WTO decision has unknown Net value

Apr 12, 2005 3:11 AM

Even for a world split on almost every issue, last week was wildly weird.

The appellate body of the World Trade Organization, which includes 148 countries around the globe and is based in Geneva, Switzerland, handed down a 146-page decision on an appeal by the United States of the WTO’s decision last November that this country had violated World Trade rules in attempting to halt Internet betting in the tiny Caribbean island-country of Antigua and Barbuda.

What made it weird was that everybody claimed they won.

The United States says the decision justified its actions to curb Internet gambling.

Antigua says the decision was a clear-cut victory for it, since the WTO appeals group said unless the U.S. did something about the Interstate Horseracing Act of 1978, the bedrock on which Internet betting is based where it is legal in this country, it was discriminating. Antigua’s lawyer — who is from Texas by the way — says the appeals group decision means "the only way the U.S. can adhere to World Trade laws is if it bans all types of remote gambling, both inside and outside the country."

No matter which country won, American racing stands to lose. And the decision could affect Las Vegas, whose casinos themselves are ambivalent about Internet gaming. Frank Fahrenkopf and the AGA thinks it should be banned, at least the last time we heard from him. Terry Lanni thinks it should be pursued.

But as a matter of sheer danger, it affects horseracing far more.

The U.S. government has several choices in the wake of the World Trade appeals decision.

It can ignore it, since trade with Antigua is as small a dot as Antigua is on the map, but that is unlikely Washington is trying desperately to win back friends, not make new enemies.

The U.S. could drop out of the World Trade Organization, which would not be an unusual course of action for us. We have picked up our marbles and left the game when other nations disagreed with our policies. Air pollution is one example. Iraq was another. And still another is the current proposal in Foggy Bottom to appoint an ambassador to the United Nations who openly hates the organization and demeans and denigrates it.

A third possible course of action — and the one that threatens horseracing — is reflected in statements of Peter Allgeier, the Acting U.S. Trade Representative. "The report," he said of the WTO appellate decision, "essentially says that if we clarify U.S. gambling restrictions in certain ways, we’ll be fine."

The "certain ways" he is referring to is amending the Interstate Horseracing Act, which is at the heart of the WTO’s decision. Gambling expert Nelson Rose says the solution is easy. Congress should immediately amend the Horseracing Act to allow what already is being done: allow Americans to bet on foreign races and allow foreign bettors to bet on American races. The U.S., he says, then could safely prohibit all other forms of Internet gambling, foreign and domestic. Rose concedes, though, that if Nevada casinos ever start taking bets online, or state lotteries begin selling tickets on the Internet, everything changes. He says Antigua could then go back to the WTO and clearly win.

It does not seem likely Congress would do what Rose proposes, given its past expression that interstate Internet wagering is a matter for states to decide, which some have by allowing Internet gambling and others have by barring it.

It is likely, however, that the Justice Department will celebrate the World Trade decision, and try to use it to bolster its contention that Internet gambling is illegal because of the Wire Act, now more than 40 years old.

Joseph Kelly, a law professor at the State University of New York in Buffalo, warned that this matter is far from over. "There are going to be further proceedings on both sides," he said, and then asked a rhetorical question. "How are you going to stop a British-licensed casino in the United Kingdom from taking wagers from American citizens?" And he answered it succinctly: "You just can’t."