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Internet Gambling

 
  • In 2004 Merrill Lynch estimated the internet gaming industry recorded a turnover of $6.3billion and estimated that number to rise to $86 billion in 2005.Nevertheless, the legal landscape for internet gambling in the United States is complex and includes international implications.



  • This 2002 report to the US Congress from the General Accounting Office provides an excellent overview. http://www.gao.gov/new.items/d0389.pdf
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  • In 2006 the Unlawful Internet Gambling Act became law in the United States.  The law bans internet gambling operations from accepting most forms of payment that a customer would use to gamble on the operators’ sites. The act also criminalizes transfer of funds to internet gambling operations by banks or other financial institutions that process credit card payments and checks. MORE
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  • Even before the 2006 statute passed, the U.S anti-gambling position was causing international conflicts.  In 2000, US citizen Jay Cohen was convicted of illegally using interstate telephone lines to take online wagers from U.S. customers through his operation World Sports Exchange ("WSE") IN ANTIGUA. MORE

 

  • The government of Antigua and Barbuda took issue with the United States’ application of rules regarding cross-border betting. Antigua and Barbuda argued that the US approach is inconsistent with obligations under the WTO General Agreement on Trade and Services (GATS).  Antigua and Barbuda argued that US action to prevent US-issued credit cards being used for gambling threatened the livelihoods of its citizens. It sees the ban as mainly aimed at protecting the huge U.S. betting industry from foreign competition.  The US had argued its prohibition helped to prevent money launder and protect vulnerable members of US society.

 

  • The WTO appeals panel recently upheld the 2004 decision favoring Antigua and Barbuda.  The summary decision is found at http://www.wto.org/English/tratop_e/dispu_e/cases_e/ds285_e.htm  After additional arbitration, in Dec. 2007, The Arbitrator determined that the annual level of nullification or impairments of benefits accruing to Antigua is $21 million and that Antigua may request authorization to suspend obligations under the TRIPS Agreement at a level not exceeding $21 million annually.

  • In 2008, the European Union launched an investigation launched earlier after European betting companies complained that U.S. actions against them were infringing world trade rules. Internet gambling generally is legal in the United Kingdom and other EU countries.  http://www.msnbc.msn.com/id/23560417/

Unlawful Internet Gambling contd...

 

<continued>...In 2006 the Unlawful Internet Gambling Act became law in the United States.  The law bans internet gambling operations from accepting most forms of payment that a customer would use to gamble on the operators’ sites. The act also criminalizes transfer of funds to internet gambling operations by banks or other financial institutions that process credit card payments and checks.

 

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United States V.Cohen

 

<continued>...Even before the 2006 statute passed, the U.S anti-gambling position was causing international conflicts.  In 2000, US citizen Jay Cohen was convicted of illegally using interstate telephone lines to take online wagers from U.S. customers through his operation World Sports Exchange ("WSE") IN ANTIGUA.

  • Cohen was convicted of conspiracy to violate the Wire Wager Act and seven substantive violations of the Wire Wager. Evidence presented at trial demonstrated that WSE was located in Antigua and that Cohen solicited Americans to call WSE through toll-free telephone numbers and to contact WSE via their website. The Wire Wager Act makes it a crime to use telephone lines in interstate or foreign commerce for the placement of sports bets. Cohen was sentenced to 21 months in prison and fined $5000.
 

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© 2008 Larry Garrison & Rita Marie Cain

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