Because I was emailed this story three times and I’m too busy to look for something else to post today, you are going to hear about Antigua getting whitelisted. From the Antigua Sun:

After months of hard work, negotiations and amendments, Antigua and Barbuda has successfully attained white list certification from the UK Department of Culture, Media and Sport.

By attaining this white list status, remote gaming operators based in Antigua and Barbuda will, as of 21 Nov., be allowed to advertise their services to consumers in the UK and promote the expansion of Antigua and Barbuda’s online gaming industry.

The white listing also means that operators will have the opportunity to work within a world-class regulatory environment that offers “superb e-services infrastructure.”

According to Mark Mendel, Antigua and Barbuda’s attorney at the World Trade Organisation WTO, this achievement makes Antigua and Barbuda the only non-EU European Union country, other than Tasmania, to receive white list certification.

Antigua Sun.

This sounds pretty good for Antigua. It’s better, I suppose, than being blacklisted. I wonder how the new administration will alter the U.S. policy towards online gaming. I’m not sure that it will, but you never know.

For a long time, I’ve been a little surprised that the US/WTO online gaming case hasn’t gotten more mainstream press. Now the tide may be turning. This LA Times editorial is a case in point:

ANTIGUA AND BARBUDA, former British colonies on the eastern edge of the Caribbean Sea, are smaller than Los Angeles and less populous than Burbank. Yet they may be able to force the world’s most powerful government to change its gambling laws.

Not since 1960 has it been legal under federal law to place or take bets on sports using interstate or international phone lines. The Federal Wire Act of 1961 and subsequent measures also have been interpreted to ban online gambling as well, or at least gambling on sports. At issue is whether those laws constitute “arbitrary and unjustifiable discrimination” against foreign firms.

Do they? Antigua and Barbuda argue that they do — and the World Trade Organization agrees. So do we.

…

So the U.S. faces trade sanctions from the WTO unless Congress does one of two things: Either acknowledge that betting on horses from overseas is no greater threat to the nation’s moral fiber than it is at an OTB parlor, or make OTB parlors illegal.

Maybe it doesn’t have the stomach for either. If so, then Antigua and Barbuda may want to ask the WTO to ponder why allowing the interstate sale of lottery tickets — a form of state-sponsored gambling — is any less hypocritical than the U.S. stance on thoroughbreds and trotters.

Get rid of gambling restrictions – Los Angeles Times

If this editorialist had read Cutting the Wire, he/she would have known that federal efforts to ban interstate gambling go back to the turn of the century, and that the Wire Act was the culmination of a half-century of agitation over the race wire.

The WTO is fed up with good old-fashioned American intransigence, at least as far as online gambling goes. From Ars Technica:

The tiny Caribbean nation of Antigua and Barbuda has just won a World Trade Organization (WTO) ruling against the US regarding online gambling. The WTO has ruled that the US “has failed to comply with the recommendations and rulings” of past WTO decisions, opening the way for possible trade penalties against the US.

The case began back in the summer of 2003, when Antigua and Barbuda requested that the WTO form a panel to investigate US laws against cross-border gambling web sites, many of which are based offshore in the Caribbean islands. The claim was that the US had not lived up to its obligations under the “General Agreement on Trade in Services” (GATS), and that it was blocking services between WTO member countries.

In November 2004, the WTO panel concluded that US federal laws (including the Wire Act and the Illegal Gambling Business Act) and several state laws incorrectly breached the GATS agreement, and they required the US to change its ways. In early 2005, the US and Antigua and Barbuda both appealed portions of the ruling. The appeal proved more favorable to the US (it agreed that gambling laws could fall under the “public morals” exception to GATS), but the US was still required to change its rules because it remained in violation of Article XIV of the GATS.

An arbitration panel headed by Dr. Claus-Dieter Ehlermann concluded that a reasonable time period for implementation was 11 months and two weeks, which meant that the US should have made changes by April 3, 2006. In the summer of 2006, Antigua and Barbuda claimed that nothing had yet been done, and they requested a new WTO panel to enforce compliance. That panel has just issued its report, which takes the US to task for not complying with the earlier ruling. “Rather than take that opportunity,” the report says, “the United States enacted legislation that confirmed that the ambiguity at the heart of this dispute remains and, therefore, that the United States has not complied.”
….
The complete WTO report (PDF) is available for those who want to wade through forty pages of bureaucratic writing at its finest.
US rolls the dice at the WTO and loses; must change onling gambling laws

We’ll have to see where this goes. This might spur Congress to re-consider the the Internet gambling ban, but I really think it will be more internal political pressure and a need for state revenues than any external demands that will pave the way for legal Internet gaming in the US.

