No one knows just yet what the U.S. government will decide to do in response to the World Trade Organization’s ruling regarding the complaint brought against the United States by Antigua and Barbuda, but those involved in the Internet gambling industry, are definitely waiting to find out.  The WTO’s April ruling, which favored the two island nations, concerns an ongoing point of contention between the U.S. and Antigua and Barbuda about the legality of online gambling and includes an April 3 deadline issued by the WTO for the U.S. to end discrimination against foreign-based online betting companies.  In that April ruling a WTO judge said that the U.S. failed to show that the Interstate Horse Racing Act was applied equally to foreign and remote betting operations.  The U.S. Trade Representative’s office has said that all that was required to rectify the problem was a clarification of the Interstate Horse Racing Act.

During a Race Track Industry Program Symposium on Racing and Gaming, held at the University of Arizona in Tucson, several possible responses by the U.S. government were considered and a high-ranking official from the Thoroughbred industry suggested that the U.S. government should legalize the Internet gambling – a practice that has seen billions of dollars bet by American citizens using services based offshore.

At a panel entitled "International and Interstate Commerce Issues for Racing," Greg Avioli, the Executive Vice President of the National Thoroughbred Racing Association (NTRA) expressed the opinion that the U.S. government should legalize Internet gambling.

Internet gambling is far and away the fastest growing portion of this industry," Avioli said. "The long-term solution should be for the U.S. government to legalize and regulate Internet gambling. A total of $6-billion is bet on the Internet in the U.S., with almost all of it going offshore. The whole issue isn’t getting any smaller, it’s only going to continue to grow."

Mark Mendel, the attorney who represented Antigua in the case the country brought before the World Trade Organization in Geneva, Switzerland, said that the U.S. position on online gambling is contradictory for several reasons.  Mendel, who was successful in representing Antigua, pointed out that, while the U.S. maintains that remote gambling by American citizens using offshore outlets is illegal, the practice continues within U.S. borders.

As an example of the contradictory policy, Mendel cited the case where a partner at Mendel's El Paso, Texas-based law firm was able to purchase lottery tickets over the telephone from the Massachusetts State Lottery using a credit card.

"Then there’s the whole morals issue," Mendel said. "And the reasoning is convoluted. The U.S. government ultimately said remote gambling is bad and evil but brick and mortar gambling is not evil."

While not sure himself of what the U.S. response to the WTO ruling would be, Avioli did say that he was confident that the NTRA’s lobbying efforts in Washington, D.C., would avoid any possibility of changes to the Interstate Horse Racing Act.

I don’t know what they’re going to do," Avioli said. "What we’re going to do at the NTRA is make sure we preserve that right to continue to bet on horse racing through the Internet. The scary part of this suit is its precedent setting."

“There is the option for the U.S. to settle this and to have nothing to do with this," Avioli said. "They could send them some money and not have anything to do with them. That would only be a short-term solution. There needs to be a long-term solution because of the fact that it is precedent-setting."

Posted on: December 16, 2005

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