Poker News

I. Nelson Rose

The latest decision from the World Trade Organization (”WTO”) shows that foreign licensed Internet poker operators are fighting back against the many governments, including the United States, which are threatening to arrest them. The WTO ruled that the U.S. has not taken any steps to comply with its prior decisions. It declared that the U.S. was discriminating against Antigua’s legal online operators by charging them with crimes while allowing American operators to take bets on the Internet.

The European Court of Justice (”ECJ”) recently issued a similar decision. It declared that Italy could not charge British citizens with crimes under Italian law for taking bets online, since Italy had made it impossible for anyone who was not Italian to get a license.

This does not mean that a state cannot keep out foreign legal gaming. Each situation is unique.

The first step is to find a statute or regulation that might apply. Most fights against remote betting stop here, because lawmakers simply have not enacted the necessary laws.

The federal Department of Justice, which is charged with enforcing federal laws, asserts the Wire Act covers all forms of interstate and international gambling. But the few courts that have looked at the issue have ruled the Wire Act is limited to bets on sports events and horse and dog races. So foreign poker sites cannot be charged under that law.

Almost all other federal and state statutes also havesevere weaknesses, such as not clearly stating that they apply to activities taking place partially in other countries. The recently enacted Unlawful Internet Gambling Enforcement Act does nothing to correct this problem. An underhanded political move by the failed politician Bill Frist, this Act applies only to Internet gambling that is unlawful under some other federal or state law. If there is a law in place, the situation gets complicated.

States start with the right to bar all goods and services, even if these come from places where it is legal to sell and ship these products. The problem arises when a government has agreed, sometimes unintentionally, to eliminate its trade barriers.

Usually when a state joins a federation, like the states of the United States, or signs a treaty organization, like the European Union, it finds it has opened its borders to goods and services from its sister states or trade partners. But decision-makers have unanimously agreed that gambling is different from other legal businesses. A government can bar foreign gaming, if it can come up with good reasons for doing so.

States that want to exclude legal foreign gambling always raise the same arguments: fear of fraud, money laundering, organized crime, underage and problem gambling, and because it offends local morality. Governments cannot rely solely on the real reason - to keep out competition. It is almost impossible to successfully argue that a state has the right to exclude a legal activity when that state allows only local operators to do the exact same thing.

This is what happened to the U.S. in its fight with Antigua in the WTO. The WTO ruled that the U.S. agreed to let in legal gambling from other members of the WTO. But it then bought the argument that federal laws against remote gambling were necessary to protect Americans. So, the U.S. would have won. But Antigua raised the Interstate Horseracing Act, which allows Americans to bet on races from their homes, but only with operators in U.S. states. Since there is no reason for this discrimination against Antiguan horsebooks, the U.S. was held to be in violation of the WTO treaties.

The same type of analysis can be done with any two countries and any form of gambling, for anyone willing to spend large amounts of time and money.

Filed under: Poker News