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Tony Batt

Online Gambling Back in Forefront

2 April 2004

WASHINGTON, DC -- Sen. Jon Kyl, R-Ariz., a staunch foe of Internet gambling, said Thursday a recent ruling by the World Trade Organization may spur Congress to finally approve legislation to prevent Americans from wagering at offshore Web sites.

A three-member WTO panel declared on March 24 that federal prohibitions against Internet gambling are an unfair trade barrier.

"This could demonstrate the need for the United States to act and demonstrate its resolve," Kyl said.

The WTO decision was a victory for Antigua and Barbuda, two Caribbean islands that are havens for Internet gambling businesses. Americans account for about 60 percent of the Internet gambling market.

A spokesman for U.S. Trade Representative Robert Zoellick described the ruling as deeply flawed and said there would be an appeal to the WTO's seven-member panel of trade judges.

Gross revenues for Internet gambling have mushroomed from $445 million in 1997 to an estimated more than $4 billion last year. There were about 1,800 online Web sites last year, and that number is surging.

Despite scathing criticism from the Bush administration, Kyl and other lawmakers, the WTO decision may make it more difficult for Congress to pass Internet gambling legislation this year, according to Joe Kelly, a business law professor at State University of New York at Buffalo.

"I think a lot of very thoughtful senators are going to ask themselves if they really want to ignore a WTO ruling," said Kelly, who helped write Internet gambling regulations for Antigua. "The WTO is not popular, but how can the United States ask other countries to obey WTO's rulings if it will not?"

Even though the American Gaming Association opposes Kyl's bill, association President Frank Fahrenkopf said the WTO ruling should make senators more likely to support Internet gambling restrictions.

"I don't see much of an appetite in the Senate for letting the WTO tell us what our internal policy ought to be," Fahrenkopf said.

But Fahrenkopf acknowledged there has been no progress in resolving the association's objections to Kyl's bill since it passed the Senate Banking Committee in July on a 19-0 vote.

The casinos Fahrenkopf represents object to a provision that would prohibit states from legalizing Internet gambling within their own borders.

"If there is an attempt to push the bill in its current form through the Senate, we will do everything we can do to oppose it," Fahrenkopf said.

The association took a neutral position on a bill approved in June by the House that would outlaw the use of credit cards, checks and electronic fund transfers to pay for online wagers.

Unless the Senate approves Kyl's bill and works out differences with the House bill, the eight-year quest by Congress to restrict Internet gambling will continue to be unsuccessful.