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E-Gambling : Antigua vs. United States By Izabella Zakaryan Andrea Zizack

E-Gambling : Antigua vs. United States By Izabella Zakaryan Andrea Zizack. History. Increasing Popularity of web gambling Total Revenue = $ 6 billion Antigua and Barbuda became major hosts of the e-gambling industry U.S. restrictions A high participation by US citizens. TIMETABLE.

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E-Gambling : Antigua vs. United States By Izabella Zakaryan Andrea Zizack

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  1. E-Gambling:Antigua vs. United States By Izabella Zakaryan Andrea Zizack

  2. History • Increasing Popularity of web gambling • Total Revenue = $ 6 billion • Antigua and Barbuda became major hosts of the e-gambling industry • U.S. restrictions • A high participation by US citizens

  3. TIMETABLE • March 21, 2003 first consultation requested by Antigua and Barbuda • June 12, 2003 establishment of a panel requested by Antigua and Barbuda • August 2003 a panel was composed • August 2004 the panel proceedings were suspended • November 2004 negotiations were redeemed • November 10, 2004 the Panel reported its decisions • January 2005 both parties appealed on certain issues • March 2005 the case went to the Appellate Body • April 7, 2005 a final decision was reached

  4. US FEDERAL LAWS • The Federal Wire Act 1967 • The Travel Act 1961 • The Illegal Gambling Business Act 1970

  5. The Travel Act (a) “Whoever travels in interstate or foreign commerce or uses the mail or any facility in interstate or foreign commerce, with intent to - (1) distribute the proceeds of any unlawful activity; or (2) commit any crime of violence to further any unlawful activity; or (3) otherwise promote, manage, establish, carry on, or facilitate the promotion, management, establishment, or carrying on, of any unlawful activity, and thereafter performs or attempts to perform - (A) an act described in paragraph (1) or (3) shall be fined under this title, imprisoned not more than 5 years, or both; or (B) an act described in paragraph (2) shall be fined under this title, imprisoned not more than 20 years, or both, and if death results shall be imprisoned for any term of years or for life.”

  6. The Federal Wire Act [58] Subsection (a) of the Wire Act, a criminal provision, provides: “Whoever being engaged in the business of betting or wagering knowingly uses a wire communication facility for the transmission in interstate or foreign commerce of bets or wagers or information assisting in the placing of bets or wagers on any sporting event or contest, or for the transmission of a wire communication which entitles the recipient to receive money or credit as a result of bets or wagers, or for information assisting in the placing of bets or wagers, shall be fined under this title or imprisoned not more than two years, or both.[59]”

  7. Illegal Gambling Business Act “In order to prove a prima facie case under this statute, [124] the government must establish that there is a gambling operation which (1) is in violation of state or local law where it is conducted, (2) involves five or more persons that conduct, finance, manage, supervise, direct or own all or part of the business and (3) remains in substantially continuous operation for more than thirty days or has a gross revenue of $2,000 in any given day. [125]”

  8. WTO Agreements • GATS- The first multilateral trade agreement in trade services “GATS is intended to contribute to trade expansion under conditions of transparency and progressive liberalization and as a means of promoting the economic growth of all trading partners and the development of developing countries” Articles VI, XI, XVI, XVII

  9. Antigua Position • Claimed that certain restrictions imposed by the US through federal and state laws resulted in a total prohibition on the cross-border supply of gambling and betting services from Antigua • Argued that the US’ prohibition on the cross-border supply of gambling and betting services and its measures restricting international money transfers and payments relating to gambling and betting services are inconsistent with US’ Schedule of specific commitments under the GATS as well as Articles XVI:1, XVI:2, XVII:1, XVII:2, XVII:3, VI:1, VI:3, and XI:1 of GATS • US has made full market access and national treatment commitments (that is, inscribed “None” in the relevant columns of its GATS Schedule) and is acting inconsistently with its obligations under its GATS Schedule

  10. US Position • The items cited as “measures” in Section III of the Annex to the panel request are not in fact “measures” within the meaning of Article 6.2 of the Understanding on Rules and Procedures Governing the Settlement of Disputes, and are therefore not within the terms of reference of this Panel • Antigua’s request for establishment of the Panel improperly included certain measures that were not the subject of consultations.

