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Aaron Todd

Aaron  Todd

Home-game hotshot Aaron Todd was an editor/writer at Casino City for nearly eight years, and is currently the Assistant Director of Athletics for Communications and Marketing at St. Lawrence University, his alma mater. While he is happy to play Texas Hold'em, he'd rather mix it up and play Omaha Hi/Lo, Razz, Deuce-to-Seven Triple Draw, and Badugi.

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Will the WTO ruling will affect U.S. Internet gambling policy?

3 Apr 2007

By Aaron Todd

Last week, the World Trade Organization ruled that the United States was violating the General Agreement on Trade and Services (GATS) by allowing Americans to make interstate bets on horse races over the phone or on the Internet with American racebooks while denying qualified foreign entities access to the U.S. market for the same services.

The tiny Caribbean nation of Antigua and Barbuda, which initially brought the case forward in March, 2003, became the smallest nation to win a WTO case.

The U.S. Department of Justice maintains that interactive wagers on interstate horse racing are illegal.

"Nobody agrees with this," said Joseph Kelly, a professor of Business Law at SUNY Buffalo. "If the Justice Department believed that, wouldn't they take action against any of these interstate interactive horse racing entities? Are they going to throw the Terminator in prison because the state of California licenses this?"

The U.S. has until May 30 to comply and may appeal the decision. In order to comply, the U.S. must either work to ban interactive wagers on interstate horse races or open the American market to qualified foreign racebooks.

The more likely scenario, however, is that the U.S. simply ignores the ruling, in which case Antigua may impose sanctions. Those sanctions probably won't affect America much in the short term, but according to Kelly, the ruling may have Congressmen considering the impact of the U.S. turning its back on the ruling of an international body.

"Senator Richard Luger of Indiana hates gambling more than (Arizona Senator John) Kyl," Kelly said. "But he's very internationally oriented, and I think he might be thinking, 'Gee, if we don't follow the GATS in this area, suppose we beat China on some other issue.' The Chinese might say, 'If the US doesn't follow the WTO, why should we?'"

The ruling clears the way for larger trading partners to levy the same complaint -- and it would likely take much less than the four years it took Antigua to obtain a favorable ruling.

"Antigua led the way, because nobody was sure whether the GATS was applicable to gambling," Kelly said. "All these jurisdictional issues form the basis of the early decisions. Antigua resolved all these issues, and it's going to be much easier for the next country."

The case, however, only applies to horse racing, as the WTO reaffirmed the U.S.'s stance that it can ban Internet gambling on moral grounds, so long as it is consistent about which Internet bets are allowed and which bets are banned.

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