US Faces $100 Billion Fine For Web Gambling Ban

Stony Stevenson writes with the news that the World Trade Organization is seeking billions of dollars in compensation from the United States from their ban on internet gambling. The view of the WTO is that the US has reneged on commitments to the organization. "The disputed concessions arise from Antigua's victory earlier this year when the WTO ruled that the US violated its treaty obligations by excluding online Antiguan gaming operators, while allowing domestic operators to offer various forms of online gaming. Instead of complying with the ruling, the Bush administration withdrew the sizeable gambling industry from its free trade commitments. As a result, all 151 WTO members are considering seeking compensation for the withdrawal equal to the size of the entire US land-based and online gaming market, estimated at nearly US$100 billion."

Re:Hmmmm....

[Anonymous Coward]

Er, no.

Gaming in the UK is also heavily regulated to ensure people aren't cheated out of their money. So why were UK executives of a UK online betting company arrested by the US when their plane passed through a US dependency's airport?

The US prohibits gambling on religious grounds, not because of corruption worries.

Re:Hmmmm....

[Dunbal]

IANAL however my understanding is that international law and treaties trumps domestic laws every time. Congress had no business passing a law that went against an international treaty. The US first should have withdrawn from the WTO. You can't have it both ways. However the American attitude is the usual "who is going to stop us" that has been prevalent since the '90s.

The Romans thought the same, once upon a time. Keep building up that animosity, America.

Re:So tell me...

[shawnmchorse]

It's because we didn't actually ban gambling. If the U.S. had just banned all forms of gambling, that would have been fine and the WTO would have accepted that with no problems. But instead, we banned only certain specific forms of gambling (e.g. Internet poker and casino games) while specifically allowing others (e.g. brick and mortar casinos, horse and dog racing, fantasy sports betting) and even protecting some as a governmental monopoly (state lotteries). It's the U.S.'s schizophrenic way of simultaneously banning and allowing gambling that's had the Antigua and the WTO complaining for so long.

Re:State Right

[Ngwenya]

Now that's an interesting point. Since only the government of the USA can represent the states in international relations, it may well be that the USA has signed up for a treaty obligation for which it has not been granted specific power. In the old days where the gambling had to be physically located in a geographical location, this was easy to enforce. Now we have the situation where gambling crosses physical boundaries (falling within the purview of the federal government), but the power to regulate it remains with non-signatory bodies (the individual states).

Thus, could the states compel the USA to repudiate the treaty, if the USG acted outside its constitutionally limited power?

--Ng

Re:Hmmmm....

[140Mandak262Jamuna]

China may also then cash in their US debt they have been buying making it worse.

That is not the big issue. They are holding our bonds, and we don't have the Gold standard. So we just print them as many dollars as we want and give it to them. They know it too. So they won't cash the bonds, but they might start a war.

In the last war, almost all historians agree, Germany was defeated mainly by the huge industrial output of USA. In the next Sino-US war, just see who has the industrial capacity to out produce weapons to foresee the winner.

Re:Good!

[Maxo-Texas]

As an American,

The issue is that we do allow gambling. If it was entirely illegal, this would not be a trade issue. But by allowing gambling in certain protected areas, we are engaging in protectionism of the gambling industry from foreign competition.

We are saying "gambling from italy is illegal" but "gambling from vegas is legal".

Clearly, if a local jurisdiction wishes to prohibit gambling, they just need to put up a firewall around the internet to their jurisdiction.

You have the short memory my friend!

[Anonymous Coward]

Import tariffs and excise taxes are how the U.S. government paid for itself prior to 1913 when the income tax was invented. And if the U.S. wasn't so hopelessly mired in debt and entitlements and social manipulation it still could be.

Tariffs are not wrong, no matter what foreign governments don't like about it. There's nothing wrong with encouraging self-sufficiency first and then resorting to imports when required. You just have to pay for it.

There's a bigger thing here people are missing

[Solandri]

What the US is saying is it's legal for its citizens to gamble in places hosted inside the country, but illegal outside the country in places we have an otherwise unfettered trade relationship with. (i.e., if the place was hosted in Cuba, it'd be illegal regardless.)

This is different than cocaine because cocaine is an illegal substance throughout the US, imports and domestic distribution is prohibited, period.

It's blatent hypocrisy and the exact sort of thing the WTO was created to prevent.

