Since 2002, the United States has refused to take Antigua seriously. In spite of expressed concerns from Antigua about U.S. gambling policies, in spite of rulings against the United States by the WTO, and in spite of numerous concerns expressed by U.S. politicians, the United States has refused to acknowledge that Antigua may be a country they have to deal with. As well, magazines and newspapers like the New York Times, the Los Angeles Times, the Wall Street Journal, Time magazine and Forbes magazine all issued editorials suggesting that the U.S. must start taking Antigua seriously or face consequences as a result of their blatant breach of WTO commitments. Regardless, the U.S. has refused to acknowledge the situation and instead has chosen to ignore it believing that in the end it will all just go away. In fact, in 2006 the U.S. chose to do nothing to address the WTO ruling that they were in breach of their commitments and instead just announced to the world that they were in compliance with the commitments and had been all along. This act of contempt towards the WTO only served to make America look like a bully and sore loser.
Earlier this year, the U.S. finally conceded defeat in the case, but rather than talking with Antigua or even trying to work out some sort of compromise they instead decided to announce they would rewrite their commitments in the WTO regarding gambling, and naively believed that no other countries would ask for compensation. In fact, the U.S. even stated that no countries were entitled to compensation and essentially dared other countries to submit claims. This shouldn't be surprising. America has long maintained the position as a world superpower and obviously believes that it can only be respected by other countries if it displays a tough persona. Many American politicians today truly believe that listening to suggestions from others displays weakness. In their views America should say "jump" and the other countries should respond "how high?". Even upon declaring war in Iraq, George Bush refused to listen to other countries when those countries asked for proof that Iraq was a world threat. Instead George Bush issued the famous line in the Address to the Nation; "you're either with us, or you're with the terrorists." A few countries did go to war with the U.S., but most stayed out of the conflict citing they wouldn't be bullied. The hard handed tactics didn't work with regards to compensation in this WTO case either, as several countries did file for compensation as a result of the U.S. decision to rewrite its commitments. If successful the U.S. could be required to offer concessions in other trade areas costing the country tens of billions of dollars and hurting many innocent American businesses. Some have suggested the United States may just opt out of the WTO if put to the wall, but doing so would cost them even more given how many WTO cases they have won and the number of markets now open to them as a result of those victories. Either way in the end if the United States refuses to deal with the situation, Americans will suffer.
So what can the U.S. do? The answer is fairly simple - negotiate and compromise. For some reason the White House chooses to treat those suggestions as a form of defeat and weakness. Again, it goes back to the tough guy persona. America doesn't negotiate. It tells everyone how to act and they do so out of fear. But the U.S. must realize that in this instance it has to take a different route. Antigua isn't going away, the demands for concessions aren't going away, the WTO isn't going to suddenly announce the U.S. is off the hook and the U.S. horse racing industry will never give up the deal it won in the Interstate Horse Racing Act to offer remote gambling. The U.S. is between a rock and a hard place, and unfortunately for American citizens they could end up suffering for a moral decision that makes no sense. It's not as if Antigua is asking the USTR to allow the importation to the U.S. of cocaine, slaves or contraband goods, but rather the importation of gambling services, which is legal in 48 of the 50 U.S. states.
Fortunately for the U.S. they have an opportunity to save face and live up to their superpower image while abiding by WTO commitments and not have to give up billions of dollars in concessions. The way to do so is to simply consider the suggestions Antigua presented to them in the first place and make it appear that they are doing so for the good of America.
To sum up, here essentially was what Antigua suggested:
1 - Allow Antigua to offer betting services to U.S. citizens for a "test case" period of time (3 years?) and any other countries offering bets to Americans will still be in violation of U.S. law. The American government can make it appear that they are considering U.S. regulation of online gambling and would like to use Antigua as a guinea pig to see if the operations there are consistent with the method they would like to use with regards to online betting in the U.S. if and when legalized and regulated. America doesn't even have to mention the WTO, but by offering Antigua this option they would be in full compliance with the WTO ruling since Antigua is the only complainant. It can be agreed that only those sportsbooks, casinos or poker rooms currently licensed in Antigua are allowed to offer their services to Americans during the "test period". Antigua has already indicated that they would be willing to accept this option.
2- Force Antiguan gambling operations to block any betting from ISPs that originate in Hawaii or Utah and also to disallow any signups from people with addresses in those states since gambling is clearly not legal there.
3- Allow American auditing firms to monitor all software from the Antiguan companies focusing on betting patterns, random number generators, line movements, payout methods, age verification software and suspicious play by bettors. The American government has clearly stated that their big concerns with regard to online gambling are the fairness of games, underage betting and problem gambling. So if the Antiguan government can illustrate to an auditing firm like Price Waterhouse Coopers that all those concerns are solved by the Antiguan regulatory model then the U.S. can be comforted in knowing that those concerns are being met online.
4- Closely monitor gambling payouts to and from Antiguan gambling companies and banks to satisfy any concerns related to money laundering.
5- Come up with some sort of solution to satisfy the IRS that most Americans are indeed reporting gambling profits. The method to do so would have to be worked out by both countries. While this could cause headaches, it is clearly an issue the U.S. will never be willing to compromise on. I'm personally not sure why the U.S. taxes windfalls (I believe they are the only country that does so), but so long as they do, they will want proof that online gambling income is being reported.
In return the American government would lift restrictions on payment systems for Antiguan gambling companies and would offer immunity from prosecution to anyone that is operating with a legal Antiguan gambling license. As well, the U.S. would be able to take anything it learns from the Antiguan gambling "test" and apply it to legalizing online gambling for American companies when online gambling is legalized and regulated in the United Sates.
No doubt many reading this will probably be laughing at the suggestions and say it's pie in the sky as the United States would never agree to backtrack on its stated position. However, it should be noted that if the United States did so it would not be the first time. Gambling was illegal in the early 1900s, but legislation allowed Nevada to legalize it in the 1930s as a test case in response to the Great Depression. The success of Nevada casinos led to the eventual wide spread gambling that is seen in the United States today. As well, alcohol prohibition of the early 1900s ended up being repealed only after a test case, when Franklin D. Roosevelt allowed the 3.2 percent alcohol beer. The repeal of prohibition was necessary because gangsters were taking over the market, Americans were drinking anyway and most importantly polls showed that over 80 percent of Americans didn't want prohibition in the United States. The exact same thing holds true with online gambling today. Americans are betting online anyway, there is no federal law on the books making it illegal to place a bet online, and poll after poll shows that Americans don't want the UIGEA or any other anti-gambling law. Consequently, at some point the laws will be repealed and online gambling will be legal and regulated in the United States whether it is under the current government or more likely under a democratic government. So America may as well address the issue and move in the direction of legalization and regulation before the U.S. has to give up billions of dollars in trade concessions to countries like the European Union, Japan or Canada.
Regardless, the heavy-handed tactics the U.S. has taken with regards to online gambling are not working. It can no longer treat Antigua like a fly it can't seem to swat and must seriously address the current WTO decision. The U.S. can start by having the USTR sit down with Antiguan officials and say the following two words they have refused to utter: "let's talk".
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