and ability to create a globally important business sector on the Internet, as Antigua claims it was doing with online gaming.

The WTO will most likely deal with other Internet cases soon, as US search giant Google has suggested it will press a claim against China for violating the WTO by barring Chinese users from certain Internet sites using the Google search function.

 

[jetset]

Update

U.S. ONLINE GAMBLING STANCE CRITICISED IN TRADE FORUM (Update)

American foreign relations and trade credibility at stake

Expert panelists at a trade forum this week leveled harsh criticism at the US, focusing on a trade clash between the US and Europe over Internet gaming. The panel believes that the US could be liable for up to $US 100 billion in trade concessions to international industries as the issue heads toward a World Trade Organisation arbitration.

The disputed concessions arise from the Caribbean nation of Antigua's victory earlier this year when the WTO ruled that the US violated its treaty obligations by excluding online Antiguan gaming operators, while allowing domestic operators to offer various forms of online gaming (see previous InfoPowa reports).

Having failed in various stratagems to derail the Antiguan case or appeal against the findings, the US Trade Representative took the unprecedented step of withdrawing US obligations on gambling from its decade old free trade obligations. Consequently, interested fellow members in the 151 nation WTO community have the right to press for compensation for the withdrawal equal to the size of the entire US land-based and online gaming market, estimated at nearly US$100 billion.

The European Union, along with India and five other countries, has thus far filed notice that it intends to seek compensation.

"The US decision is a major threat to a rules-based international trading system," said Nao Matsukata, former director of policy planning for the Office of the US Trade Representative, speaking at the Brussels forum this week sponsored by the Centre for the New Europe, an important public policy think tank with a special interest in free markets and open trade.

"If more countries follow the US lead and do the same thing, the entire WTO system could implode and that would be extremely dangerous for US economic interests and for free trade generally.

"Part of what makes the US such a formidable opponent in international negotiations is its credibility. That credibility is now at stake for the US government not just in the trade area but in foreign relations generally."

Lode Van Den Hende, a trade lawyer at Herbert Smith in Brussels, criticised the US for prosecuting foreign online gaming companies while letting domestic online gaming interests operate with impunity.

"This is absolute discrimination against foreign operators that the WTO has found to be illegal," he said.

"It is exactly the kind of practice that the WTO was set up to eliminate, and now the US is violating this very basic principle that it fought hard to put in place at the inception of the organisation."

Others speaking at the forum included Stephen Pollard, the President of the Centre for the New Europe and Dr. Sallie James, trade policy specialist at the Cato Institute, a major think tank in Washington, D.C.

"This is by far the most significant WTO case ever and its implications for both the US and the EU are enormous," said Nao Matsukata, a former Bush Administration trade official. "This is also a watershed moment for the WTO because a major world power is thumbing its nose at the institution and disregarding its obligations," he added.

Already, several publicly listed online European gaming operators, such as PartyGaming and 888 Holdings, have lost billions of dollars in revenues and market value because of the US laws excluding overseas operators. Meanwhile, US giants such as Yahoo! and the Las Vegas-based Sands Corporation are beginning to market online gaming services in Europe.

The size of the dispute is astounding, experts say. The potential trade concessions are roughly twenty times larger than what had previously been the biggest WTO dispute, a $4.3 billion tax issue between Europe and the US that was resolved by the US adjusting its tax code. Most WTO claims involve far lower sums, such as Ecuador's $191 million claim against Europe over banana tariffs.

Thus far the US has questioned the value of the concessions demanded, whilst its own initial proposals have been dismissed. Negotiators have until the end of October when, unless the matter is settled, the size and nature of the trade concessions will be determined by WTO arbitration.

"One major question is how strong the EU will be in pushing the US for all of the concessions available to it," said Craig Pouncey, a Brussels-based trade lawyer with Herbert Smith.

 

[nielsenj]

It looks like the US Gorvernment has made exactly the same mistake as the online casino industry made before the passing of the UIGEA. The online casino industry did not take threats about passing of anti-gambling laws serious and never made any serious lobbing efforts. The industry underestimated the opponent they were up against. In the same way the US Government seems to have underestimated the potential scope on the trade dispute with Antigua and instead of battling Antigua they are now part of the largest trade WTO dispute ever. Hopefully it will get a beating as severe as the one the online casino industry received when the UIGEA was passed.

 

[jetset]

Quality article on the Antigua compensation valuation:

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[jetset]

Update

WORLD TRADE DISPUTE LATEST

Further hearing scheduled in Geneva this week

The bureaucratic process involving fair compensation for WTO nations that have been impacted by the withdrawal of the United States' treaty obligations on gambling rumbles on, with the news that further hearings will take place later this week in Geneva.

Antigua's Minister of Finance Dr. Errol Cort told the Antigua Sun newspaper that he is waiting on the outcome of the first session of a WTO hearing in Geneva which is scheduled for this Thursday before fixing a meeting at the US Trade Representatives office.

At that session, the WTO panel will hear verbal submissions from both the U.S. and Antigua and Barbuda governments and will get the chance to pose questions based on the arguments raised by both sides regarding compensation.

The arbitration panel is expected to enter the phase of deliberations after which it will rule on the matter of compensation for Americas failure to comply with the earlier rulings of the WTOs Dispute Settlement Body.

Cort said that after this meeting, he will be in a better position to address the issue as to exactly what position the country will take when he meets the USTR.

I must say that I wanted to await the outcome, the opening session for the panel that has been set up to hear our further dispute at the WTO on Thursday, Cort said. So, I am still hopeful that we will meet when I get to Washington but I am awaiting initially the first impressions from our representatives in Geneva at the end of the first day of the hearing of the tribunal on Thursday.

