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Antigua wins WTO case

Discussion in 'Casino Industry Discussion' started by jetset, Mar 30, 2007.

    Mar 30, 2007
  1. jetset

    jetset Ueber Meister CAG

    Occupation:
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    UNITED STATES LOSES W.T.O. APPEAL

    World Trade Organisation appeal panel judges that American government is discriminatory when it comes to online gambling

    A ruling the tiny Caribbean nation of Antigua and Barbuda has been keenly anticipating was made by World Trade Association officials this week, who found in favour of the islanders in their long David and Goliath tussle over online gambling with massive neighbour the United States.

    The U.S. ignored a WTO dispute ruling that found it discriminates against foreign gambling companies and nations by banning payments to gaming Web sites while allowing bets on its own soil, the global trade body's highest judges said.

    The victory was immediately greeted with significant jumps in online gambling company shares trading on the London stock exchange - at Party Gaming Plc shares jumped as much as 16 percent.

    Antigua and Barbuda, a Caribbean nation of 80 000 people and the smallest government ever to lodge a WTO complaint, scored an initial victory against U.S. online gambling restrictions when the WTO found in April 2005 that the U.S. had pledged to open the industry to competition 10 years earlier.

    Today's (Friday) ruling rejects a U.S. appeal against that.

    The U.S. exacerbated its weak position in the dispute by passing legislation five months ago aimed at denying the estimated $12 billion global business to American residents, who accounted for half of the market at the time. The U.S. Unlawful Internet Gambling Enforcement Act banned credit card companies from processing payments to online betting sites, causing extensive international commercial damage to companies and investors in the process.

    Antiguan Finance Minister Dr. Errol Cort said that the ruling offers hope to the global online gambling industry currently under siege by the U.S. Department of Justice. "It [the WTO ruling] vindicates all that we have been saying for years about the discriminatory trade practices of the United States,'' Dr. Cort said in a statement.

    A spokesperson for the U.S. Trade Representatives Office, Gretchen Hamel, agreed that the ruling had gone against her country, but insisted that the U.S. would maintain a ban on Internet gambling financial transactions to "....protect public order and public morals'' as long as it doesn't discriminate against foreign companies."

    "We are currently reviewing our options,'' Hamel said, without commenting further on the widespread forms of betting permitted throughout the USA that have not been the subject of negative legislation.

    The U.S. has argued that the prohibitions pre-dating the UIGEA in October 2006 apply to both foreign and American betting services, and the WTO's decision only applies to gambling on horseracing, which is an exempted activity under the law, to discriminate against foreign companies.

    The U.S. added that its latest [UIGEA] law isn't covered by the WTO ruling and said that its 1995 commitment to open gambling to foreign companies was "an oversight" by the Clinton administration.

    Aside from extensive international damage to investments and companies, the UIGEA has caused income for the 32 registered online casinos in Antigua and Barbuda to fall to $130 million a year from $1 billion in 2000, the Antiguan government claims. The country developed online gambling to boost a tourism-dependent economy after several hurricanes in the 1990s.

    Antigua successfully argued in its complaint that the U.S. protects its domestic gambling industry while failing to live up to its international commitments.

    The UIGEA has been widely criticised, both within and outside the USA. Congressman Barney Frank, chairman of the influential House Financial Services Committee, who is about to launch an attempt to repeal the Act, described it as "the stupidest law ever passed."

    Charlie McCreevy, commissioner for the European Union's internal market, labeled the U.S. law "a protectionist measure'' early this year (2007), saying the EU should complain to the U.S. after Congress passed the legislation barring credit card companies from processing payments.

    When the UIGEA was enacted, U.K. Culture Secretary Tessa Jowell compared it to the American alcohol ban of the 1920s, saying the measure may force online gambling underground into an unregulated black market.

    "This is a smashing success for Antigua in every possible way,'' John Ashe, the Caribbean island nation's ambassador to the WTO in Geneva, said in a statement. "The ruling clears up any lingering doubt that Antigua has obtained a clear and convincing win over the United States and it is now time for the United States to meet its international trade obligations.''

    Antigua may seek sanctions in the form of withdrawing intellectual property protection for U.S. trademarks or copyright. Known as "cross-retaliation,'' such sanctions are legal at the WTO when an economy can't afford to impose sanctions in the form of higher customs duties on goods.
     
    12 people like this.
  2. Mar 30, 2007
  3. Auditor

    Auditor Dormant account

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    If the US does not comply. It will open the door to other countries, like China, to ignore WTO rulings as well. The GATS rule was established by the US and they will not even follow their own law, unreal.
     
  4. Mar 30, 2007
  5. sdaddy

    sdaddy Meister Member

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    This is a very positive development, but I'm wondering if the U.S. can keep appealing this decision and dragging it out.

    Realistically, how much longer can this go on before the U.S. is under imminent threat of sanctions if it does not comply with the WTO?
     
  6. Mar 30, 2007
  7. Da_Gambla

    Da_Gambla Dormant account

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    There are several legal routes the US can take. First off, just sitting around waiting buys them time and is certainly a sound legal strategy. By 'them', I do mean the US based B&M casinos that want the US market share, and they want that market to be HUNGRY, which is why we are being starved right now.

