Antigua's WTO Action Triggered By Jay Cohen
Published: Friday, August 04, 2006 Online-Casinos.com
ANTIGUA'S WTO ACTION TRIGGERED BY JAY COHEN
US WTO representative between a rock and a hard place if decision goes Antigua's way
The Washington Post reports that the US Administration can thank ex-sportsbook operator Jay Cohen for its embarrassing World Trade Organisation troubles with the tiny Caribbean islands of Antigua and Barbuda.
In an article entitled "Against All Odds" the newspaper says that U.S. prosecutors put Cohen behind bars in 2002 for running an Internet gambling site in the Caribbean country of Antigua and Barbuda. Not long before the prison gates clanged shut, he had learned that the federal crackdown on online betting might violate global trade rules.
He persuaded Antigua and Barbuda to instigate a complaint at the World Trade Organisation. "It kind of helped keep my spirits up," he said.
Fast forward: Antigua and Barbuda, population 69 000, is winning. The case has become an embarrassment to Washington, one that could result in economic pain. It isn't quite over, but the world's only superpower may have to capitulate to a country whose entire population could easily fit into the Rose Bowl, the Post opines
In 1998, federal prosecutors charged several operators, including Cohen, with violating a 1960s-era law forbidding the use of phone wires for gambling. Convinced that the law didn't apply in Antigua, Cohen returned voluntarily to U.S. soil.
The United States imprisoned Cohen for his gambling Web site based in Antigua.
"No judge is going to let this stand," he recalled thinking. But a jury convicted him, the judge gave him 21 months, and the Supreme Court refused to hear the appeal.
Out of the blue, not long before Cohen entered prison in Nevada, a strange letter arrived. He has since lost it. The writer suggested that the U.S. government's position left it vulnerable to a trade complaint.
"Is there anything to this?" he asked a lawyer friend.
Turned out there might be: Several years earlier, Washington had pledged in a trade treaty to open the U.S. market in "recreational, cultural and sporting services" to global competition.
Cohen alerted the Antiguans. Antigua filed. "Did we not have a duty to our citizens to protect their jobs?" said Sir Ronald Sanders, who was then Antigua's ambassador to Britain and the WTO.
The United States had a seemingly strong defense -- the need to protect "public morals and public order." WTO member countries can ban goods and services that might harm their social fabric, a classic case being the prohibition of liquor imports in Muslim countries.
"Gambling in general, and remote supply of gambling in particular, raises grave law-enforcement and consumer-protection concerns," the U.S. trade representative's office said in a legal filing.
There was, however, a hole in the U.S. position: The government tolerates Internet betting on horse races and, in some states, lotteries and other games. Numerous U.S. sites, including Youbet.com and Xpressbet.com, let users wager on races over the internet.
This was blatant hypocrisy, the Antiguans claimed, contending that the U.S. position violated a trade principle called "national treatment." The principle essentially requires a government to treat foreign goods and services the same as domestic ones. To outlaw liquor imports, a Muslim country must ban domestic brewing, too.
Likewise, the Antiguans contended, the United States can bar citizens from using overseas gambling sites only if it bans domestic sites. Yet Congress has refused to enact a comprehensive ban - in part because horse racing depends on phone and Internet wagers.
WTO judges bought that argument. Antigua won a slam-dunk ruling in 2004, and though an appeals panel scaled it back, Washington was still in a tough spot. The final ruling essentially said that the United States must outlaw all forms of online gambling, including on horse racing, or Antigua wins.
The U.S. government has refused to concede defeat.
The Bush administration first vowed to secure legislation "clarifying" that all forms of online betting are illegal. But the horse racing industry has blocked such efforts on Capitol Hill.
Next, the administration cited testimony by the Justice Department in April claiming that all Internet wagering across state lines, including that on horses, violates existing laws. That was news to the horse racing industry, and it seems to have had little effect. Even so, the administration has pointed to the statement as evidence that the United States treats all online gambling the same.
Scoffing, the Antiguans are asking the WTO to declare that Washington is defying its ruling. Many experts expect Antigua to win again, after months of delay.