On 8 Oct., Cort addressed the U.S. opposition of Antigua and Barbudas claim. In a submission filed with the WTO last month, the United States argued that the US$3.4 billion claim was exhorbitant and wildly out of line with any realistic figure.

In return, the U.S. has proposed $500 000 as more reasonable. Last week in several press interviews, Antigua's legal representative said that the US$ 3.4 billion claim had been arrived at in serious and professional consultation with international economics experts and could be substantiated.

The finance minister has reiterated his position that the government hopes to be able to sit with representatives of the U.S. and examine the issue of compensation for the losses it suffered by way of taxes and employment generation from the thriving online gaming sector.

 

[SlotsWizard]

...the U.S. has proposed $500 000 as more reasonable...

Bunch of cheapskates! What a joke! Maybe as loss of income for 1 week... not for 1+ year(s)!!

In plain and simple English, the US has been caught with its pants down. Time to live up to your obligations, Bushie boy!

 

[jetset]

Compensation decision delayed by US

WTO COMPENSATION DECISION FURTHER DELAYED

December 14 is new deadline

The United States has secured a further delay in making decisions regarding compensation to fellow World Trade Organisation members impacted by its unilateral withdrawal of treaty obligations concerning gambling.

Representatives of Antigua, the European Union and five other nations expected negotiations to wrap up this week, but the Reuters news agency quotes US Trade Representative spokesperson Gretchen Hamel as saying: In order to provide all parties with sufficient time to reach a successful resolution, the United States and the claimants have jointly agreed that these negotiations should be extended until December 14.

Hamel revealed that each negotiation is proceeding at its own pace, and some are quite advanced. "However, we have agreed to extend the negotiation period for all claimants," she said.

Although full details are not yet known on the amount of compensation claimed, there has been media speculation that EU claims could run into billions of dollars following the commercial damage caused to European companies which were obliged to leave the US market in the wake of the Unlawful Internet Gambling Enforcement Act.

Antigua has publicised its demand that the US pay up $3.4 billion in the form of suspended copyright laws, a proposal on which the US has sugggested that around $500 000 would be more appropriate, which the islanders have rejected.

Reuters notes that Hamel suggested that Antigua seems to be the only country that is vigorously pursuing its claim, implying that EU representatives are not as committed. Should agreement on compensation not be achieved, the issue will fall before WTO arbitration. Hamel suggested that there was a strong possibility that the other six nations with claims, including the EU, will settle upon what she termed "a reasonable solution."

 

[Rollo]

Actually, it's going to be bad news if they settle. Once done, the U.S. is going to have still less incentive to change the law in the future. On the other hand, one could also look at it as paving the way for online gaming protectionism of U.S. gaming sites if the U.S. ever develops an online gaming industry down the road... but I think for the moment though it's bad news.

I'm sad to see the U.S. working this out so easily (it seems) with other countries, but one thing I do agree about is I do think Antigua's claim is a bit high. Their figure is 3 or 4 times their entire annual GDP.

Anyway... good luck to Antigua.

 

[silcnlayc]

More Time for US in WTO Online Gambling Compensation Negotiations

More Time for US in WTO Online Gambling Compensation Negotiations

October 25, 2007
Amy Calistri
World Trade Organization trading partners have agreed to give the US until December 14, 2007 to negotiate compensation settlement agreements with countries that have filed damage claims against the US. The claims stem from the US's withdrawal of access to its online gambling market, a retaliatory move it made following Antigua's successful WTO challenge of US online gambling restrictions earlier this year.

The countries that have filed for damages include the European Union, India, Antigua and Barbuda, Japan, Costa Rica, Macao, Canada and Australia. Within the WTO, when a country rescinds a previously ratified trade agreement, countries are allowed to file damages equal to their share of the lost market. The US online gambling market is estimated by some to value $100 billion.

The US had failed to reach settlements with any of the filing countries by the October 22nd deadline. Last month, negotiations with the European Union appeared to have stalled. Antigua is reported to be shunning negotiations, preferring instead to litigate for its $3.4 billion claim. Gretchen Hamel, spokesperson for the US Trade Representative's Office said "Each negotiation is proceeding at its own pace, and some are quite advanced. However, we have agreed to extend the negotiation period for all claimants."

The deadline extension would also allow additional time for the Internet Gambling Regulation and Enforcement Act, introduced by U.S. Representative Barney Frank (D-MA), to gain support in the US Congress.

If passed, the IGREA would effectively create a regulatory framework for internet gambling companies to operate within the US and eliminate the need for WTO trade compensation.

"Additional support for the Frank bill provides encouragement that the U.S. can avoid a major trade clash and paying billions in trade compensation and penalties," said Jeffrey Sandman, spokesperson for the Safe and Secure Internet Gambling Initiative.

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[jetset]

Update

EU COMPANIES WANT MORE U.S. COMPENSATORY ACTION

WTO negotiations may not be going as well as the USTR believes

The World Trade Organisation compensation row between the United States and several nations, notably the European Union, looks set to widen following reports from Reuters news agency this week that EU companies may be impatient with delays in reaching a fair compensation package.

Reports earlier this week that the October 22 deadline for a resolution has been extended to December 14 will have done little to cool things down.

Reuters reports that EU companies, many of them world leaders like PartyGaming, Bwin, Sportingbet and 888.com, saw their stock market value plunge billions in 2006 after the United States passed legislation aimed at shutting down financial transactions with online gambling companies.

In May this year, after being defeated at the World Trade Organisation in a tussle with Antigua, Washington took the rare step of withdrawing its WTO commitment to allow foreign firms into its gambling market, opening itself up to compensation claims from other WTO member nations.

