10/14/2004 11:00PM

Bill opens up a world of possibilities


The United States government and the World Trade Organization have sparred on many issues. Two of the rifts have affected gambling in the U.S., but now one of the major impediments appears out of the way.

The Foreign Sales Corporation bill, which would repeal export tax breaks ruled illegal by the WTO, passed the U.S. House of Representatives by a 280-141 vote and the Senate by a 69-17 vote. A spokesperson for President Bush said he would sign the bill.

"This legislation achieves a good balance by ending escalating sanctions on American products . . . and leveling the playing field for U.S. businesses competing in a worldwide economy," wrote Rep. Bill Thomas, Republican chairman of the House Ways and Means Committee.

The FSC bill should end a debilitating dispute with the European Union over U.S. tax breaks to exporters. Previously, the WTO had approved $4 billion in retaliatory tariffs on U.S. exports by the EU. Those, hopefully, will be allowed to expire.

This will help many U.S. industries, including horse racing. If and when an onerous 30 percent withholding tax on foreign wagers fades away, it will open up the estimated $85 billion worldwide horse racing market to U.S. common pool wagering.

If the U.S. horse racing industry could tap into 10 percent of the world market, that would increase total wagering here by $8.5 billion.

The second gambling issue involving the U.S. versus WTO is Internet gambling.

The tiny Caribbean island of Antigua had filed a complaint with the WTO after the U.S. had prosecuted American citizen Jay Cohen, president of the World Sports Exchange gambling website. Cohen had moved to Antigua and set up his Internet company there.

Upon returning to the U.S., Cohen was arrested and convicted for accepting illegal wagers on sporting events and sentenced to 21 months in prison.

After Cohen's conviction, Antigua acted, taking the position that the U.S. was in violation of the General Agreement on Trade in Services (GATS) by not complying with its own global trade commitments.

The WTO sided with Antigua, but the ruling has not changed U.S. policy against Internet gambling one iota.

The Bush administration opposes Internet gambling because of the social cost, including illegal wagering by underage children. Plus, they fear that terrorists will use it as a tool for money laundering.

Las Vegas casino operators would love a chance to compete for global Internet gambling dollars. Industry analysts predict the marketplace will mushroom to $15 billion by 2006. With a mature, highly regulated industry in Nevada and brand names known and trusted worldwide, Las Vegas casino websites would attract enormous business.

"We're going down one path, and the rest of the world is going down a completely different path," Sebastian Sinclair, Internet research analyst for Christiansen Capital Advisors, said in a New York Times interview.

Meanwhile, the frustration is that millions of Americans are already gambling online. There's nothing the U.S. government can do to stop it, and millions of dollars in potential tax revenue are lining other people's pockets.