Inside Asian Gaming

47 take remote bets on horseracing within the United States. The ruling was released in November 2004. Over Antigua’s objections the United States won leave to appeal.The case dragged on until March of this year when the Appel- late Body of the WTO found that the United States had failed to show that its restrictions on remote gambling did not constitute“arbi- trary and unjustifiable discrimination”against Antigua’s operators within the meaning of the applicable treaty, the General Agreement on Trade in Services. Washington at this point was already un- der a WTO order either to extend its Internet prohibition to US racing or open the country to Antigua’s 500-plus gambling Web sites. That either of these things will happen is about as likely as a foreign retailer winning permission to sell lottery tickets in Great Britain in competition with the National Lottery (a possibility, by the way, which the European Court of Justice has specifically rejected, even for operators within the Euro- pean Economic Area). Still, the decision of the WTO Appellate Body did accomplish one thing: it opened the door for Antigua to seek damages. InMay 2007,the United States responded to this likelihood by exercising its option to remove gambling as one of the “recreational services” covered by GATS. This was done on the grounds that the government signed on to the treaty back in 1994 never intending that gambling would be included as a pro- tected “service”—indeed, gambling over the Internet hardly existed at the time. It was a perfectly legal move, albeit an alarming one, “unprecedented in dispute settlement his- tory,”according to a trade policy analyst with the Cato Institute, a libertarian, pro-market think tank based in Washington. It is this, on the surface anyway, that has the EU and the other big claimants like India, Australia and Japan up in arms. But it’s only part of the sto- ry. From El Paso to Potsdam the line is fairly direct. But a stop in Brussels is necessary. ‘We need new concessions’ Considering the persistent manner in which Europe’s Internet gambling operators have been shut out of their own Common Market, for the EU to cry discrimination vis-à- vis US law smacks of the very hypocrisy that Washington is accused of by Antigua. Great Britain, for example, has set stan- dards for social responsibility that licensing jurisdictions must impose on operators if they want to advertise in Britain. As things stood last month, about 1,000 Web sites— almost half the total estimated to be active in the world today—failed to make the cut. Yet, not one is based in the tax havens of Gibraltar or Malta, or anywhere else in the European Economic Area. The EEA, in fact, is automatically“white-listed”for advertising in Britain under Common Market rules. Not sur- prisingly, the British crown protectorates of Alderney and the Isle of Man also have been judged compliant. Over the last year or so, 10 EU Member States have been under investigation by the European Commission for government- backed monopolistic and anti-competitive gambling practices. Despite their claim to be operated for the public good, EC Presi- dent Jose Manuel Barroso has gone so far as to say that these monopolies, which mostly are publicly owned, “cannot be regarded as non-profit organizations, given that they are subject to strict annual revenue targets and often rely on commercial retail outlets to market their various gambling services.” Among the 10, France and Sweden were warned last month to amend their protec- tionist policies or they could be hauled be- fore the European Court of Justice. “Too many member states persistently infringe Community law,” said Barroso, “and that is why we are determined to act.” Little of consequence has actually been accomplished, however.The Commission can investigate, it can issue an opinion that a vio- lation has occurred, it can set conditions for a government to remedy the violation. In the final resort it can bring an infringement ac- tion to the ECJ. Then once that happens the process starts all over again. In hindsight, if you look at how Europe’s heads of state intervened last year to ensure that gambling was excluded from a contro- versial directive aimed at opening up the EU services sector to cross-border competition, what you see is something very similar to the US response this year with GATS. But then it’s difficult to find anything in the EU’s actions that pays more than lip service to Antigua’s plight.Certainly there is no evidence of a mis- sion on the part of Brussels tomake the world safe for unfettered Internet gambling, which in any event no EU Member State is prepared to welcome under its national roof. Witness the muted response from Internal Market Commissioner Charlie McCreevy to the big US crackdown last autumn in the form of the Unlawful Internet Gambling Enforcement Act. “In my view it is probably a restrictive practice,” he said. Although he did add, “We But maybe this story begins not in Potsdam but way on the other side of the world, in the southwestern United States, deep in the Southwest, in the sun-baked Texas border town of El Paso, home of the law firm of Men- del Blumenfeld, whose clients include World Sports Exchange—WSEX, as it’s known, based in Antigua and co-found- ed by Jay Cohen, the only executive of a licensed Internet operator ever to be convicted in a US court and sent to prison for illegal gambling.