I just love this headline: Tiny Antigua grabs the US by its illegal, online dice. The story is interesting, too:

Has the time actually come for Congress to read its own legislation?

In the wee hours before Congressmen could head off for their election year recess, they managed to churn out a mound of unread anti-gambling legislation. In their haste to vacate, the lawmakers added fuel to a smoldering trade dispute between the tiny island paradise of Antigua and the superpower to the north. While the conflict centers around online gambling, it could well end up disrupting the businesses of companies such as Microsoft and Google, if the US is unable to fend off the bully Antigua.

The legislation in question primarily sought to restrict access to online gaming sites for American players by criminalizing financial transactions between American financial institutions and the sites in question. It has, however, had the unintended consequence of strengthening Antigua’s hand in its dispute with America before the World Trade Organization (WTO) over the supply of cross border gambling services. As Mark Mendel, Antigua’s lead attorney in the case explained to El Reg:

The new legislation strengthens our arguments that the US permits domestic remote gambling but not foreign remote gambling, as it has a number of ‘carve outs’ for domestic operations that cannot apply to foreign ones. It is just further evidence of the discriminatory effect of US laws and the [American] government’s enforcement of them.

In its hurried attempt to penalize the foreign-based online gaming outfits without offending the American-based horse racing and Indian casino industries, Congress managed to bring into bold relief the crux of Antigua’s claim against the United States – namely that American law treats foreign suppliers of gambling services differently than its own. Such equitable treatment between trading partners forms the backbone of the WTO, and, if Antigua has its way, American intellectual property owners will ultimately pay the price for the American government’s refusal to open its market to at least certain types of internet gambling.

Tiny Antigua grabs the US by its illegal, online dice

Fans of Mortal Kombat will have to imagine that game’s narrator reading this post’s headline to get the full dramatic effect.

I’ve already written extensively on the WTO case and the latest gambling “ban” (for that matter, I was a consultant on the WTO case), so the only new thing I’ve got to say is that Congress will learn that in today’s world, borders just aren’t as inviolable as they once were.

The nation of Antigua is understandably chagrined that the United States government has not come into compliance with the World Trade Organization’s ruling on its Internet gaming case. I’m not a lawyer, so I can’t break all this down. But here’s the press release from Antigua’s PR firm:

The deadline passed today for the US to comply with a WTO ruling in favour of the Antiguan Online Gambling industry
as imposed by the World Trade Organisation in April 2005. As a result, nAntigua may now impose trade sanctions against the US in conjunction with the WTO agreements. Interestingly, while the US has ignored compliance issues in the Antigua WTO case, the US Trade Representative Rob Portman last week warned China of the consequences of non-compliance in a similar WTO trade dispute.

The World Trade Organisation imposed the deadline for the US after an April 2005 ruling in favour of Antigua regarding US anti-gambling laws and calling for compliance by the United States with that ruling by the close of
business today.

Under the rules of the multi-lateral dispute resolution system of the WTO-invoked by the United States as recently as last week against China-a country found to be acting inconsistently with its trade obligations is given a reasonable period of time to bring its laws or trade practices into conformity with the WTO ruling.

Although the WTO is a voluntary organisation, most members found to be in violation of their treaty obligations work hard in good faith towards timely compliance. In cases where prompt compliance has proven difficult, members usually engage with the prevailing party in the dispute with a view towards developing a mutually acceptable compromise.

“Unfortunately, the United States in this case has neither complied with the WTO decision nor worked with Antigua in good faith to find a reasonable solution,” said Dr. L. Errol Cort, Antigua and Barbuda’s Minister of Finance and the Economy. “Ironically,” noted Minister Cort, “I can find no better words in response to the United States inactivity than to paraphrase those of United States Trade Representative Rob Portman made in relation to China last week-’As a mature trading partner, the United States should be held accountable for its actions and be required to live up to its responsibilities.’”

Antigua and Barbuda trade officials noted that the passing of the deadline without any attempt at compliance by the United States was “greatly disappointing” to their twin-island State. They also added that, like many developing countries, Antigua and Barbuda was encouraged to sign up to the WTO agreements as a way to achieving some diversity and prosperity for the 70,000 citizens out of the limited resources available to the tiny country. “While we realised the decision was going to present the Americans with some difficulties, we are surprised and disappointed by the apparently cavalier attitude of the USTR toward this very important issue to our country,” said Dr. John W. Ashe, Antigua and Barbuda’s Ambassador to the WTO.