Since then the EU and up to six other countries have been haggling with the U.S. Administration over compensation in the form of concessions in other areas of trade.

Comments by the US trade Representative, Gretchen Hamel recently (see InfoPowa report) suggested that negotiations were progressing, although she brushed aside suggestions that as much as $100 billion might be involved in EU claims.

However, an indication of growing impatience are reports that online gambling firms want European Union trade chief Peter Mandelson to change tack and approach the US Congress on the issue when he visits Washington early next (November) month.

Naotaka Matuskata, senior policy advisor with U.S. law firm Alston & Bird, said Washington was not making meaningful compensation offers and it was time for the EU to turn to the U.S. Congress in an attempt to reverse the online gaming ban.

Matsukata's firm represents UC Group, a British company which processes online payments including for the gaming sector.

"The EU should explore the legislative options available at this moment, largely because the USTR (United States Trade Representative's) office is so dug in," Matsukata, a former USTR official, told Reuters during a visit to Brussels.

Mandelson is due to visit Washington between Nov. 7 and 9. A spokesman said he planned to speak, either by phone or in person, to Barney Frank, chair of the House of Representatives Financial Services Committee. Frank has put forward legislation to roll back the U.S. online gambling financial transactions ban although he has struggled to find substantial support.

"The European Commission continues to strive for the best possible compensation deal for European service providers," Mandelson's spokesman said, declining to comment further.

Matsukata said Mandelson could focus minds in Congress on the potential pain of compensation demanded by the EU and other countries such as Canada and Japan in other areas of U.S. business if the ban is not reversed.

Reuters reports that EU gambling firms have previously urged Brussels to push for $100 billion in compensation, a figure U.S. officials have dismissed as exaggerated.

In 2000, Mandelson's predecessor Pascal Lamy warned the U.S. Congress of retaliatory measures after failing to make headway with the U.S. administration over export tax subsidies ruled illegal by the WTO. The U.S. Administration eventually scrapped those measures known as the Foreign Sales Corporation programme.

 

[jetset]

Update

R.G.A. URGES E.U. TO PERSEVERE ON U.S. CLAIMS

American withdrawal from WTO commitments could be costly

The chief executive of the UK-based Remote Gaming Association, Clive Hawkswood has come out with a strong recommendation to European Union trade commissioner Peter Mandelson to push hard for solid compensation from the United States following its withdrawal of its World Trade Organisation treaty obligations concerning gambling.

The RGA counts most of Britain's major online gambling groups among its members, and it is understood that the EU is negotiating with the US Trade Representative on an EU claim for compensation worth up to $100 billion, along with claims from six other nations. The negotiations have been prolonged until December 14 to give the United States time to consider the claims and make counter offers, or seek final arbitration via the WTO.

Addressing a press conference, Hawkswood said: The EU clearly hasnt accepted the first offer. But it needs to do more. The UK is clearly a big player. We want the UK government to press the EU to hold a strong line.

Hawkswood had earlier led a high level delegation from gaming companies in a discussion on the issue with Mandelson in Brussels to underline the importance of securing a fair deal from the Americans.

 

[jetset]

Update

WTO COMPENSATION CASE LANGUISHING, SAYS ANTIGUA LAWYER (Update)

"I think they are having a difficult time not only with us but with the EC."

Referring to the December 14 delay in making decisions on its World Trade Organisation claim for compensation against the United States (see previous InfoPowa reports) Antigua's lawyer Mark Mendel surmises that this may be caused by difficulties in negotiating a European Union deal.

Speaking to the Antigua Sun on the issue this week, Mendel said compensation negotiations were originally to be completed in September, but were first extended to October, then November 30 and currently into December.

Mendel said the issue was languishing - possibly because the Americans were having difficulties in reaching a deal with the 27 nation European Union which reportedly has demanded compensation worth billions of dollars. "I think its presenting them with more problems than they expected, although why they didnt expect more problems I dont understand, he said.

The European Union, Australia, Canada, Costa Rica, India, Macao and Japan have joined Antigua and Barbuda in filing claims. Mendel said that the process is not an easy one for the US. Thus far, he said, the Americans have been able to conclude a deal with Australia and may have reached an agreement with Japan. The other negotiations remain outstanding.

Really, I think everything is stalled and Im not precisely sure where its going to go, Mendel said. The arbitration ruling on a separate claim by Antigua and Barbuda for US$3.4 billion in compensation for the non-compliance by the US with an earlier WTO ruling is scheduled to be released at the end of this month. Mendel expressed the opinion that that ruling is likely to have a major impact on the negotiations with other nations.

If we get a pretty sizable figure, I think the European Community will be encouraged to take an even stronger line, he said.

Meanwhile in Geneva, the Antiguan Finance Minister Dr. Errol Court kept the pressure on at a WTO trade policy review for the members of the Organisation of Eastern Caribbean States (OECS).

Minister Court told the review meeting that recent actions by the United States undermine the credibility of the body.

During his presentation, Dr. Cort stressed that the United States failure to comply with the WTO rulings and its announcement that it intends to withdraw its commitments in Internet gaming undermines the credibility of the WTO system and may prove what some developing countries have feared; that the system only works to the benefit of the countries that are rich, large or powerful.

He noted that the countrys diversification policy has not been without challenges, since service providers face substantial barriers to trade. As an example of this, he addressed the issue of Internet gaming and the impact the United States restrictions on the cross-border provision of these services has had on the sector.

Antigua and Barbuda has pledged continued commitment to the WTOs multilateral process, despite what Dr. Cort described as the countrys limited financial, human, technical and other resources, all of which exacerbate the challenge of implementing WTO agreements.

Dr. Cort indicated that, notwithstanding the challenges, Antigua and Barbuda believes that trade should be a tool for sustainable growth, development and poverty reduction.

