LexisNexis(TM) Academic - Document

LexisNexis(TM) Academic - DocumentCopyright 2005 The Financial Times Limited
Financial Times (London, England)

April 8, 2005 Friday
London Edition 1

SECTION: BACK PAGE - FIRST SECTION; Pg. 20

LENGTH: 684 words

HEADLINE: WTO chips in on the debate over online gambling: The impact of yesterday's ruling could prove to be substantial, say Alan Beattie andFrances Williams

BYLINE: By ALAN BEATTIE and FRANCES WILLIAMS

BODY:


For its supporters, it is the battle of David against Goliath; for its opponents, Mammon against morality. Antigua and Barbuda yesterday 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 yesterday's ruling, which found that some of the US measures were justified but that they 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. "I can't see the US doing that," said Mark Mendel, Antigua's lead attorney, yesterday.

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 hurt Washington.

But the ruling could have wider implications. One reason 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 have made inroads into the US in spite of the ban.

Christiansen Capital Advisors, a US-based consultancy, reckons the growing global online betting market will take nearly Dollars 10bn (Pounds 5.3bn) in wagers this year, about half from Americans.

There is another intriguing aspect to the case. It is the first ruling under a special clause allowing trade restraints to "protect public morals or to maintain public order". The US cited underage and compulsive betting, fraud, money-laundering and organised crime as threats from online casinos.

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, which argues for regulation rather than a total ban.

Although only 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. 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 comments: "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 such as Las Vegas, Atlantic City and native American reservations. The availability of betting on the family PC evidently touches a nerve. "Internet gambling magnifies the destructiveness of gambling by bringing the casino into your home," says Spencer Bachus, an Alabama Republican congressman.

"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 Deseret Morning News, a Utah newspaper owned by the Church of Jesus Christ of Latter-Day Saints, or Mormons. "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 yesterday's decision is enough to save the WTO from the disapprobation of Republican America remains to be seen. The ruling backed the US's "public morals" argument while criticising its implementation.

But if the decision further opens up America's living rooms to gambling, a backlash from the heartlands looks a pretty safe bet. Business Life, Page 13

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