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Antigua and US both claim win in WTO gambling row
By Alan Beattie and Frances Williams
Published: April 7 2005 16:31 | Last updated: April 7 2005 16:31
For its supporters, it is the battle of David against Goliath; for its opponents, Mammon against morality. Antigua and Barbuda on Thursday received the final ruling in its World Trade Organisation gambling case against the US.
Antigua had alleged that the US Department of Justice illegally tried to stop internet betting companies based in the tiny Caribbean island state marketing themselves to American gamblers. In the event, both sides claimed vindication after Thursday’s ruling, which found that some of the US's measures were justified but had not been applied fairly.
Washington said it could maintain prohibitions aimed at internet gambling if it tightened up its laws; Antigua maintained the US would have to outlaw all forms of remote gambling, including interstate betting on horse races, to comply with WTO rules. "I can't see the US doing that," said Mark Mendel, Antigua's lead attorney, on Thursday.
If Antigua's interpretation is correct, the implications could be substantial. True, the only bite in the WTO's ruling is the scope for reciprocal trade sanctions. The loss of markets in Antigua, with an economy 0.007 per cent the size of the US, is unlikely to trouble Washington unduly. Antigua claims that the US actions destroyed most of the 5,000 jobs the country's industry previously provided out of a national workforce of just 30,000.
But there are several reasons why the ruling could have wider implications. One is that, as a first case concerning online services, the ruling could encourage other countries to see how far the WTO's services agreement can be pushed.
Another is that the European Union, with rather more clout than Antigua, could bring a copycat case to the WTO. European internet gambling companies, many headquartered in Gibraltar, have made inroads into the US despite the ban. Christiansen Capital Advisors, a US-based consultancy, reckons the growing global online betting market will take nearly $10bn in wagers this year, around half from American gamblers.
And there is another, particularly intriguing, aspect to the case. As well as claiming that it never intended gambling to be included under the WTO services agreement, the US trade representative's office created precedent by invoking a special clause allowing trade restraints to "protect public morals or to maintain public order". Many and varied threats were cited including underage betting, compulsive gambling, the risk of fraud, and the fear that online casinos would facilitate money laundering, organised crime and even terrorism.
The case has pitted traditional morality against international casino capitalism.
"Don't forget that this country was founded by the Puritans," says Keith Furlong, deputy director of the New Jersey-based Interactive Gaming Council. The gambling industry argues that regulation, not a total ban, is the way to keep gambling addiction and organised crime at bay.
Though Hawaii and Utah still have outright bans on gambling, Mr Furlong says about 10-20 per cent of American politicians, often egged on by Christian conservative groups, are virulently opposed.
Utah in particular is one of the most socially conservative states in America, influenced by the Church of Jesus Christ of Latter Day Saints, or Mormons.
As so often with trade issues, a small and concentrated campaign can exert a powerful influence. Mr Furlong laments: "These are people with whom it is hard to have a constructive conversation."
Mr Mendel says: "Americans can't really argue they have a total moral aversion to gambling. That is a hangover from 40-50 years ago. No American is more than two hours from a casino."
But many American land-based casinos are concentrated in enclaves like Las Vegas, Atlantic City and native American reservations. It evidently touches a particular nerve for betting to be available on the family PC.
"Internet gambling magnifies the destructiveness of gambling by bringing the casino into your home," says Spencer Bachus, a Republican congressman from the southern state of Alabama, who has tried to pass anti-internet gambling legislation through the US Congress.
"For the WTO to prohibit a state from enacting laws on what it considers basic questions of right and wrong is simply unacceptable," thundered a recent editorial in the Mormon-owned Deseret [sic] Morning News. "If that happens, the Bush administration should tear up the general trade agreement and renegotiate it with states' rights in mind."
Whether the small print of Thursday's decision is enough to save the WTO from the disapprobation of red-state America remains to be seen. The ruling backed the US's “public morals” argument while criticising its implementation. But one thing is clear. If the decision further opens up America's living rooms to gambling, it would be rash to bet against a severe backlash from the heartlands.