 

[jetset]

Update

EU COMMISSIONER STANDS UP FOR ONLINE GAMBLING

"It's not in the interest of American consumers to have good responsible competitors in this market excluded by regulatory mechanisms..."

The European Union's compensation claim against the United States for its withdrawal of World Trade Organisation obligations on online gambling (see previous InfoPowa reports) took another step forward this week when EU Trade Commissioner Peter Mandelson arrived in Washington to pursue the matter with US leaders.

Mandelson is in Washington as part of an effort to persuade Congress to repeal a ban on Internet gambling signed into law last year, reports Reuters. Comm. Mandelson argued that the ban was unfair to Europe, where much of the world's online gambling operations are centred.

The United States must change an Internet gambling law that discriminates against European companies by preventing them from offering services in the U.S. market, the European Union's top trade official said.

"What we need to see is a change in U.S. legislation that removes that discrimination against EU operators," Mandelson told reporters before heading to Capitol Hill to discuss the issue with U.S. lawmakers, the Reuters news agency reported.

"It's not in the interest of American [online gambling] consumers to have good responsible competitors in this market excluded by regulatory mechanisms," Reuters quotes Mandelson.

In October 2006, in one of his final acts as Senate Majority Leader before his retirement, Bill Frist engineered a set of rules that managed to tack a previously rejected separate bill banning monetary transactions with online gambling operations in the US, onto a sea ports regulation bill containing anti-terrorism measures that the Senate was certain to pass, and President Bush sure to sign.

The SAFE Ports Act doesn't ban the act of gambling online, but prohibits financial transactions with online gambling companies. The ban on those transactions adversely impacted the online gambling industry and caused extensive corporate damage to companies that exited the US market in its wake. Within weeks of the UIGEA being signed into law, trading in stocks of online gambling firms in Europe plunged sharply.

European gambling firms recently asked the EU to pursue claims of up to a reported $100 billion in compensatory sanctions, and Comm. Mandelson indicated he supported their claims, raising them to the level of a trade deficit line-item.

"When a member of the WTO defaults on its commitments, compensation is due," Mandelson remarked. "That's the case of online gambling."

In a speech before the Carnegie Endowment later, Mandelson presented a broader view of EU/US trade relations:

"Close ties between Europe and the United States are still the main foundation of world politics and the global economy," he said. "We have a deep store of shared values, experiences, and interests.

"The EU is beginning to transform itself from an internal market into an outward looking political actor - as [French] President Sarkozy reflected in his speech to Congress this week. The EU and the US cannot dictate every contour of the global age, but that does not mean we will be dictated to either."

 

[jetset]

Update

EU COMMISSIONER CALLS ON BARNEY FRANK

"I think (Frank) takes a fair-minded, common sense approach to this," says Mandelson

The headline-grabbing visit to Washington by European Union Trade Commissioner Peter Mandelson continued keep the online gambling industry in the spotlight this week as the EU emissary visited US legislators and trade representatives and spoke at meetings on "Transatlantic Economic Cooperation."

Mandelson's principal mission is to negotiate fair and adequate compensation for the 27 nation EU following the unilateral withdrawal of WTO trade obligations by the United States (see previous InfoPowa reports) However, he has also taken the opportunity to call for an end to American laws which discriminate against foreign online gambling companies.

Whilst he has hinted that the $100 billion compensation claim called for by EU commercial organisations may be a little ambitious, Mandelson has stressed that he is pressing for substantial redress .

"When a member of the W.T.O. defaults on its commitments, compensation is due," he said in an interview with Reuters. "That's the case of online gambling."

With at least seven other countries seeking compensation, the European Union is probably the largest claimant in the issue and negotiations have twice been extended as efforts to achieve an acceptable settlement continue. If the parties cannot settle the matter between themselves, the E.U. could demand a binding arbitration before a W.T.O. panel.

Mandelson met with Congressman Barney Frank during his visit, discussing the legislator's proposed "Internet Gambling Regulation and Enforcement Act", which seeks to regulate Internet gambling and possibly bring the U.S. into compliance with World Trade Organisation rules by creating a level playing field among domestic and international operators.

"I think [Frank] takes a fair-minded, common sense approach to this and we look forward to that being effective legislation," said Mandelson.

The U.S. Trade Representative Susan Schwab was also on Mandelson's itinerary on the compensation issue.

Trade experts applauded Mandelson's comments during his stay in Washington.

Nao Matsukata, formerly Director of Policy Planning for the US Trade Representative and now a Senior Advisor for Alston and Bird LLP said that the EU initiative signals a new chapter in the resolution of the WTO case.

"His willingness to meet with Chairman Frank suggests that Mandelson is open to finding a legislative solution to the problem," said Matsukata. "The meeting today initiated a mutually supportive effort to resolve the unfortunate decisions of the United States to withdraw from its GATS commitments, and should help create positive momentum for the Frank legislation on Capitol Hill. Next steps should include closer consultations between congressional staff and Mandelson and his staff."

Lode Van Den Hende, a trade expert in Brussels commented on the Frank bill: "The U.S. Congress is seeking to regulate online gambling in a competitive and fairly taxed environment that encourages the participation of responsible companies. It is possible for U.S. legislation to create strong consumer protections, facilitate consumer choice, and provide durable tax revenues for the future.
"Since the U.S. Trade Representative's sole interest seems to be to continue to violate U.S. treaty obligations under the WTO, it is incumbent upon the E.U. to work directly with the U.S. Congress to develop a responsible solution."

