5/7/07 - Los Angeles Times
A bill before the House would change the nation's policy on offshore betting and provide
Busted by the World Trade Organization for discriminating against offshore betting
shops, the U.S. government is attempting a procedural maneuver to make the WTO go
away. It's a legalistic move that underscores the hypocrisy of the government's approach
The dispute stemmed from a complaint brought by Antigua and Barbuda, a haven for
online betting operations. The Caribbean island nation contended that restrictions on
remote gambling violated the United States' commitment to an open market for services.
U.S. representatives countered that the restrictions, which date to 1961, were needed to
protect public morals. The WTO agreed, but only up to a point: U.S. law allows remote
betting on horse races within the 50 states (at licensed off-track betting parlors), so the
government can't block foreign bookmakers from also taking those bets.
On Friday, a deputy U.S. trade representative announced plans to modify the
commitment made in 1993 to open U.S. markets to "recreational services." The
modification will clarify that gambling services are not included, eliminating the WTO's
jurisdiction over the issue.
The little-used technique might solve the problem with Antigua, but it won't fix the flaws
in U.S. policy. As the off-track-betting issue illustrates, Congress loses interest in
protecting people from the lure of online gambling when thoroughbreds and trotters are
involved. Similarly, interstate restrictions on games of chance evaporate for state
lotteries — a form of gambling that the government enthusiastically promotes.
Meanwhile, restrictions on other forms of wagering have led to perverse results. The
most closely scrutinized and stable gambling businesses — casinos in Las Vegas and
Atlantic City — stayed out of online wagering, conceding the field to unregulated and,
occasionally, fly-by-night operators. A federal law passed last year to prohibit credit card
companies from processing bets has spawned a host of workarounds, including online
wallets and repurposed prepaid phone cards.
A saner approach would be to allow online betting through licensed and regulated operators, as proposed by Rep. Barney Frank (D-Mass.), chairman of the House
Financial Services Committee. Such operators could be required to meet age-verification
standards, analyze betting patterns to detect and block compulsive gamblers and pay
additional taxes, with a portion going to treat gambling addiction. This approach would
do far more to protect the public than ineffective prohibitions that criminalize only the
high-tech version of an otherwise legal act.