Mark Mendel, the legal counsel in the dispute, announced that Antigua and Barbuda would pursue remedies against the United States under WTO rules that allow the beneficiary of a WTO dispute to impose trade sanctions against a non-compliant member. “We have already started the process,” said Mr. Mendel, “and barring immediate movement by the USTR on the issue, we will be making a filing with the WTO for suspension of certain trading concessions before the end of the month.” Mendel further observed that trade sanctions are not intended to be a substitute for compliance, and that the United States is still expected to bring its laws into compliance with the WTO rulings. “This is too important of an issue for Antigua and for the sanctity of the multi-lateral trade system of the WTO to let pass,” said Mendel. “Our efforts to bring the United States into compliance will continue unabated.”

That’s their side–I wonder if the US will respond?

I just received an email from an attorney working with Antigua’s WTO case asking me to post the following:

Friends. I have been asked by one of the lawyers representing Antigua in its WTO gambling case against the US whether one or more people who follow this site would be willing to send samples of gambling advertisements or promotions from their area. The lawyer wants to collect photos of billboards, newspaper ads, flyers, taxi cabs ads, etc. that carry gambling advertisements. The idea is to get samples from around the United States. If you live outside the US, but get ads from US-based gambling companies where you live, he would like to get samples of those ads as well. This would include advertisements for casinos, horse or dog racing tracks, card rooms, bingo parlours, the lottery and even internet gambling (poker, sports or other). When you submit a sample, please fill out the attached form with your name, address, telephone number, and e-mail address, as well as an indication of the date and place where you found the sample. These materials are going to be collected for possible use at a later date. No one will be a witness or anything like that by submitting these materials; however, the lawyer may ask a few people later (if the need arises) to sign a simple attestation that what they submitted was true and correct. Participation is, of course, purely voluntary. A “submission form” is attached in Word format. Thanks.

If you want to get involved in the US/Antigua WTO dispute, here’s your chance. I can only hope that, when the case is over, this collection of gambling ads will be turned over to the Center for Gaming Research.

On a totally different note, if you read the Las Vegas Review-Journal, be sure to check out Norm! Vegas Confidential tomorrow.

As I said in Cutting the Wire, online gambling will become unambiguously legal in the United States once we reach a certain tipping point: the need for state revenues will outweigh any lingering opposition to “expanded” gambling.

The Grand Forks Herald reports on a North Dakota legislator who sees the same thing:

A lawmaker who advocated making North Dakota the first state to license Internet poker companies has been in demand as a speaker on the issue, making trips to Las Vegas, Montreal and the Caribbean island of Antigua this year.

Rep. Jim Kasper, R-Fargo, and four other North Dakota legislators went to Antigua for four days earlier this month on what they described as an unofficial trade mission. Their trip was paid for by the Antiguan government, they said.

Antigua licenses Internet poker companies, and Antiguan government statements on the trip focused on North Dakota’s potential role in Internet gambling, including the possible use of the state-owned Bank of North Dakota to handle wagers.

In September, Kasper was a featured speaker at the Casino Affiliate Convention in Las Vegas, which focused on Internet marketing for the gambling industry.

In June, he attended the annual Global Interactive Gaming Summit & Expo in Montreal, a conference organized by the River City Group of St. Charles, Mo. River City’s chief executive officer, Sue Schneider, helped lobby for Kasper’s Internet poker measure during the 2005 Legislature.

Kasper believes state licensing of poker Web sites is a potentially lucrative source of money for the state treasury, and industry officials who favored his bill said they were eager for U.S. regulation.

“I am not putting away the idea of getting into Internet gaming licenses in North Dakota,” Kasper said. “The revenue we missed is too great to pass up.”

Nevada and the U.S. Virgin Islands have approved bills allowing for state licensing and regulation of Internet poker sites, but have been wary of following through because of U.S. Justice Department statements that Internet gambling is illegal in the United States.

Fargo legislator continues Internet poker push

Poker might be the foot in the door that online gambling needs. After all, it is chiefly player-to-player betting, with little exposure for the house (that’s the problem with government-sponsored sports betting).

To those who laugh at the idea of North Dakota blazing a trail into a new age of legal online poker, remember that once isolated Nevada was considered hopelessly backward for sanctioning–gasp–legal public casino gambling.