 

[jetset]

Update

A NEW PERSPECTIVE ON INTERNET GAMBLING

US politicians have hopefully taken onboard a better view of a popular pastime

Good to their word (see previous InfoPowa reports) Antiguan politicians used a Caribbean business conference this week to provide their US colleagues with a more positive perspective on Internet gambling and the hypocrisy of American laws seeking to disrupt the popular pastime.

Weekend meetings were organised between a team led by the Antigua prime minister Baldwin Spencer and members of the U.S. Congress in the hope that it would help resolve the ongoing World Trade Organisation trade battle between the two nations.

Spencer discussed the dispute with New York Democrat Rep. Charles Rangel, chairman of the House Ways and Means Committee, and three other members of the Congressional Black Caucus on the sidelines of the regional business conference.

Antigua accuses the U.S. of crippling its gaming industry through hypocritical laws such as UIGEA which allow US horseracing, lottery and fantasy sport betting via the Internet, but prohibit financial transactions with online gambling companies.

"We're hoping that coming out of this dialogue here, Charlie Rangel would have a better and greater appreciation of Antigua and Barbuda's position," Spencer said.

The Antiguan government had also planned to invite the US lawmakers on a tour of the Caribbean nation's Financial Services Regulatory Commission and some Internet gaming companies, but it is not known if this took place. Finance Minister Dr. Errol Cort had hoped to demonstrate to the American visitors that Antigua has the will and the capacity to adequately regulate online gaming operations.

Congressman Rangel, who oversees tax legislation as chairman of the Ways and Means Committee, said he worries Washington may have overstepped its authority in the long-running dispute.

"I think my country is wrong in trying to change the rules of the WTO," Rangel told local Caribbean reporters. "Your great nation and ours will have to negotiate those differences in terms of equity and fairness."

 

[jetset]

ONLINE GAMBLING INDUSTRY APPLAUSE FOR EU TRADE COMMISSIONER (Update)

U.S. visit to put the industry's case achieved wide coverage.

European Union Trade Commissioner Peter Mandelson's frank exchanges whilst on a visit to Washington recently on the U.S. and World Trade Organisation dispute over online gambling inequities has been applauded by industry representatives.

During his visit (see previous InfoPowa reports) Mandelson called on the US government to give European operators fair and non-discriminatory access to its multi-billion dollar online gambling market. The issue is still under negotiation with claims worth billions of dollars on the table from several nations, and a deadline for WTO arbitration of December 14.

During his visit Mandelson met with Congressman Barney Frank to discuss the US politician's proposed legislation seeking to regulate and license online gambling in the United States, hopefully opening up the market to reputable companies.

During his visit, Mandelson said: The US has so far opted for compensation to make right what is wrong. I dont think compensation does that job. What we really need is for legislation to be put right and for foreign operators not to be discriminated against in the way that the present legislation does. I will continue to make these arguments on behalf of European industry.

Clive Hawkswood, chief executive of the Remote Gaming Association, a trade association that represents leading and mostly listed British public companies, said: We were very pleased to hear Commissioner Mandelsons public support for non-discriminatory legislation to regulate gambling in the US. It is in the consumer's interest to have a legitimate, well regulated market. We urge the Commission to ensure that adequate legislation is in place before concluding the current compensation negotiations.

Earlier this month, Hawkswood accused the US government of "....blatantly protectionist behavior. U.S. companies are entitled to operate in European markets, while we've been forced out of the United States. Commissioner Mandelson's visit is a good opportunity to address discrimination against responsible European companies. The USTR should be put on notice that the E.U. will not allow the wholesale denial of trade rights protected by the World Trade Organisation."

 

[jetset]

Horse racing - and why American law is a farce

ONLINE U.S. HORSE RACE BETTING SITES CONSOLIDATE

$80 million deal comes to fruition through mobile and Internet access

The horse racing industry continues to bet bigtime on the expanded opportunities offered by the Internet and facilitated by industry carve-outs in American anti-online gambling legislation.

This week, Kentucky's Churchill Downs Inc. group moved to consolidate three online advance-deposit wagering sites that it bought earlier this year into its own service, TwinSpires.com.

The sites - BrisBet.com, TsnBet.com and WinTicket.com - were purchased as part of a $80 million deal in June.

Churchill Downs ADW account holders who previously wagered through the account-wagering sites the company acquired in June 2007 will continue to enjoy many of the same features those sites offered, as well as the AmericaTAB wagering interface that powered BrisBET.com TsnBET.com and Winticket.com. That wagering interface has been updated with a fresh look and feel and the TwinSpires.com brand.

Churchill Downs ADW account holders who wagered through TwinSpires.com prior to the consolidation will now experience a faster and more feature-rich wagering interface, said a company spokesperson. In addition, they now have access to free handicapping information provided by Brisnet and have the option of placing wagers by mobile device.

All BrisBET.com, TsnBET.com and Winticket.com customers can access their wagering account information, including account balances, through TwinSpires.com and will be able to log in to the new TwinSpires.com with their existing account number and personal identification number. Players who already had TwinSpires.com accounts will continue to log in with their existing username and password.

Since acquiring the AmericaTAB and Bloodstock Research Information Services (BRIS) ADW platforms in June, our Kentucky and California teams have been working hard to combine the best features of all of our services into a single, improved home for account wagering, said Vernon Niven, the companys executive vice president of technology initiatives and president of TwinSpires.com.

The new TwinSpires.com integrates the ease of use, familiarity and exceptional customer service that BrisBET.com, TsnBET.com and Winticket.com customers have come to appreciate with updated navigation, rich handicapping information and a modern appearance. By consolidating our ADW sites under the TwinSpires brand, we can now focus our resources more efficiently in product development, marketing and customer service.

TwinSpires.com charges no fees for wagering services and offers free Brisnet past performances as well as Twin Spires Club player rewards. TwinSpires.com customers also enjoy live video streaming and race replays.