    Secondly, the US has every legal right to enforce its Taxation laws. For example, the WTO cannot challenge or enforce any sanctions against the European VAT. Therefore, US legislatures will obviously start trying to figure out a way to force income from abroad to be taxed in the form of a W9. I would imagine there would be a lax in those laws, or the levels of taxes collected on gambling winnings from US based casinos (so as to encourage US play within the US).

    These are complicated things that need to be sorted out, so I'm sure the US will stand firm on the new law and just sit and wait for awhile. Although the WTO ruling is interesting, the US does not have any previous history of being forced to do anything.

    - Keith
     
  8. Mar 30, 2007
  9. vinylweatherman

    vinylweatherman You type well loads CAG MM

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    Idea?

    This last bit could prove interesting, given the internet. If protection ceases, then Antigua could allow P2P file sharing networks to base main index servers there to replace the losses of casinos. This will make the sanction really bite, but it will bite the asses of the big private corporations with much to lose, such as the Music, Film and Software industries. These corporate monoliths will move to protect their own interests, and will want an end to these sanctions at the earliest possible opportunity, even if this means pressuring the US government to comply with the WTO ruling despite their moralistic and/or protectionist attitudes.
    Microsoft has been stung by large EU fines for attempting to drive out the competition, and they still resist more openness of it's OS so that competitor software can be written to interface more smoothly to effectively compete with the Microsoft inclusive packages such as Media Player and Internet Explorer.
     
  10. Mar 31, 2007
  11. lots0

    lots0 Banned User - troll posts - flaming PABnonaccred

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    When Antigua files the paper work with the WTO for sanctions and I have no doubt they will, the fire works will start for real.
     
    1 person likes this.
  12. Mar 31, 2007
  13. Rollo

    Rollo Dormant account

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    Unfortunately, I don't think much will happen and the US can ignore the ruling pretty much with impunity as all it does is give Antigua the right to impose sanctions on the U.S. to compensate ... which it's powerless to do becuase it has a miniscule economy.

    If the EU won such a case that would be different but even there, who woud really want to get into a trade war with the world's biggest market over a minor industry like online gambling? Nations violate the WTO all the time.

    I'm not even sure this really applys to online gambling as a whole per se as the US treats US companies the same as foreign companies with respect to online sportsbetting, poker, and casino games - it's illegal for everyone. This may only apply to the carve outs like horse racing. I'm not sure about that one, though.

    Anyway, it's sure not bad news for a change, but don't get your hopes up that this will change anything. On the contrary, it's likely to get worse before it gets better.
     
  14. Apr 1, 2007
  15. sdaddy

    sdaddy Meister Member

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    I disagree. If Antigua chooses to exercise "cross-retaliation" against the U.S., as is allowed under the WTO rules, then the effects could be significant. You wouldn't need a large economy to have companies start reselling U.S. copyright-protected materials for discount over the internet. The level of infrastructure is probably no more than what is needed for Antigua to house its current internet gambling operations.
     
  16. Apr 2, 2007
  17. Rollo

    Rollo Dormant account

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    I'd agree if not for the fact that this is happening on a massive scale in places like Russia and China already... illegally.

    I really don't think the U.S. is suddenly going to change the law due to the Antigua situation and I don't think there are any industry experts think so either. The U.S. has all sorts of pressure that they can use to persuade nations such as Antigua which are in their back yard.

    I wish it would provoke a change in the U.S. law, but I highly doubt it will. More likely nations such as the U.S. will try change the rules of the game if they don't like the outcome.
     
  18. Apr 2, 2007
  19. winbig

    winbig Keep winning this amount.

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    Sanctions against the USA? That'll be the day. Hell, the USA even ignores UN rulings.
     
  20. Apr 2, 2007
  21. Simmo!

    Simmo! Moderator Staff Member

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    Were Antigue to withdraw US trademark protection, who's up for registering IBM, Google and Microsoft? :)
     
  22. Apr 2, 2007
  23. dominique

    dominique Dormant account

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    All of this actually doesn't have gambling as focus, it is the much bigger free trade issue at stake. Both the WTO and the EU are trying to enforce free trade laws..

    Democracy is based on free trade.

    Ought to make you think.
     
  24. Apr 2, 2007
  25. sdaddy

    sdaddy Meister Member

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    Good idea. I think I'll hold off on upgrading to Vista for a little while.:)
     
  26. Apr 2, 2007
  27. Rollo

    Rollo Dormant account

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    On top of everything else we're talking maybe $100 million tops of lost income for Antigua which isn't exactly going to bring the US to its knees.

    I hope it leads to the law being repealed, but I see the US digging in their heals. The left doesn't like the WTO to begin with and the right is sure not to like Antigua pushing around the US on a "morality" issue. I'm not sure how it will shake out, but I think the chances are mighty slim that the US repeals the law based on this. This may serve to do nothing more than weaken the WTO.

    If the EU got full behind it then something could happen, but I think the EU may not want to provoke the US ultimately over online gambling with so many bigger fish to fry and no long term interest in undermining the WTO framework.

