Big News for online gambling!

[Raji]

The World Trade Organization last week handed down a landmark decision against the United States. In its ruling the WTO found that the US government law prohibiting online gambling was illegal.

In order to abide by the ruling, the US would have to either remove exceptions for horse racing (which is highly unlikely) or they would have to repeal the law entirely. The legislation, enacted last October, essentially places the onus of responsibility for monitoring internet gambling transactions on the banking institutions. It does not make it illegal to actually place bets online.

The WTO found in favor of online gambling haven Antigua, which lodged the complaint over two years ago. Since that time, the US government has aggressively started to go after gaming operators.

``This is just another turn of focus by the U.S. government in dealing with its widening trade deficit with China,''
On paper, tiny Antigua's recourse seems rather thin. They can place sanctions on the US, but for what? Bananas? Sugar cane?

In reality, the WTO decision empowers Antigua more than most people realize.

Should the US fail to abide by the ruling, the global implications could be immense.

That's because the United States plans to file a complaint with the WTO against China as early as this week. The US complaint involves allegations that China has been engaging in piracy of copyrighted movies and books.

Officials have prepared two cases, one saying China sets too high a value on pirated movie or music disks before prosecuting violators, and another objecting to restrictions on the sale of foreign books and movies in the nation, they said. The people, three industry officials and one lawyer, spoke on condition they not be identified.

China's illegal copying of movies, music and software cost companies $2.2 billion in 2006 sales, according to an estimate by lobby groups representing Microsoft Corp., Walt Disney Co., and Vivendi SA. The WTO complaints are the first by the U.S. against China for breaching intellectual property rights, in a country where copying has extended to bags, golf clubs and even shampoo.

The Starbucks Corporation won a trademark infringement lawsuit against a Chinese company that used a similar name and logo. A Shanghai court ordered Shanghai Xingbake Coffee Shop to pay Starbucks 500,000 yuan ($61,956) in damages, the largest awards against a Chinese company for trademark infringement.
``The U.S. believes that now it's time to put more pressure'' on China, five years after the country became a WTO member, said Standard Chartered Plc's economist Stephen Green in Shanghai. ``The U.S. believes that China has clearly infringed rules that it agreed to play by,'' prompting the action, he said.

But China will have every opportunity to point towards the US unwillingness to abide by the recent WTO decision should a complaint be filed. "Hypocrisy" charges will be easy to come by.

While the United State can file an appeal in the Antigua vs USA matter, this just opens the door for China to continue profiting from piracy for the next five years.

In a letter to President George W. Bush in October, House Speaker Nancy Pelosi and other lawmakers said that ``no country in the world has done more to undermine American intellectual property than China.''

U.S. complaints were imminent, Trade Representative Susan Schwab said on Feb. 22.


When he is not hugging President Bush, Arizona Senator Jon Kyl can be found drafting legislation to ban online gambling, carving out exemptions for his friends in the horse racing lobby and ensuring the new legislation passes by attaching it to a crucial unrelated Port Security bill during the final hours of Congress voting before Election Day recess. Mr. Kyl also wants a wall built around his state's border, similar to the Great Wall of China, as a means of keeping illegal Mexicans out. This means that Mrs. Kyl will have to wash her husband's dirty laundry...as opposed to Guadalupe.
``We're all going to run out of patience at some point, and that's going to be sooner rather than later,'' she said.

Under WTO procedures, the U.S. will formally ask for consultations with China when it files its complaints. Only after 60 days can the U.S. ask for an independent panel to adjudicate the dispute.

The U.S. plan may not escalate into a formal complaint, said Li Yushi, deputy director of the Chinese commerce ministry's research institute.

``This is just another turn of focus by the U.S. government in dealing with its widening trade deficit with China,'' Li said today in Beijing. ``The administration understands that China has made efforts in IPR protection, as well as our limitations in enforcing the effort.''

China is also one-upping the US in regard to its explosive gambling industry based primarily in Macao.

While the United States government continues to demonize online gambling, Las Vegas and river boat gaming continues to thrive Stateside. But many fear the Vegas market could soon dry up with high rollers choosing Macao over Sin City. This year, Macao became the biggest gambling center in the world and continues to grow.

Indications were that Vegas had intended to supplement losses by jumping into the billion dollar online gambling industry. Those plans were shot down with the passing of this new law, a law that does not exempt Las Vegas casinos.

As for the US government's complaint against China, they may have even bigger worries to contend with on the counterfeiting front. Tiny Antigua may decide to follow China's lead, and what's to stop them? Should the United States elect to ignore the WTO decision, the price they'll be paying could be astronomical. More astute policymakers in Washington appear to realize this. Chairmanship of the House Financial Services Committee, Barney Franks, has already announced he will draft legislation to repeal the anti-online gambling measure.

Raji