Online Gambling

U.S. Partially Settles Internet Gambling Trade Dispute

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Unfortunate news:

The United States has reached a deal with the European Union, Japan and Canada to keep its Internet gambling market closed to foreign companies, but is continuing talks with India, Antigua and Barbuda, Macau and Costa Rica, U.S. trade officials said on Monday.

"We are pleased to confirm that the United States has reached agreement … with Canada, the EU and Japan," Gretchen Hamel, a spokeswoman for the U.S. Trade Representative's office, said in a statement several hours after the EU had announced details of the deal it had reached with Washington.

The decision is a disappointment for European online gambling companies who hoped a case brought by Antigua several years ago at the World Trade Organization gave them a foothold to get back in the U.S. market after being kicked out by Congress last year.

In an April 2005 victory for Antigua, the WTO said a U.S. law allowing only domestic companies to provide horse-race gambling services discriminated against foreign firms.

But rather than open up the U.S. online horse-race gambling market, Congress tightened restrictions on other forms of Internet gambling last year by making it illegal for banks and credit card companies to make payments to online gambling sites.

The Bush administration also announced in May that it was retroactively excluding gambling and betting services from market-opening commitments it made as part of the 1994 world trade agreement, saying that U.S. trade negotiators had made a mistake by not expressly excluding them at the time.

It's too bad Europe, Japan, and Canada caved. Here's hoping little Antigua stays plucky.

A few observations:

First, and most obviously, the U.S. government is so hellbent on policing the online habits of its citizens, it's willing to pay what will likely be tens of billions of dollars of money in trade reparations—taken from same said U.S. citizens in tax receipts—to maintain its dumb ban on consensual online wagering.

Second, the U.S. could have resolved all of this and preserved its precious gambling prohibition by simply making the prohibition uniform. But that wouldn't do. Just as important as the ban on Internet gambling itself were the carve-outs for politically-protected special interest groups. Think state lotteries, or the horse racing industry, which has over the years given generously to the campaigns of people like Kentucky Sen. Mitch McConnell and Virginia Rep. Bob Goodlatte, who decry the immorality of online poker while also supporting carveouts for the ponies. So the tens of billions the U.S. government is paying to settle the trade dispute is not only to preserve the gambling ban, it's to preserve the congressionally-granted monopoly on online wagering for interests with more political clout than poker players.

Finally, U.S. Trade Office flack Gretchen Hamel apparently told Reuters she "isn't going to get into" the terms of the settlement. Pardon? Is the settlement not being paid with public funds? Aren't the people who negotiated the settlement employees of the U.S. government? On what grounds does the U.S. Trade Office feel it's entitled to withhold this information?