British initiative to regulate remote gambling welcomed by IGC
April 8, 2005
Two developments last week demonstrate how the United States is
out of step with much of the world when it comes to handling the
challenges posed by online gambling, the Interactive
Gaming Council said in a press release following the successful
passage of the UK Gambling Bill.
One was the passage of the United Kingdom gambling reform legislation
and the other was the final decision of the World Trade Organization
regarding Antigua’s complaint that the U.S. prohibition of
Internet gambling violates U.S. commitments under the GATS, the
General Agreement on Trade in Services.
The reform of the UK’s antiquated collection of gambling laws
includes provisions for licensing and regulating remote (interactive)
gambling to include Internet casinos, sportsbooks, betting exchanges
and poker. The law creates a powerful new Gambling Commission that
will have the authority to ensure that licensed remote gambling
businesses are operated fairly. The Commission will also ensure
that criminal activity such as money laundering is prevented and
that players are protected by harm minimization measures, not the
least of which are blocking minors from gambling at these sites
and mitigating problem gambling.
“This long-awaited reform in the UK is a huge step forward
for the cause of regulated remote gambling,” said Rick
Smith, executive director of the IGC. “Finally a first
world government, one that has successfully regulated terrestrial
gambling for years, is taking responsibility for the regulation
of this rapidly growing form of gambling. Rather than fighting it,
as is the U.S. approach, or pretending it will go away, the British
are stepping up to the challenge of regulation.”
The second new development is the WTO decision, which followed an
appeal of a ruling by a WTO panel in November 2004. The final decision
affirms the key point of the earlier WTO ruling that the U.S. commitment
to free trade under the GATS includes a commitment for gambling
and betting services. The WTO also indicates that federal laws such
as the Wire Act – an anti-gambling law enacted long before
the Internet – may be legitimately claimed by the U.S. as
“necessary to protect public morals or maintain public
order.” Under the GATS, a country can exempt itself
from a free trade commitment if it can prove that its laws serve
such a purpose.
But the WTO adds that because of the Interstate Horseracing Act,
the U.S. does not consistently apply its prohibitions against “remote
betting services for horse racing.” Foreign and domestic suppliers
of these services are treated differently, the ruling says, and
that violates the GATS. An amendment passed in 2000 to the Interstate
Horseracing Act permits interactive wagering on horse races. Although
the U.S. Department of Justice disagrees with that interpretation,
U.S. companies today offer interactive wagering on horse races.
“Although it obviously is concerned with the question
of equal treatment of foreign and domestic betting services, the
WTO’s focus on the Interstate Horseracing Act is a reminder
of how the U.S. treats interactive wagering on horse races differently
from interactive wagering on casino games,” said Keith
Furlong, deputy director of the IGC. “Our organization
believes that the Internet is simply another means of delivering
the gambling product. If a country legalizes and regulates a type
of gambling in the real world, it should legalize and regulate the
same type of gambling when delivered via an alternative medium.
“It’s hard to predict what changes the U.S. will make
to conform with its GATS obligations, or whether it will risk flouting
the WTO by ignoring a ruling that it doesn’t like. But this
ruling helps to make the case for regulated interactive gambling
in the U.S. by putting pressure on policy makers to reconsider their
inconsistent, ill-advised approaches.
“Meanwhile, the UK will be setting an example of how this
industry can be properly regulated so that consumers can be protected
and society’s interests can be served. Our members want to
be licensed, regulated and taxed just as the mainstream gambling
industry is in most countries.”
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