TwinSpires.com is the official advance deposit wagering service for Churchill Downs Incorporated and its family of racetracks, as well as for the Kentucky Derby and Kentucky Oaks. TwinSpires is a wholly owned subsidiary of Churchill Downs Incorporated and offers wagering on races from Churchill Downs, Santa Anita, Gulfstream Park, Fair Grounds Race Course, Pimlico Race Course, Lone Star Park, Golden Gate Fields, Laurel Park and other popular racing venues.

 

[sdaddy]

The horse racing industry continues to bet bigtime on the expanded opportunities offered by the Internet and facilitated by industry carve-outs in American anti-online gambling legislation.

They may be taking advantage of these carve-outs now, but I'm waiting for the time when the US is finally forced to pay huge compensation to other countries because of the resulting withdrawal of WTO commitments. Then, when the US public wakes up to this, there could be a big backlash against the domestic horse racing industry for this mess.

 

[jetset]

40 000 reasons to oppose online gambling?

40 000 REASONS TO OPPOSE ONLINE GAMBLING?

Racing industry generous to anti-online gambling politician

One of online gambling's most passionate detractors apparently enjoys almost $40 000 in encouragement and support from an industry that benefits increasingly from his attacks on Internet gambling.

According to an article on Gambling Web this week, quoting from the Internet webcast "Perspectives," the wannabe nemesis of online gambling, Congressman Bob Goodlatte of Virginia, has accepted almost $40 000 in campaign funds from the horse racing industry.

Goodlatte has consistently been an ardent supporter of anti-online gambling legislation that gives inequitable carve-outs for Internet betting through state lotteries, fantasy sports and, yes - horse racing in the United States. And the latter has in particular embraced the opportunity with expanded online betting activities (see recent InfoPowa reports)

Goodlatte has been frequently quoted as supporting the view that online gambling is immoral, somewhat out of balance with his support for the carve outs, which have contributed to the invidious (and potentially expensive) situation that the United Stated currently finds itself in vis-a-vis the World Trade Organisation; facing billions in claims from other nations..

Goodlatte has been vociferous in his efforts to get online gambling banned or hamstrung. Last month, he appeared before the House Judiciary Committee hearing on online gambling assembled by Congressman John Conyers, where he again insisted that the Unlawful Internet Gambling Enforcement Act - which seeks to prohibit financial transactions with online gambling companies - be enforced with criminal prosecutions.

 

[Mousey]

40 000 REASONS TO OPPOSE ONLINE GAMBLING?



According to an article on Gambling Web this week, quoting from the Internet webcast "Perspectives," the wannabe nemesis of online gambling, Congressman Bob Goodlatte of Virginia, has accepted almost $40 000 in campaign funds from the horse racing industry.
...
Goodlatte has been vociferous in his efforts to get online gambling banned or hamstrung. Last month, he appeared before the House Judiciary Committee hearing on online gambling assembled by Congressman John Conyers, where he again insisted that the Unlawful Internet Gambling Enforcement Act - which seeks to prohibit financial transactions with online gambling companies - be enforced with criminal prosecutions.

Just a good ol' boy, looking out for horse racing. Pardon me while I

 

[jetset]

CRUNCH WEEK FOR WTO DISPUTE

Friday deadline for US compensation response

After years of litigation, political manouevring and agreed postponements of previous deadlines, it looks as if Friday this week may see some firm developments in the United States response to its World Trade Organisation dilemma.

Mark Mendel, a private attorney representing Antigua, told Reuters ahead of an expected ruling by the WTO arbitration panel on Friday that he expects to succeed with a claim for compensation that could be worth up to $3.44 billion a year in "cross retaliation" moves as a response to US actions against the Antiguans over online gambling.

In an April 2005 ruling, the WTO found a U.S. law allowing only domestic companies to provide online horse-race gambling services discriminated against foreign companies, reports The Guardian newspaper. The United States has argued Antigua is entitled to only $500 000 in compensation because of that ban.

But Antigua - which built an online gambling industry to replace declining tourist revenues - claims the damage to its economy by protectionist and discriminatory online gambling bans demands significant compensation.

The Caribbean islanders specifically want WTO permission to suspend copyright protections on American movies, music and software so its domestic manufacturers can export those products to the United States and potentially other markets, Mendel said.

"I think we provided plenty of proof to justify our figure ... We feel pretty confident it should be a high number," Mendel said. "I think there's no doubt that we're going to get the ability to cross-retaliate."

Last year, the U.S. Congress tightened restrictions on Internet gambling by making it illegal for banks and credit card companies to make payments to online gambling sites. In addition, the Bush administration announced in May it was retroactively excluding gambling services from market-opening commitments it made as part of the 1994 world trade agreement.

That opened the door for the European Union, Japan, India and other trading partners to seek "compensation" from the United States in the form of increased access to another U.S. service market, such as insurance or air travel.

European Union online gambling companies, angry about being shut out of the lucrative U.S. online gambling market, have urged the EU to seek as much as $100 billion in compensation. Although EU Trade Commissioner Peter Mandelson has played down that suggestion, he has said the United States would have to provide "substantial" compensation to satisfy the EU.

The latest deadline for finishing those talks is Friday - the same day the WTO will rule on Antigua's damages request.

Nao Matsukata, senior policy adviser with U.S. law firm Alston & Bird, said he expected the U.S.-EU compensation talks would drag on past Friday and be influenced by the arbitrator's report.

"The Antigua report could clearly advantage one side or another depending on how it comes out," said Matsukata, whose firm represents UC Group, a British company which process online payments including the gaming sector.

 

[lots0]

As noted in another thread

The WTO decision has been delayed.

