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Poker News | Gambling and the Law

USA Asks Antigua to Back Off Imposing Sanctions

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Sean Spicer, a US Trade Representative (USTR) spokesman, announced that Washington is asking Antigua to delay taking any action regarding the sanctions against the US, over the Unlawful Internet Gambling Enforcement Act (UIGEA). This plea, from Washington, came after an arbitrator for the World Trade Organization (WTO) allowed the tiny Caribbean nation to impose sanctions against the USA.

The trade body found that,” The U.S. had the right to prevent offshore betting as a means of protecting public order and public morals. But Washington was violating trade law by targeting online gambling without equal application of the rules to American operators offering remote betting on horse and dog racing.”

The WTO arbitration panel said, “We had to adopt our own approach to come up with a fair retaliation figure in view of the wide difference in how the U.S. and Antigua estimated the economic effect of the gambling ban.”

The sanctions, authorized by the WTO in the dispute over online gambling, are worth an estimated $21 million a year and give Antigua the right to legally use US services, copyrights and trademarks. Many leading US industries are watching the case with interest. If Antigua is successful in its retaliation efforts, the US economy would be greatly affected.

Of major concern is the possibility that Antigua could legally violate US intellectual property rights, leaving them open to copy and sell DVD’s, CD’s, designer clothing, industrial designs and computer software. By not having to pay any licensing fees, like US companies do, Antigua could sell their copies at bargain prices, dealing a severe financial blow to the US economy.

The recent WTO ruling is set in stone, and cannot be appealed by either the US or Antigua. The US commented on the outcome by saying, “The ruling could establish a harmful precedent for a WTO member to affirmatively authorize what would otherwise be considered acts of piracy, counterfeiting or other forms of infringement.”

USTR spokesman Spicer also stated that, “Washington has initiated a formal process at the WTO to revise its commitments and is in talks with Antigua and six other WTO members that have claimed to be affected”.

Although Washington has admitted their Internet gambling restrictions (UIGEA) were ruled illegal by the WTO, they argue that fair compensation for Antigua’s lost annual revenue should only be about $500,000. The decision was a blow to Antigua, which was fighting to impose 3.4 billion in sanctions, by giving them the right to target intellectual property rights and US commercial services. The USTR office also issued a statement that, “Antigua was seeking sanctions worth more than three times the size of its entire economy. Antigua's claim was patently excessive."

Antigua, had hoped the ruling would make the U.S. revoke their online gambling restriction and abolish the UIGEA. With 32 online licensed casinos, which employ 1,000 people, the yearly revenue of approximately $130 million is Antigua’s main source of income. In 2000, Antigua’s casinos had an estimated annual income of One Billion dollars. Since the UIGEA went into effect, revenues from the casinos have dropped considerably, dealing a huge financial blow to the little Caribbean island.

When the US announced it would revise the conditions under which it signed the WTO's 1994 General Agreement on Trade in Services (GATS) that opened the door for a number of countries to seek compensation under a separate process. Since then, the US has made deals with 27 nations, European Union (EU), Canada and Japan to change the treaty. So far though, no deals have been made with Antigua, India, Macau and Costa Rica.

Antigua’s battle against the US was backed and financed by gambling companies based in the UK. Those companies were disappointed this week when the EU announced that in exchange for accepting the U.S proposed revision to the GATS, they had made a deal for minor U.S. trade concessions. The UK gambling companies claimed the US owed 100 billion, and had urged the WTO to be tough on the US.

Under international trade rules, the UIGEA will remain illegal, unless it can garner approval from all 151 members of the WTO. Approval is unlikely unless the US government either permits Americans to gamble online at off shore casinos, or eliminates the current exceptions for betting on horses and dog races.

With an estimated half of the world's online gamblers located in America, the U.S. government has stepped up its battle against the $15.5 billion a year online gambling industry.

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