US Laws Are Protectionist
Published: Tuesday, August 15, 2006 Online-Casinos.com
US LAWS ARE PROTECTIONIST, SAYS ANTIGUA'S LAWYER
Interview with Gambling911 produces some interesting insights into the WTO conflict
The online gambling publication Gambling911 carried an insightful interview this week with Mark Mendel, lead counsel for Antigua on the Antigua vs. the United States World Trade Organisation case. Mendel is a respected lawyer with the firm of Mendel-Blumenfeld, LLP with offices in El Paso, TX, Albuquerque, NM, and Cork, Ireland.
During the interview he offered some interesting views on the recent BetOnSports indictments and the current legislative position in the United States on internet gambling.
Mendel commented that the BetonSports case strengthens the Antiguan argument that US laws are protectionist, as the Department of Justice had once again gone after an offshore operator rather than the US horseracing sites such as YouBet.com and others that it claims are illegal. He characterised the recent WWTS indictments as the same, saying it was another excellent example of US discrimination - going after an Antiguan operator rather than their own domestic, sanctioned remote betting.
Answering questions on monopolies and exempted businesses in US attempts to ban online gambling, the lawyer said that part of the problem was the lack of participation by the American public.
"There really is no upswelling against on-line gaming, nor is there a loud enough force in favor of it either," he said. "It seems to amount to public grandstanding by politicians with no public connect. I think that is why domestic remote gaming interests have had little problem getting their exemptions carved into legislation…nobody really cares!
"Because nobody cares that much, I think that this may be one of the rare circumstances where public citizen input to legislators might make a real difference. If Senator X only hears from the normal opponents to online gaming (vested interests, "religious" right, etc.) and then gets a number of communications from persons opposed to the erosion of rights and economic protectionism, then it just may turn some heads.
"America clearly has domestic remote gaming, but it is limited somewhat in scope currently. I think what the domestic industry wants is to keep it that way, or, if things are to change and gaming is to be opened up, that it be opened up in a way that allows the current industry leaders in other kinds of gaming (i.e. Las Vegas, Atlantic City) to come into the industry in a dominant way, dwarfing international competition."
Turning to the World Trade Organisation dispute between the USA and Antigua, Mendel says his first preference is for the U.S. to ultimately come to the table with Antigua and seek a fair, negotiated solution. "We think that we can show these services can be provided safely and fairly from Antigua to U.S. consumers," he claims. "It is frustrating, as we have given the Americans endless opportunities to work out a negotiated solution. For whatever reason, they have chosen not to do so yet. But, we expect that ultimately they will have to."
Asked whether legalisation of online gambling in the USA might not have the effect of persuading Antiguan companies to leave and set up in the States, Mendel thinks this unlikely. "There are some well-established Antiguan companies that feel they can compete on a level playing field. If they cannot, then so be it. We are not looking for favouritism, just fair ability to compete," he opines.
Mendel spends some time explaining the rulings of the WTO disputes panel, and the lack of understanding of the findings by the US media. "The reality is that the U.S. lost a very important case in the WTO that will ultimately force the U.S. into either compliance or rejecting the entire WTO process. We believe they will ultimately comply, but it is going to require persistence on our part to force the U.S. to come to grips with the case," he says.
Commenting that most legal experts have accepted the Antiguan perspective on the decision, Mendel claims that "....the final ruling gave the U.S. two options - grant Antiguan operators market access or ban all domestic remote gambling."
"We have "bet" that the U.S. remote gaming interests are too entrenched for the Americans to do the latter. So far events such as the Goodlatte bill, which is almost unbelievably protectionist, and the prosecution of WWTS and BetOnSports have proven us correct in this regard.
"We are right now starting a formal process whereby the WTO will be assessing the status of the U.S. "compliance" with the WTO rulings. We fully expect they will be found woefully non-compliant, and that will give further impetus to our efforts to get the U.S. to stop being hypocritical and comply with the ruling," he says.
Giving an opinion on the BetonSports issue, Mendel told Gambling911 that he believes the company did everything wrong. "They sacked Carruthers and left him out to dry simply for doing what he was hired for and paid to do," he said. "They have effectively destroyed their company and put customer funds at risk. They should have never shut down and acceded to the American jurisdictional claims."
Mendel recommended that regulated Antiguan providers of all gaming services should continue business as usual and not change anything they do. The same is true for any offshore operators offering non-sportsbook services. Further, he opined "...not accepting telephone bets is a meaningless gesture."
When asked about that part of the indictment that accuses BetonSports of not properly remitting the wagering excise tax, he stated that is simply a tactic. He cannot see how the US can enforce taxing jurisdiction over a foreign entity with no American presence.
Mendel does not pull any punches in his assessment of the industry in the wake of the BetonSports affair:
"I think the whole offshore gaming world has been very poorly served by the deer in the headlights panic of the remaining BoS executives. They have literally taken a company with over US $100 million in market capital and thrown it all away - not to mention the looming consumer disaster.
"Contrast their reaction with that of companies such as WSEX (World Sports Exchange) and WWTS back in 1998. They kept the doors open, carried on as usual and no punter lost a cent as a result.
"It is ironic that the US thinks they are doing consumers a favour by collapsing an otherwise healthy and reliable service provider. The US argument against offshore gaming is (ostensibly) rooted in the need to protect American consumers from the dark world of offshore gaming . . . "
"Almost all editorial opinion on the issue is contrary to Congress and the view of the Department of Justice. The general consensus seems to be to support rational, regulated remote wagering," Mendel concludes as a general note.
He reveals that Antigua submitted massive amounts of evidence to the WTO on the abject failure of many state regulatory schemes and the general blasé attitude in the U.S. towards these failures. "Nonetheless, we have even offered the U.S. a role in the oversight of our regulatory scheme to demonstrate its efficacy," he says. "The offer was of course, rejected!"