The word is the WTO will let everyone know this coming Monday when the decision will be made public.

 

[jetset]

DISAPPOINTING W.T.O. NEWS

Yet another delay in decision on trade dispute

The industry's hopes for positive news from the World Trade Organisation were dashed Friday when Reuters news service reported yet another delay on the trade body's long-awaited decision regarding the amount of retaliation that Antigua and Barbuda can impose on the United States in their Internet gambling trade dispute.

"We understand the report has been delayed," said Gretchen Hamel, a spokeswoman for the U.S. Trade Representative's office, without giving further details.

The delay may have also impacted the claims of other countries, including the EU, for which there was a similar deadline of December 14. In a parallel issue, the negotiations with the United States to come to a compensation agreement also seemed to be in limbo. If those talks don't lead to a consensus, the European Union could, like Antigua, also request that a WTO arbitration panel decide the matter.

Antigua has been in a long-running fight to offer its Internet gambling services in the United States. The case is being closely watched by European online gambling companies, which were pushed out of the U.S. market by new US legislation last year, suffering extensive commercial damage.

In an April 2005 victory for Antigua, the WTO rules that a U.S. law allowing only domestic companies to provide online horse-race gambling, fantasy sports and state lottery services discriminated against foreign firms. The US horse-racing industry, in particular, has taken extensive advantage of its legislative carve-out, introducing Internet betting on the pastime in a big way.

Antigua, which built an online gambling industry to replace declining tourism revenues, has asked permission to impose $3.44 billion a year worth of "cross-retaliation" on the United States. It wants the WTO's authorisation to suspend copyright protections on American movies, music and software so its domestic manufacturers can export those products to the United States and potentially other markets.

The United States representative has countered with the observation that Antigua is entitled to no more than $500 000 in damages in the dispute, something which Antigua's finance minister, Dr. Errol Cort hotly contests, claiming full justification has been provided.

The WTO ruling may not necessarily be too long delayed - Mark Mendel, a private attorney representing Antigua, said Friday he was told the WTO was putting the final touches to the report, which also needs to be translated.

"They'll let us know on Monday precisely what day to expect it," Mendel said on his way to a meeting with House of Representatives Ways and Means Committee Chairman Charles Rangel, a New York Democrat, and other lawmakers to discuss the case.

Last year the US Congress tightened restrictions on Internet gambling by making it illegal for banks and credit card companies to make payments to online gambling sites. In addition, the Bush administration announced in May it was retroactively excluding gambling services from market-opening commitments it made as part of the 1994 world trade agreement.

That opened the door for the European Union, Japan, India and several other other trading partners to seek "compensation" from the United States in the form of increased access to another U.S. service market, such as insurance or air travel.

The deadline for finishing those WTO talks also was on Friday, but it appeared that would be extended as well.

 

[jetset]

This is a very disappointing result for EU gambling companies

US, EU Agree on Compensation Over Online Gambling Ban


GENEVA (AP) - The United States will provide the European Union with new trade concessions in mail services and warehousing as part of a compensation deal over Washington's refusal to lift restrictions on Internet gambling, the European Union said Monday.

The agreement also includes new U.S. market opportunities for European companies offering testing and analysis services, as well as in research and development, Brussels said in a statement.

The postal and courier concessions will affect how Germany's DHL, the express and logistics division of Deutsche Post World Net AG, competes with U.S.-based companies FedEx Corp. and United Parcel Service Inc., EU officials said.

The overall trade valuation of the package is believed to fall far short of the $100 billion European online gambling sites had claimed the United States owed. EU officials could not immediately say how much the deal was worth.

"This compensation cannot be quantified up to the euro," the EU mission to the WTO said in an e-mailed statement. "Nonetheless, it is clear that new trade opportunities are created for EU service suppliers in important sectors in the U.S."

The office of the U.S. Trade Representative in Washington declined immediate comment.

Washington stopped U.S. banks and credit card companies last year from processing payments to online gambling businesses outside the country. The decision closed off the most lucrative region in a growing market currently worth about $15.5 billion. About half of the world's online gamblers are based in the U.S.

In March, the World Trade Organization delivered a final ruling that the U.S. ban was illegal.

The commerce body found that the U.S. had the right to prevent offshore betting as a means of protecting public order and public morals. But it said the U.S. was breaking trade law by targeting online gambling without equal application of the rules to American operators offering remote betting on horse and dog racing.

"While the U.S. is free to decide how to best respond to legitimate public policy concerns relating to Internet gambling, discrimination against EU or other foreign companies should be avoided," said Peter Power, spokesman for EU Trade Commissioner Peter Mandelson.

The WTO is expected to rule in the coming weeks on a request by Antigua and Barbuda to impose $3.4 billion in commercial sanctions against the U.S. for its failure to comply with the ruling. The tiny Caribbean nation, the smallest ever to win a WTO dispute, has threatened to target U.S. patents and trademarks.

After losing the case, Washington sought to fix the problem by rewriting its obligations under the WTO's treaty on trade in services. That allowed Canada, Costa Rica, India, Macau, Japan and the EU to file compensation claims.

EU officials said their deal creates new U.S. market opportunities for European companies seeking to expand investment and trade in the international mail business.

Washington also agreed to ease access to European providers of research and development in the natural sciences, social sciences and humanities, and companies offering technical testing and analysis services. The commitments do not cover programs funded by the U.S. government, according to the EU's Geneva mission.

The U.S. and Canada are also believed to be close to a deal.

 

[Simmo!]

Er Or put another way, the EU has sacrificed the online gambling industry to appease other larger more influential companies in unrelated sectors. Correct? I still don't understand why politics has got itself such a bad name Granted, I'm sure those other markets are deemed of more benefit to more people, but that's more than a tad underhanded IMO. So it looks like the US still wields the power over the EU.

