05/24/2007 12:00AM

U.S. backs off gambling pact

Email

The United States has informed the World Trade Organization that it has withdrawn a previous commitment to open the U.S. to international gambling markets, a move that has the potential to resolve a dispute that threatened horse racing's exemption to a ban on Internet gambling.

The United States made the decision to withdraw from the commitment in the wake of a ruling two years ago by the WTO that said the U.S. was in violation of international treaties because the country had declared that gambling operations in Antigua could not take bets from U.S. residents. The ruling stated that the United States could not prohibit overseas countries from taking bets in the U.S. because of the legality of interstate gambling on horse racing.

Horse racing officials had feared that the United States would put pressure on the U.S. legislature to remove horse racing's exemption from a federal ban on Internet wagering in order to resolve the dispute. The withdrawal by the U.S. from the commitment, however, now means that the U.S. does not have to abide by the WTO's rulings in gambling cases.

"This is a great day for the parimutuel industry," said Alex Waldrop, the president of the National Thoroughbred Racing Association, which conducts lobbying efforts on behalf of the Thoroughbred industry. "The WTO will no longer play a role in the global debate on U.S. regulation of gambling services over the Internet."

The United States made the commitment to the WTO about opening its markets during the Clinton administration. Under that commitment, the U.S. would be obliged to allow international companies to provide services that were legal in the U.S., under so-called consistent applications of trade guidelines.

Antigua had argued that the United States was in violation of that commitment when Antigua sought to enter the U.S. markets and was instead prohibited from taking bets from U.S. customers, under laws that said Internet gambling was illegal in the U.S. The WTO agreed with Antigua, based on the exemption for horse racing that gives Internet companies the ability to accept wagers across state lines.

Since the ruling, the U.S. has argued in front of the WTO that gambling activities should be exempted from the trade guidelines on "moral" grounds. The WTO was in the process of determining whether Antigua could retaliate against the United States by prohibiting U.S. companies from doing business in the country.