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Emily D. Swoboda

Utah Legislator Brings States' Rights to Fore in Federal I-Gaming Debate

9 January 2009

A Utah state legislator is relying on an international gambling dispute to ensure that states retain their rights regardless of any national or international trade agreements made at the federal level.

Representative Sheryl Allen, Republican of Bountiful, in December introduced House Resolution 1 -- or Resolution Urging the Withdrawal of United States' World Trade Organization Commitment on Gambling.

Despite its name, however, Ms. Allen said the proposal is not in fact about gambling, which is illegal in Utah -- gambling is simply the vehicle for a more important issue, in her view.

"It is a states' rights issue," Ms. Allen told IGamingNews on Friday. "It is much more than gambling -- gambling is just the case that has gone the farthest at the World Trade Organization."

Ms. Allen's proposal is motivated by a near five-year dispute at the W.T.O. between the twin-island Caribbean nation of Antigua and Barbuda and the United States. The two nations are at odds over United States laws that prohibit certain types of remote wagering, which Antigua claimed were in violation of General Agreement on Trade in Services, or GATS.

Following multiple court battles and decisions in favor of Antigua, the legal clash concluded in December 2007 with a final ruling by a W.T.O. arbitration panel that saw Antigua awarded $21.1 million in intellectual trade sanctions against the United States.

In the meantime, the United States had already announced its intention to withdraw gambling services from its commitments to GATS -- a set of trade obligations agreed upon by members of the W.T.O. -- claiming it inadvertently agreed to include gambling when it signed the agreement in 1994.

But in order to complete that withdrawal, the United States must offer compensation to all members of the W.T.O. affected by the change. In 2008, the United States negotiated deals with several countries, including Canada, Costa Rica and Japan, but refused to release information about the terms of the settlements, claiming it was a matter of "national security."

Ms. Allen, however, said she has a hard time perceiving that this information is a danger to the country. Her resolution, moreover, entreats the federal government to better communicate with states in matters of trade, particularly when agreements may affect them.

"States would very much like to know what the agreement is between other countries and U.S.T.R. on the Antigua case settlement, using American terminology," Ms. Allen said. "That's a protected document, at least when I checked about two weeks ago. And we would like more consultation with the states and we would like state authority respected and protected."

One could reason that Ms. Allen's resolution is motivated by the fear that, with the possibility of a renewed push for legislation to regulate online gambling at the federal level, states will be forced to allow online gambling within their borders.

However, most of the proposals introduced in recent years -- like Barney Frank's Internet Gambling Regulation and Enforcement Act -- included an opt-out provision for states.

"What the states may not be aware of is that, whatever resolution comes out of this, it looks like it will go their way," Nao Matsukata, senior policy analyst at Alston & Bird, told IGamingNews Friday.

In other words, if the United States and Antigua reach a settlement, and the United States withdraws its gambling commitments from GATS, the states will likely maintain their rights regarding remote gambling. At the same time, if a regulatory bill passes in Congress -- with an opt-out provision, for instance -- states' rights are still preserved, he explained.

In June 2007, Antigua filed for $3.4 billion in compensation from the United States over its decision to withdraw gambling services from GATS, and as of July 2008, no settlement had been reached between the parties.

IGamingNews could not confirm the current status of negotiations.

Click here to read Ms. Allen's resolution.

Utah Legislator Brings States' Rights to Fore in Federal I-Gaming Debate is republished from
Emily D. Swoboda
Emily D. Swoboda