Sunday, December 23, 2007

As Predicted, a WTO Mess

The recent arbitration decision by the World Trade Organization to award Antigua & Barbuda $21 million annually intellectual-property copyright abrogration sets a historical precedent of sorts. In another way of thinking, it does absolutely nothing at all. The WTO was left hung between two impossible extremes, being the pie-in-the-sky requests of Antigua's $3.44 billion claim and the U.S.'s insulting $500,000 offer in response. Worse, the WTO had to do something, since the organization's own existence and credibility was at stake. It was a real 'Sword of Damocles' moment for the WTO, with no good solution at hand.

When one realizes this, it becomes obvious that the WTO's decision was, in fact, quite logical. Despite the spin issued recently by Antigua's lead attorney, Mark Mandel, the point is that the original complaint was made in regards to Internet horseracing only, and not to all other forms of online wagering and gambling be that sportsbetting or poker or whatever. As such (and I'm not a lawyer, by the way, but this seems pretty easy), the WTO ensured its own continuing existence in part by adhering to a very strict 'letter of the complaint' resolution, simply not bothering to deal with the overall scope of Internet gambling in computing the amount of the judgment.

In fact, it's possible that the WTO didn't even use that much information in arriving at a figure, since both sides' 'offers' were clearly farcical. Maybe it went like this:

"What's Antigua's population? About 80,000? And how many of those had jobs in the online gambling sector? 1,500 or 2,000? And what's Antigua's annual GDP? About a billion? Okay, both these sides can shove their ridiculous numbers. 1,500 divided by 80,000 times a billion dollars sounds like a reasonable estimate for the value of the market, right?"

Granted, it was a bit more complex than that, but viewed in such a light, the $21 million annual judgment makes perfect sense. Even better, from the WTO's view, it's a figure that might be defensible and allow the WTO to stagger on after this case; the U.S.'s subsequent withdrawal of its commitments in the online sector highlighted the WTO's true nature as a kin of the United Nations... that is, a toothless beast.

As for online-gambling firms who looked for this case to be their savior? Lots of luck with that. A couple of recent news stories have claimed that a couple of major UK-based players are now starting their own WTO complaint through the European Union. That's something they should have done about four years ago, instead of idly sitting by and whistling into the wind. It'll take years for any real progress to be made in that area, and by the time it is,the nature of online gambling will have been irrevocably changed. It doesn't matter that later this year the 'Frist' faction that controlled these trade negotiations --- and in fact, controls the U.S. Executive Branch --- will very likely be out on its collective ear.

For major online-gambling interest, it's a grand, billion-dollar example of not heeding the signs, and of not doing the necessary work to keep rainy days from coming.

All's far from lost, of course, for online poker. The game's legality has never been directly challenged except through a couple of onerous (and likely unconstitutional) state laws, indirect spews from select conservative government officials notwithstanding. In addition, several important legal challenges remain, both as threats to the U.S.'s UIGEA and to the U.S. Trade Representative's ability to conduct unilateral WTO negotiations in the way it has.

Poker is gaining ground, turbulent times aside. Bet on it.

1 comment:

CSuave said...

I believe I read somewhere that the EU and the US have settled their complaint by allowing the EU access to their postal and courier business sectors which previously had been off limits to them. Basically the US govt felt like they already subsidize the post office so now they will let in competition so they can get out of the business and still keep internet poker and gambling away from the US citizens. LOL