Antigua has the US by the Short Hairs in Online Gaming Flap

by Lou on September 2, 2007

Antigua, a tiny Caribbean nation, appears to have the right stuff to force the United States to reconsider its position about online gaming.I’ve blogged extensively about Antigua challenging the United States’ prohibitions on online gaming before the World Trade Organization. Antigua won their case and then won it again on appeal.

Congress, however, has yet to act to bring US law in concert with our treaty obligations to the World Trade Organization.

For the WTO, this is a big deal. They’ve got to assess some penalty on the United States. They can’t let the US slide simply because they are the big Kahuna and a driving force behind the WTO. The WTO can’t afford to look as though the US is their padrone, and they can’t impose tough sanctions on the small nations and let the 500 pound gorillas slide right by unscathed.

This dispute with Antigua a big deal for the United States too. The US was the driving force behind the WTO’s creation, and has gotten much more from it than this little flap might ever cost. The United States can’t expect to get any respect from other nations if they blithely ignore rulings they don’t agree with, while pushing forward on those that are favorable to them.

Lurking behind the scenes, but very important in this affair are a few trade disputes the US has with China. The US can hardly bring these issues to the WTO unless their skirts are clean. In terms of potential economic impact for the United States, the issues with China dwarf the cost of any online gaming dispute with tiny Antigua.

Because Antigua’s winning claim was based on arguments that the United States is discriminating against online casinos by permitting some online wagering while making it illegal for financial institutions to handle payments for Internet casinos abroad.

The United States can go in either of two directions. They can allow online wagering at offshore casinos or they can opt to ban Internet gaming entirely. The latter is unlikely because it would put the kibosh on fantasy sports leagues and off-track horseracing wagers, and probably lottery tickets sold online.

The right thing is for the United States to allow online wagering, as almost every other civilized country does. That’s probably going to happen too, but not without the United States being dragged kicking and screaming into the modern era by a tiny Caribbean nation of 75,000 people.

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