Oh my goodness. Clueless, thy name is Antigua and Barbuda. Antigua and Barbuda are at it again, trying to fight the United States on the US's stance towards internet gambling. These two countries are like flies trying to beat the fly swatter. It isn't going to happen. No matter how hard they hit, even if they win in a WTO court, the United States will do what they want – not what Antigua and Barbuda want.

This is not to say that I don't agree with Antigua and Barbuda. I do. I just don't think they have a chance in Hell of getting the US to comply with anything they are able to come up with.

In case you've been hiding underneath a rock for the past few years, or you're simply new to the internet gambling industry, allow me to give you some background. Antigua and Barbuda filed a complaint with the World Trade Organization (WTO) against the United States for duplicity in their gambling laws. The United States allows for internet gambling for horse race betting and state lotteries, yet states that off-shore internet gambling is illegal. Last summer the WTO gave the United States an April 2006 compliance date to make their laws consistent.

This is a gambling story with a strange biblical resonance. The United States is Goliath, and Antigua and Barbuda are David. Normally countries this small, total population 69,000, would never start such a fight with the US. However, the internet gambling firms which rely on these countries to support their livelihood have offered to foot the legal bill.

According to a Washington Post article published last week it all started when Jay Cohen was arrested and jailed in the United States for owning and operating a sports book from Antigua. Cohen had known that there was an indictment against him, but he went to the US anyhow and was surprised when he was actually arrested, charged, and jailed. Cohen, like Betonsports.com had blatantly broken the 1961 Wire Act by allowing for bets to be placed by phone as well as internet. However, in jail Cohen received a letter stating that the United States had left themselves open to a trade complaint. He did some research and found there was so truth to the statement.

The US government had pledged to the WTO that they would open the markets of "recreational, cultural and sporting services" to global competition. Sir Ronald Sanders, who was then Antigua's ambassador to Britain and the WTO said, "Did we not have a duty to our citizens to protect their jobs?" Of course they did, and so they fought.

The US tried to argue that they needed to protect "public morals and public order." This is allowed under WTO rules; however it has to be consistent, such as a Muslim country which bans the importing of alcohol can not allow the manufacturing of alcohol in their country. I don't understand how the logic of that argument fits the US considering that there is some sort of gambling allowed in 48 of the 50 states, but I'm not a lawyer. Then the US tried a different approach. "Gambling in general, and remote supply of gambling in particular, raises grave law-enforcement and consumer-protection concerns," the U.S. trade representative's office said in a legal filing.

On top of the fact that some sort of gambling is in nearly every state in the union there's the fact that the government tolerates internet betting on horse races and, in some states, lotteries and other games. Several sites located in the US allow wagering on horse races from the New Jersey Meadowlands to the Louisiana Downs. These sites allow for inter-state betting, something which the Department of Justice and the 1961 Wire Act explicitly prohibit. The loophole in this is that the Wire Act was written in 1961, well before the internet was invented. As long as the sites allow for internet betting only then it's legal. The same loophole which makes it legal for these sites to operate is the one that makes the US in violation of a trade agreement.

Gambling "preys on lower income classes," said Gary C. Hufbauer, a trade specialist at the Institute for International Economics, who opposes it. "But here we've had all this tolerance toward gambling -- Indian gambling, for example, in my native state of New Mexico. So if the U.S. is going to tolerate this amount of vice, while ruling out a foreign supplier of vice, it does seem to be . . . inconsistent" with trade rules.

Jay Cohen was busted because his site took bets by phone as well as internet. He was convinced that as his company was located in Antigua the law didn't mean him, he was wrong. The United States seems to think a lot like Cohen. Since they are the US, there's no reason to comply with trade agreements, and in truth they are right. If Antigua and Barbuda were to boycott the US it would hurt them more than it would hurt the US. "The WTO gives the little guys clout, but it cannot guarantee symmetry of justice," said Claude Barfield, a trade expert at the American Enterprise Institute.

Now the Antiguans are asking the WTO for the right to fight fire with fire against the US. They want permission to copy and export US made DVDs, CDs and similar material. I laughed when I read that. I can't imagine the WTO would ever give them permission to do such a thing. Furthermore, if they decided to do it on their own they would be giving the US a reason to fight them, which could mean the US would boycott their goods and stop exporting to the country. That would definitely hurt them more than it would hurt the US. This is why I said in the beginning that Antigua and Barbuda are clueless. Not because I don’t want them to win their WTO case, but because they don't seem to realize that they don't stand a chance of getting what they want.

Posted on: August 7, 2006

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