UNITED STATES LOSES INTERNET GAMBLING DISPUTE TO MINNOW
Absence of military option proves US is able to negotiate

by gary ilines
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In an era of strong-arm military tactics by the world's one remaining superpower, exposing international organisations as impotent and international law at times as irrelevant, the victory of the small Carribean nation of Antigua and Barbuda over the United States breathes qualified hope into the lungs of not only the online gambling industry but of all people in the world.

Antigua and Barbuda, a tiny nation of 67,000 people, suffered throughout the 1990's as tourism declined, and the country was advised by none other than the World Bank to begin diversifying into Internet services as a replacement industry. The most lucrative of these subsequently developed Internet services became online gambling, with the United States by far the major consumer.

Anti-online gambling legislation imposed on its own population by the US federal government over the past few years, most notably the attempted ban on money transfers to overseas casinos, has hit the online gambling business in Antigua in a big way, directly reducing the turnover to a fifth of its previous level. Antigua took their case to the World Trade Organisation in July 2003, arguing that the US prohibition was in violation of America's obligations under the General Agreement on Trade in Services (GATS). In March 2004, the WTO ruled in favor of Antigua, and this month the US decided not to appeal. The two nations have now entered into private negotiations.

This case is particularly painful to the United States, and poignant to the observer, because Antigua was where Jay Cohen - the man imprisoned in the US for operating an online casino from the islands - ran his online gambling operation. Jay Cohen always claimed that he was acting within Antiguan, US, and international law, and this ruling by the WTO is further evidence in his favor. In fact, it is the US who is violating the law. Cohen is currently in the process of being released (unconnected to the WTO ruling), and as a result of this ruling in favor of Antigua it looks increasingly likely that he will wish to return to Antigua upon full release and continue his online gambling operation. This will be a major blow to US federal pride, a major vindication of Mr. Cohen, and a great victory for the online gambling industry.

Both parties to this latest dispute have requested that proceedings be suspended pending private negotiations, which suggests that America is ready to strike a deal with Antigua. Perhaps there will be a provision for Jay Cohen as part of the deal. That is pure speculation, but one thing for sure is that the case is far from resolved. US motives remain obscure. The official US federal line is that they wish to protect minors and the morally weak from the evil of online gambling. Others suggest that the US is just trying to protect its own gambling business. Jay Cohen claimed that his incarceration was simply a case of trying to eliminate the competition. One thing that's clear: 75% of the world's 7.5 billion dollar online gambling industry's business comes from American bottoms on American computer chairs in American homes. Yet the evil is coming from abroad? Noam Chomsky calls this "Selective Perception".

One interesting thing which this case shows is that the United States can be called upon to enter into negotiations when military action is not an option, and international law can have an effect on US trade policy, if not foreign policy. "We look forward to working with Antigua to discuss the issues surrounding the dispute and hopefully to resolving it," said Richard Mills, a spokesman for the U.S. Trade Representative's office. Not the kind of jaw-jaw to which we have become accustomed of late.

Nevertheless, it remains to be seen to what extent the United States is yet able to cast the shadow of power across the negotiation table, as former Secretary of State George Shultz once put it. Antigua and Barbuda retains the option of refering the case back to the WTO should talks break down, but having entered into negotiations the United States will be very keen to arrive at an agreement.