Antigua battling United States Internet gambling crackdown

[The Judge]

Antigua battling United States Internet gambling crackdown
published: Friday | July 21, 2006

GENEVA (AP):

THE WORLD Trade Organization (WTO) on Wednesday set up a panel to investigate whether U.S. restrictions on Internet gambling comply with international trade rules.

The Caribbean country of Antigua and Barbuda had asked for the WTO to set up the panel after consultations with the United States failed to yield a solution. The dispute centres on whether Washington should drop prohibitions on Americans placing bets in online casinos. A previous WTO ruling said that some U.S. laws were in line with international commerce rules, but others were not.

"The United States has been busy passing legislation that is directly and unequivocally contrary to the ruling," Antigua told a meeting of the WTO's dispute settlement body.

In the past decade, federal officials have prosecuted many operators of online sports books with U.S. ownership or operations because federal law prohibits using phone wires to place those bets, said Anthony N. Cabot, a Las Vegas lawyer who has represented traditional and online casinos.

In a celebrated case from 2000, prosecutors won a conviction against Jay Cohen, a U.S. citizen who ran an operation in Antigua that took sports bets from Americans over the Internet. He was sentenced to 21 months in prison.

Most recently, an offshore sports-betting operation targeted by U.S. prosecutors shut down its Website Tuesday night, a day after a federal judge ordered the company to stop letting Americans place wagers. BetOnSports PLC said it was temporarily stopping all transactions while it reviewed the situation.
The company's founder, Gary Stephen Kaplan, the biggest target in the indictment, was somewhere in Costa Rica.

In the fiscal year ended Feb. 5, BetOnSports reported a 65 percent gain in operating profit on continuing operations to US$20.1 million. The company said it handled US$1.77 billion worth of bets for the year, up 25 percent. The Justice Department is seeking the forfeiture of US$4.5 billion, plus several cars, recreational vehicles and computers from the defendants.

"Antigua and Barbuda considers that the United States has taken no measures to comply with the recommendations and rulings of the DSB (Dispute Settlement Body)," Antigua said in its WTO complaint.

U.S. STATE LAWS
The United States contends that Internet gambling should be prohibited because it violates some U.S. state laws, and told the WTO's dispute settlement body in April that it believed its laws were in line with trade rules.

Antigua says the offshore industry is a lucrative source of revenue and provides an income for hundreds of islanders. The prohibitions, it says, are hurting the two-island country's efforts to diversify its economy away from tourism.

In particular, Antigua cites three federal U.S. laws that effectively prohibited their companies from providing gambling services to consumers in the United States: the Wire Act, the Travel Act and the Illegal Gaming Business Act.

The panel will report on U.S. compliance within 90 days. That decision can then be appealed by either side.

Antigua, a former British colony, filed the case before the WTO in 2003, contending that U.S. restrictions on Internet gambling violated trade commitments the United States made as a member of the WTO.
U.S. trade officials disagreed, saying that negotiators involved in the Uruguay Round of global trade talks, which created the WTO in 1995, clearly intended to exclude gambling.