  11. Panel Decision • Findings of the panel were in favor of Antigua • Three US federal laws (the Wire Act, the Travel Act and the Illegal Gambling Business Act) and the provisions of four US state laws (those of Louisiana, Massachusetts, South Dakota and Utah) on their face, prohibit one, several or all means of delivery included in mode 1 of GATS (i.e. cross-border supply), contrary to the United States’ specific market access commitments for gambling and betting services for mode 1. • US failed to accord services and service suppliers of Antigua treatment no less favorable than that provided for under the terms, limitations and conditions agreed and specified in the US Schedule, contrary to Article XVI:1 and Article XVI:2 of the GATS (i.e. concerning market access)

  12. Panel Decision • The United States was not able to invoke successfully the GATS exceptions provisions. In this regard, the United States was not able to demonstrate that the Wire Act, the Travel Act and the Illegal Gambling Business Act are “necessary” under Articles XIV(a) and XIV(c) of the GATS (i.e. “exceptions” provisions, including for public morals) and are consistent with the requirements of the Article XIV of the GATS • Antigua failed to demonstrate that the measures at issue are inconsistent with Articles VI:1 and VI:3 of the GATS (i.e. concerning domestic regulation) • In response to the panel’s findings, both the US and Antigua filed appeals

  13. Appellate Body Decision • Upheld the Panel’s finding that an alleged “total prohibition” on the cross-border supply of gambling and betting services cannot, in and of itself, constitute a “measure” subject to dispute settlement under the GATS • Found that the Panel should not have ruled on claims advanced by Antigua with respect to eight state laws of the United States, as to which Antigua had not made a prima facie case of inconsistency with the GATS • Upheld the Panel’s finding that the United States acts inconsistently with Article XVI:1 and sub-paragraphs (a) and (c) of Article XVI:2 by maintaining certain limitations on market access not specified in its Schedule

  14. Appellate Body Decision • Upheld the Panel’s finding that the United States’ Schedule includes a commitment to grant full market access in gambling and betting services • Reversed the Panel’s finding that the United States had not shown that the three federal statutes are “necessary to protect public morals or to maintain public order”, within the meaning of Article XIV(a); found that the United States’ measures are justified under Article XIV(a) of the GATS as measures “necessary to protect public morals or to maintain public order”; and upheld the Panel’s finding that the United States had failed to show that these measures satisfy the conditions of of Article XIV • Both sides claimed victory

  15. Implementation • At the DSB meeting of 19 May 2005, the United States stated its intention to implement the DSB’s recommendations and indicated that it would need a reasonable period of time to do so • Antigua and US failed to agree on a reasonable time of period for implementation • An arbitrator was appointed and determined a reasonable period of time for implementation was 11 months and 2 weeks from 20 April 2005, expiring on 3 April 2006.

  16. Implementation • Antigua has complained that the deadline is approaching and the US has yet to take any action • Congress has had two new pieces of legislation brought before the House since November but not for compliance with the DSB rulings • Unlawful Internet Gambling Enforcement Act of 2005 (introduced in House on November 18, 2005) to prevent the use of certain payment instruments, credit cards, and fund transfers for unlawful Internet gambling • Internet Gambling Prohibition Act (introduced in House on February 16, 2006) to expand and modernize the prohibition against interstate gambling

  17. Proposals & Recommendations • Adopt the federal and state laws that compliment WTO agreements and bring current laws into compliance • Implement and enforce regulations on e-gambling • Work with UK, Australia, New Zealand and the Caribbean Countries

  18. Resources • http://www.icasit.org/ecommerce/e_Gambling.html • http://www.iagr.org/docs/2005_agenda/wgminutes_092105.pdf • http://news.zdnet.com/2100-9588_22-6027442.html • http://www.guardian.co.uk/gambling/story/0,,1687713,00.html • http://news.yahoo.com/s/nm/20060217/wr_nm/trade_gambling_wto_dc • http://www.ustr.gov/Trade_Agreements/Monitoring_Enforcement/Dispute_Settlement/WTO/Dispute_Settlement_Index_-_Pending.html

  19. Resources • http://www.ustr.gov/assets/Trade_Agreements/Monitoring_Enforcement/Dispute_Settlement/WTO/Dispute_Settlement_Listings/asset_upload_file509_5581.pdf • http://frwebgate.access.gpo.gov/cgi-bin/getdoc.cgi?dbname=109_cong_bills&docid=f:h4411ih.txt.pdf • http://frwebgate.access.gpo.gov/cgi-bin/getdoc.cgi?dbname=109_cong_bills&docid=f:h4777ih.txt.pdf • http://www.wto.org/english/tratop_e/serv_e/serv_e.htm • http://www.wto.org/english/tratop_e/dispu_e/cases_e/ds285_e.htm • http://www.gambling-law-us.com/Federal-Laws/

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