WTO ruling unlikely to affect gaming behavior

This week the World Trade Organization (WTO) ruled US laws restricting online gaming are adequate measures “necessary to protect public morals or to maintain public order.”

Industry research groups say the ruling is unlikely to affect changes in online gaming behavior.

Other developments on the legal and legislative fronts, including efforts by several states to legalize net wagering, could put pressure on federal regulators to loosen gaming restrictions, industry observers say. The passage of a sweeping gambling bill in the United Kingdom, they say, could also open doors for overseas betting sites.

The appeal had followed an earlier ruling by the WTO’s disputes settlement body entirely favoring a complaint brought by the tiny Caribbean island of Antigua and Barbuda.
The WTO appeals panel ruled that the United States had not been able to show that US laws on horse-racing bets were applied equitably to foreign and domestic online betting suppliers, a key condition of global trade rules.
It also maintained that some restrictions imposed under US federal laws were inconsistent with the trade body’s GATS services agreement.

Caribbean nation of Antigua had argued in the complaint it launched in March 2003 that US prohibitions were harming its online gaming business, which is aimed at reducing the island’s economic dependence on tourism.
The Caribbean island, with a population of about 68,000, is a centre for offshore Internet gaming operations, attracting large numbers of US residents to its casino-style games and betting services.

The decision on Thursday effectively allowed state laws in Louisiana, Massachusetts, South Dakota and Utah, reversing the previous negative ruling.

Antigua said it expected the ruling to unlock opportunities to advertise online gaming products on US Internet sites or media without the threat of legal action by authorities.
“Following this ruling, the US has two options. One is to grant Antigua market access, the other would be to prohibit all forms of remote gambling within the United States.”

“It’s never going to be stopped,” said Frank Catania, managing partner of Catania Consulting Group, which specializes in the gaming industry. “They can put all the mechanics in place and have threats go out to MasterCard and Visa It still won’t work.”

This year, global spending on internet gambling is expected to total $9.9 billion, up from an estimated $7.5 billion in 2004, according to Christiansen Capital Advisors, a research firm that tracks the gaming industry.