Still, on a positive note, at least it's clear now that they don't give a sh*t about the industry and it will save some people a lot of wasted time I guess. And I'm sure Antigua are well chuffed to know for sure they can't expect any support from the EU.

 

[The Dude]

Er Or put another way, the EU has sacrificed the online gambling industry to appease other larger more influential companies in unrelated sectors. Correct? I still don't understand why politics has got itself such a bad name

Think you hit the nail on the head.

 

[jetset]

That's pretty much what it amounts to - early reports are indicating that the EU officials are unable to put a price on the concessions they have accepted...and they have made some namby pamby statements about the EU continuing to persuade the Americans to liberalise their online gambling.

On the face of it, this stinks and the market is reacting in that light.

I wonder whether the Antiguans will show a little more determination in what they accept - that still seems to be on the table.

 

[jetset]

ONLINE GAMBLING FIRMS DISAPPOINTED IN EU - US DEAL

Concessions accepted in return for the US changing its trade obligations are unlikely to assist online gambling firms

European Union negotiators, probably in one of the strongest positions yet in the World Trade Organisation conflict with the United States, have accepted a disappointingly milk-and-water package that does little to compensate online gambling companies for the damage done by unilateral American trade decisions.

In early reaction to news of the deal, signed in Geneva, The Guardian newspaper described it as "....a savage blow to the EU online gambling industry."

Shares in companies such as Party Gaming and Bwin fell sharply after it emerged that they and their peers had failed to persuade the EU to challenge the US despite an intense lobbying campaign highlighting the contradictions in the American position.

EU spokesmen released a statement which said: "A bilateral agreement was signed in Geneva, which provides EU service suppliers with new trade opportunities in the US postal and courier, research and development, storage and warehouse sectors. The US also made concessions in the testing and analysis services sector."

The Commission said it would still press the United States for "a non-discriminatory policy towards Internet gambling".

The Reuters news agency reports that the case dates to April 2005 when the World Trade Organisation ruled that a US law allowing only domestic companies to provide online horse-race, state lottery and fantasy sports gambling services discriminated against foreign companies.

Last year, the US Congress tightened restrictions on Internet gambling by making it illegal for banks and credit card companies to make payments to online gambling sites.

And in May, Washington announced it was retroactively excluding gambling services from market-opening commitments it made as part of a 1994 world trade deal, kicking off compensation talks with the EU and other countries including Japan and India.

A spokesman for Austrias Bwin online gambling group said the company had not expected the EU-US talks to yield more at this point but was confident the EU Commission would continue to push for a regulated opening of the US Internet gambling market.

"We continue to believe that it is better to regulate than to prohibit, because the reality shows that the prohibition only drives out the transparent, listed operators," he said. "We trust the Commission will continue to push further for this. It certainly is going to be a long way still," he added.

Bwin shut down its US poker site and wrote off 500 million euros ($717 million) of investments last year after the United States effectively outlawed Internet gambling. Other major European gambling companies suffered similarly extensive damage.

Associated Press reported that the postal and courier concessions will affect how Germany's DHL, the express and logistics division of Deutsche Post World Net AG, competes with U.S.-based companies FedEx Corp. and United Parcel Service Inc., EU officials said.

The overall trade valuation of the package is believed to fall far short of the $100 billion European online gambling sites had claimed the United States owed. EU officials could not immediately say how much the deal was worth.

"This compensation cannot be quantified up to the euro," the EU mission to the WTO said in an e-mailed statement. "Nonetheless, it is clear that new trade opportunities are created for EU service suppliers in important sectors in the U.S."

The office of the U.S. Trade Representative in Washington declined immediate comment.

"While the U.S. is free to decide how to best respond to legitimate public policy concerns relating to Internet gambling, discrimination against EU or other foreign companies should be avoided," said Peter Power, spokesman for EU Trade Commissioner Peter Mandelson.

The WTO is expected to rule in the coming weeks on a request by Antigua and Barbuda to impose $3.4 billion in commercial sanctions against the U.S. for its failure to comply with the ruling. The tiny Caribbean nation, the smallest ever to win a WTO dispute, has threatened to target U.S. patents and trademarks.

After losing the case, Washington sought to fix the problem by rewriting its obligations under the WTO's treaty on trade in services. That allowed Canada, Costa Rica, India, Macau, Japan and the EU to file compensation claims.

EU officials said their deal creates new U.S. market opportunities for European companies seeking to expand investment and trade in the international mail business.

The U.S. and Canada are also believed to be close to a deal.

The head of the Remote Gaming Association, which counts many of Europe's major online gambling firms among its membership, said he was disappointed with the deal the EU had accepted.

CEO Clive Hawkswood said his organisation will continue lobbying for a regulated system in the US. He added that though the news was not unexpected he had hoped the negotiations would go on for a while to put some pressure on the US.

Hawkswood hailed the efforts made by EU trade commissioner Peter Mandelson in taking the case to the US. He has done a lot for us, he said. When was the last time we had a senior politician go to the US to press the case for the gambling industry?

Hawkswood said the agreement between the EU and the US was likely to be a factor in the ongoing negotiations between the US and China, India, Canada and other countries over the WTO issue. This includes the dispute with Antigua which started the process where a decision regarding the level of compensation due to the tiny Caribbean island has been delayed.

 

[lots0]

I wondered why the US backed down on the Global warming thing. The Bush boy is not known for backing down (stupid as a rock he is).

I got a feeling it was all part of a big deal.

This really sucks for Americans... And for those gaming companies that lost money in the UK.

Looks like we all got sold down the river by the EU.