There has been a great deal of ambiguity about the WTO decision in the Antigua/US dispute. Both sides have claimed victory, and there is no real roadmap for what is going to happen. I’m chairing a session on this at G2E, which may feature debate between representatives of the US and Antigua, or may not.

Today’s story is that the US has been given an April deadline to comply with the WTO ruling, though I’m not sure exactly what that entails.
Read the rest of this entry »

As I’ve been saying for about a year, Antigua’s suit against the US before the WTO is about more than Internet gaming: it is about the integrity of international borders in the Internet age. So I was happy to see legal analyist Joost Pauwelyn discuss the implications of this case.

Read the rest of this entry »

The WTO panel which decided in favor of Antigua in that country’s suit against the United States has released its 287-page report. From the Register:

US laws banning cross-border gambling break international trade rules, the World Trade Organisation (WTO) ruled yesterday.

The judgement in favour of the tiny Caribbean nation of Antigua and Barbuda, home to many online casinos, puts free trade rules on collision course with US state and federal laws. US authorities have vowed to appeal the decision. If that fails they might even change the basis of their membership of the World Trade Organisation, the BBC reports.

A three-person WTO panel decided that US federal (such as the Wire Wager Act) and state laws breached the general agreement on trade and services (GATS), international rules that came into effect in 1994. Antigua and Barbuda argued that US laws prohibiting the use of US-issued credit cards or cheques to settle gambling debts threatened the job of 3,000 workers (five per cent of its 68,000 population) that made their living from internet gambling. Antigua and Barbuda officials said they had tried and failed to negotiate a settlement with their US counterparts without success on five separate occasions.

But US officials said its prohibition on offshore gambling helped prevent money laundering and protected vulnerable members of society against gambling (such as preventing kids using their parents’ credit cards to gamble). These moral arguments held little sway with the WTO, much to the disappointment of US representatives. US trade representative spokesman Richard Mills described the panel’s report as “deeply flawed”.

The argument is far from academic. In August 2000, US citizen Jay Cohen was sentenced to 21 months in jail and fined $5,000 for breaches of the Wire Wager Act in marketing an offshore sports betting company he’d set up in Antigua to fellow Americans.

Estimates of the size of the online gambling market vary. Merrill Lynch, for instance, estimates the industry recorded a turnover of $6.3bn last year. This will rise to $86bn in 2005, it forecasts

WTO rules against US gambling laws

There are more links on the Register’s newspage. The WTO has posted the text of the decision. A 2.5 megs, it takes a while to download.

As I’ve said before, this is a huge news story that isn’t getting anywhere near the attention it should. The World Trade Organization has essentially told the United States it can’t enforce its own anti-gambling laws.

Hopefully, this stuff will still be news next year when I finally release the Wire Act book. I’m doing final revisions right now.

The US has broken off its negotiations with Antigua over that nation’s successful WTO challenge of US restrictions on cross border trade in gaming services. From Yahoo News:

“Unfortunately we were not able to reach a settlement,” despite several meetings over the past four months,” said Richard Mills, a spokesman for the U.S. Trade Representative’s office.

Online gambling has grown rapidly, with spending of around $7.5 billion this year, according to industry estimates.

In a decision that U.S. Trade Representative Robert Zoellick called “deeply flawed,” a World Trade Organization (news – web sites) panel agreed earlier this year with Antigua and Barbuda’s claim that the United States’ ban on Internet gambling violated global trade rules.

Although Zoellick said the United States would appeal, the two sides suspended litigation in June in the hopes of reaching a negotiated settlement.

“Our delegation presented a number of proposals for the U.S.’s consideration, but, sadly, they were not prepared to accept them,” Harold Lovell, minister of tourism, foreign affairs and international transport and trade for the twin-island Caribbean state, said in a statement last Friday.

“What they offered as an alternative was not acceptable to us,” Lovell added.

Trade officials said Antigua and Barbuda was expected to formally notify the WTO on Nov. 4 that it wants to resume the litigation process. That would clear the way for the WTO to publicly release the panel ruling and for the United States to proceed with its appeal.

Yahoo! News – US, Antigua Break Off Talks on Internet Gambling

My guess is that since Antigua didn’t knucle under in negotiations, the USTR is doubling down, hoping to get the decision overturned.

It’s a risky move, though, because (I’m guessing) the WTO could order the US to open its borders to offshore gaming operators, something that would no doubt trigger some kind of debate over the meaning of borders in the Internet age.

Still, this case flies below the radar, while reality TV shows and criminal trials fill up the news.