    This is uncharted waters, but I think even industry execs aren't getting too excited about it or holding out any hopes that this will reverse the course.

    If all else fails, the US will unilaterally decide that in reality they won the case despite what the WTO says and cause Antigua a lot of pain if it actually tried to ingringe on US copyrights.

    The ruling is a symbolic victory, but little esle I'd argue.
     
  28. Apr 2, 2007
  29. lots0

    lots0 Banned User - troll posts - flaming PABnonaccred

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    Of course, you realize the loss is ongoing and that is 100 Million in only 4 months at the time that low ball estimate was given. Granted, the amount is still small potatoes, considering the US GNP.

    I would also like to point out that even though we in the US currently have a government that scoffs at international laws, that government will not not be in power much longer.

    The Clinton Administration promised to open up online gambling to companies outside the US. So you see, things change, elections do matter.
     
  30. Apr 3, 2007
  31. yameater

    yameater Meister Member

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    All I know is, I would actually lay a big kiss on Barney Frank if he could convince the democratic controlled Congress to repeal this incedibly stupid law.:D
     
  32. Apr 9, 2007
  33. Rollo

    Rollo Dormant account

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    Absolutely, if the Dems win the white house and hold/strengthen their hand in Congress... depending upon how it shaks out (there are a lot of conservative anti-gambling Dems at the same time pro-gambling Republicans) no doubt the chances of getting some positive action goes way, way up. I think whatever happens at the WTO, Bush isn't likely to back down and a new president is over a year and a half away.
     
  34. Apr 10, 2007
  35. lojo

    lojo Banned User - repetitive violations of <a href="ht

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    Strange things turn major tides in politics. Antigua may be the butterfly farting that becomes a hurricane... never can tell.
     
  36. Apr 12, 2007
  37. jetset

    jetset Ueber Meister CAG

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    Good article by Stephen Nover on WTO, USA and China

    Interesting assessment on the WTO, USA and China relationships going forward from the Antigua decision.

    You must register/login in order to see the link.

    Quote: The U.S. has been very unhappy about China pirating copyright material such as movies, chemicals, information technology, pharmaceuticals, software, consumer goods, industrial products and books. Estimates of U.S. losses to Chinese copyright piracy range between $2.5 billion to $3.8 billion annually, according to the Office of the U.S. Trade Representative. Theres the possibility the U.S. could file a complaint with the WTO against China, which became a WTO member in 2001.

    It certainly wont help the American cause if they dont comply with the WTO on Antigua. Never mind threatened trade sanctions, dealing with China is much more important. Thats what gets the U.S.s attention. Unquote
     
    1 person likes this.
  38. Apr 12, 2007
  39. dhayman

    dhayman Dormant account

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    Excellent article and perspective - thanks ! Looking at the big picture, however, I can't see anything being done about this with the current administration. Bush is a major obstacle, and "veto" seems to be a big part of his vocabularly these days. Just playing devil's advocate for a second, here's are some reasons why nothing will come of this:

    1) Legislation would have to be introduced to reverse (or amend) current law. This takes time, and takes votes. Standing on its own this time (presumably), it will be politically unfavorable for members of Congress to vote against (reverse) an anti-gambling bill. Most of John Q. Public doesn't even know that UIGEA exists, so a law to effectively "legalize" gambling online, cannot be construed as a favorable thing in the eyes of the public. Hence, I can see a lot of Congressmen (Dems and Republicans) voting against it.

    2) As horrible and corrupt a politician Bush may be (IMO), he is an extremely allegiant soldier - he will stick up for his "buddies" to no end. I cannot see him reversing the work of his friends Kyle and Goodlatte. Frist is no longer around, of course, so he is no longer part of that equation.

    3) Bush is all about "me, me, me". He does not perceive or seem to care that the U.S. has lost clout throughout the world under his watch. He continues to take an Imperialistic attitude towards almost everything he does. He's currently under fire (indirectly) from the software and entertainment industries over the Chinese piracy acts, and the filings with the WTO this week, reflect that. Bush truly believes that if the U.S. speaks and requests, that whomever is on the other side of the request will need to acquiesce. He believes that China will need to comply, and if WTO doesn't support him, he will take measures in his own hands (see the parallel here between the U.N. and Iraq.......). Bush could care less about Antigua and the UIGEA.

    4) Bush and his administration are not smart people. They don't think out of the box. They don't see the ramifications of running up debt and mortgaging the future of our children. They don't understand that legalizing online gambling and coming up with a taxing strategy, could be a huge windfall from a tax standpoint. They don't realize that UIGEA will push internet gambling underground, and set it back 10 years or more, and put it in the hands of much less scrupulous people. They don't realize that crippling online gambling (and they have certainly accomplished this short-term) will kill a lot of this industry and be a major negative starting point for any Las Vegas Bricks & Mortars that venture into the online arena eventually. They just don't get it. They haven't done their homework. Plain and simple, they are just poor businessmen and poor realists.

    If anything can be done to reverse UIGEA, it will come after a Dem is elected in 2008. And even then, the recovery period from the fallout from UIGEA will be long and steep. It remains to be seen if it will be able to recover at all.
     
    2 people like this.

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