There's something bigger going on that's behind this seeming contradiction. The Internet has created a paradigm shift in the way people interact socially. It used to be that, aside from phone calls or the occasional live TV broadcast, people could only interact with each other if they were in the same location. So you could regulate social activities on a geographic basis. Gambling is only allowed in certain states and Indian reservations. Nudie bars can only be in certain areas of town. Businesses cannot be run out of a residence. etc.

The Internet destroyed that paradigm. You can now interact virtually in a socially meaningful way with nearly anyone else in the world. You can gamble with your neighbor, or someone on the other side of the world. You can view a girl in Russia at home as your own personal nudie bar. And of course your Internet business can run on a server in your den with nobody (except the curious geek) being the wiser. This whole controversy is due to trying to apply laws built for the old paradigm to the new paradigm. What's needed are new laws for the new paradigm.

As of yet, material products cannot be transferred over the Internet. So illegal substance distribution laws can still operate under the old geography-based paradigm. If we ever invent Star Trek-style replicators, those laws will have to change as well.

Re:Hmmmm....

[Maximum Prophet]

Close shave? At the end of WWII, Germany was spending around 50% of it's GDP on the war effort. The US was in the tens of percent. (something like 12% IIRC)

During the cold war, the US was spending 6%, and we thought the Soviets were spending 12%. Turns out they were spending 25%, and they went bankrupt.

The numbers were similar for the War of Northern Aggression. (US Civil War)

The lesson is not to go to war with a country that can build more guns and bombs than you. When you add nukes, war becomes boring. Everyone loses.

Re:No it is not

[TheCarp]

And as a side side note.... who is the largest legal importer of coca leaf into this country?

Any guesses?

Yup! The Coca Cola Company! They still use it to produce coke... both kinds! They extract the coke and sell it to the Big Pharma companies for use in medicine, and then use the leftovers to make their product.

Its hard to say which coke is more vile. Both are habbit forming, though the liquid stuff has a far worst nutritional outlook.... all that sugar....

-Steve

Re:Hmmmm....

[Frangible]

What? The US didn't do shit to Germany. By the time we got there (on the wrong beach, no less), we fought boys below normal recruitment age and reserve troops in France, most of which were conscripts and weren't even members of the Nazi party. Russia manufactured its own T34 tanks, which were far superior to ours, it had nothing to do with us other than some Americans helped designed them, but it was not an official effort, no more than IBM's automation of the holocaust. Sorry but no, Rosie the riveter wasn't cranking out T34s.

Russia's industrial capacity was tremendous, and they produced tons of T34 tanks, which although being inferior to the types of panzers used on the eastern front in Europe just overwhelmed them in number.

It was Russia where most German troops died, and when Germany's losses became overwhelming, the US and allies sat and did nothing while the Russians took Berlin with tremendous casualties. So yes, after killing children and old men (and they STILL got a better kill ratio than our troops), we sat back and let Russia do all the work (again). Firebombing Dresden and killing women and children is in there somewhere. Then we proceeded to steal scientists and intellectual property from Germany, so the Russians couldn't get them, and then employed members of the Nazi party with evidence of crimes against humanity against Russia. You know, the guys who just did all the work. Then, in the occupied Germany, when there was insurgent activity, we'd go and mass slaughter civilians in whatever towns had insurgents. In one instance we pulled out and just shelled the town until everyone was dead. Wow, that was one of the finest hours in our history.

We did VERY LITTLE in Euorpe in WW2, it was mainly Russia, always has been, and always will be... not to mention Britain, which single-handed foiled Germany's invasion attempts and stopped Germany's string of victories (I'd give Britain credit for Africa, but that was mostly Rommel not getting any gas or supplies because they were being redirected to Russia instead, making him scuttle far more armor than Britain ever destroyed). We made a very significant impact on the war in the Pacific, but enough of this revisionist history crap about the US saving Europe. The most significant thing the US did in Europe then was steal Germany's scientists and their research.

Oh, and Germany's impetus for invading Russia? To "save" Europe from communism.

btw, historical documents have shown Stalin always intended to betray Hitler's non-aggression pact and ultimately invade Germany, and the rest of Europe. So it wasn't entirely just meth-head Hitler being paranoid.

But I suppose you can always ignore history and go watch "Patton" again.