Industry reaction to WTO compensation claims muted

Antigua and Barbuda asked the U.S. government Wednesday to pay $3.44 billion to settle a World Trade Organization dispute over online gambling. The European Union filed a compensation claim against the U.S. on Tuesday, asking the U.S. government to open up other financial sectors as payment for retroactively eliminating online gambling from its General Agreement on Trade in Services (GATS) schedule. India has filed a similar compensation claim. But industry experts don't expect any of the claims to change the U.S. government's stance on Internet gambling.

"Nothing that's happened with this case in the past has changed the U.S. approach," said Mark Balestra, director of publishing of the River City Group, which monitors and tracks the online gaming industry. "So it's hard to imagine anything will change it in the short term."

And the Office of the United States Trade Representative has shown no signs of shifting course.

"We look forward to learning the basis upon which WTO members -- who neither requested nor made WTO commitments on gambling and betting in the Uruguay Round and had no basis to believe that the United States had made such a commitment -- intend to support their claims of interest," said USTR spokeswoman Gretchen Hamel of the claims made by Japan and the EU.

"We will continue to work with Antigua and Barbuda to try to find a mutually satisfactory resolution to this dispute," Hamel also said.

In March, the WTO ruled that the U.S. could not allow domestic companies to offer horse racing wagers and lotteries over the Internet without giving companies from other countries an opportunity to provide those services.

The impact of the WTO case on U.S. policy will be minimal in long run as well, according to Dan Ahrens, portfolio manager of the Ladenburg Thalmann Gaming and Casino Fund.

"The WTO thing puts some more arrows in (Congressman) Barney Frank's quiver, but it has no real impact," Ahrens said.

"(In order to have change,) you have to have a Democrat in the White House, Democrats controlling Congress and a study completed showing the financial impact of revenue generated from taxing the online gaming industry," Ahrens said.

Frank (D-Mass.) has introduced legislation that would repeal the UIGEA and regulate Internet gambling. Rep. Shelley Berkley (D-Nev.) has proposed legislation that would create an independent study of the online gaming industry.

"Frank's bills aren't getting approved," Ahrens said. "But there's a good chance of getting the study approved. Then something might happen."