{"id":4877,"date":"2014-02-05T15:54:28","date_gmt":"2014-02-05T10:24:28","guid":{"rendered":"http:\/\/lex-warrier.in\/?p=4877"},"modified":"2023-07-01T15:47:08","modified_gmt":"2023-07-01T15:47:08","slug":"international-trade-gambling-services","status":"publish","type":"post","link":"https:\/\/lex-warrier.in\/archives\/international-trade-gambling-services.html","title":{"rendered":"International Trade in Gambling Services"},"content":{"rendered":"<p align=\"right\"><strong>Parth Chandra<\/strong> ((Hidayatullah National Law University, Raipur))and <strong>Sajid Sheikh<\/strong> ((National Law University, Jodhpur)).<\/p>\n<p style=\"text-align: justify;\">In World Trade Organisation (WTO) jurisprudence, \u2018gambling &amp; betting services\u2019 includes any activity involving the placing of bet or wager, that is, instances in which a person risks something of value (generally money) on the outcome of an uncertain event ((US Gambling, panel report, para. 445)). In this view, a bet or a wager can be made with respect to casino- type games, lotteries &amp; sporting events, irrespective of how these services are supplied. Thus, gambling services should be considered to cover any service which involves wagering a stake with monetary value in uncertain events driven at least partially by chance, including lotteries, casino and betting transactions.\u00a0 This definition thus covers, without limitation, online and offline market sectors, both charitable &amp; commercial \u2013run lotteries, betting services (including horse &amp; dog racing, event betting &amp; pool competitions); casino games, including table games, slot machines, bingo games, etc; services related to gambling machines that can be placed in locations other than licensed casinos and media gambling services. In this research paper the focus would be specific to online gaming industry in International Trade law. Gambling through Internet is the largest sector in games of chance. Some gambling internet sites require the downloading of a computer programme on the hard disk in order to play. Others use JAVA applets to run through the World Wide Browser, while others use all HTML and do not require any downloading.\u00a0 It is estimated that in 2009 more than 33% of online gaming concerned Internet Casinos, while 25% concerned poker rooms and 14% gambling sites ((See a presentation by Williams Robert &amp; Robert Wood, University of Lethbridge, Alberta, at the Alberta Gaming Research Institute Annual Conference held on 27th Mar. 2009, available at <i>&lt;http\/\/.gaming.uleth.ca\/agri_downloads\/4455\/Williams_AGRI_Conference_2009.ppt&gt;<\/i>)).\u00a0 As to physical locations of servers used for online gambling, it seems that Gibraltar, the Kahnawake Mohawk Territory in Canada, Malta, the United Kingdom, and Alderney represent today top 5 jurisdictions for Internet gambling. With gambling services national regulation of cross-border gambling services has also to be analysed to check the legality of gambling services in different jurisdictions of the World. Although this research paper focuses primarily on the international perspective of gambling services, it is not without importance to assess the national legal framework attached in different jurisdictions to cross border gambling transactions which are now facilitated by technology GATS has been playing a major role in promoting trade in service industry. Even gambling services has been regulated by GATS in market access and schedule of specific commitments.<\/p>\n<h2 style=\"text-align: justify;\"><b>National Regulation of Cross-Border Gambling Services<\/b><\/h2>\n<p style=\"text-align: justify;\">In most jurisdictions, gambling is considered problematic activity, which bears special societal concerns. Thus many legislators have strived to control &amp; limit the \u2018traditional games of chance as much as possible and prevent them from going online. That is the case in Saudi Arabia, for instance, where the government has chosen to prohibit gambling internet services and users blocking programmes to enforce prohibition. In United States, too, gambling online is restrictive inter alia by a federal act of 2006. Such jurisdictions were called \u2018totally prohibitive\u2019 ((See Eva Schriever, \u2018Conflict &amp; Coordination between Diverse Regulatory Environments\u2019 in Cross-Border Gambling on the Internet: Challenging National &amp; International Law, research conducted by the Swiss Institute of Comparative Law , Schutless, 200)).<\/p>\n<h2 style=\"text-align: justify;\"><b>Indian Perspective: Legality in Gaming &amp; Gambling Services<\/b><\/h2>\n<p style=\"text-align: justify;\">Till now India does not have its own dedicated online gaming and gambling laws. This has created an atmosphere of uncertainty and fear among the online gaming entrepreneurs in India. This is also of the reason why very few players have entered into online gaming area. For instance online forex trading sites like hotforex.com &amp; iforex.com were neither banned nor allowed by Indian laws until a circular was issued by RBI on 17<sup>th<\/sup> September 2013 ((RBI\/2013-14\/265 A.P (DIR Series) Circular No. 46)). In India online poker gaming services is still a grey area and there are no specific laws to state whether they are legal or illegal. However the scenario is fast changing in a limited dimension after few judgements of High Courts of India protecting \u201cGames of Skills\u201d from criminal actions. Very recently on 7<sup>th<\/sup> January 2014 the Karnataka High Court in one of its rulings held that playing \u201cRummy\u201d online is not a criminal offence as it involved \u201cApplication of Skills\u201d. ((http:\/\/perry4law.org\/onlinegamingandgambling\/wp-content\/uploads\/2014\/01\/Kirana-S-v.-State-of-Karnataka-Criminal-Petition-No.-76482013.pdf))In fact another related matter is pending before Supreme Court and thus that ruling will decide the faith of online gaming industry in India. However one thing is quite certain and clear that unlike India\u2019s counter parts India has not allowed cross border gaming or gambling services and accordingly it has placed its restrictions in its Schedule of Commitments under WTO.<\/p>\n<h2 style=\"text-align: justify;\"><b>Legality in Canada &amp; USA: Gambling Services<\/b><\/h2>\n<p style=\"text-align: justify;\">Part VII of the Canadian Criminal Code makes all activities relating to operating or acting in support of a commercial betting enterprise is an offence, unless it is an enterprise licensed by a provincial government (Sec 207 (1) (a) of the code.) A criminal prosecution based on provisions of section 202 of the code was initiated in 2001 against an Antiguan based online operator that was offering bets to Canadian residents ((R vs. Starnet Communications International Inc., 17 Aug 2001, Vancouver 125795)).<\/p>\n<p style=\"text-align: justify;\">In United States, gambling transactions are subject to highly restrictive regulations both at state and federal laws. The situation of online gambling was clarified in 2006 when the Unlawful Gambling Enforcement Act was adopted. While the Act does not expressly prohibit Internet Gambling it focuses on payment methods used to fund internet gambling to fulfil its goal since it prohibits the acceptance of any payment instrument for unlawful internet gambling.<\/p>\n<p style=\"text-align: justify;\">In other jurisdictions gambling is allowed through licensing &amp; other regulatory methods such as Australia, Switzerland &amp; some European nations have adopted regulatory policy rather than keeping a blanket ban on online gambling.<\/p>\n<h2 style=\"text-align: justify;\"><b>GATS: Supply of Gambling Services\u00a0\u00a0 <\/b><\/h2>\n<p style=\"text-align: justify;\">Under GATS supply of services are pursuant to Article I: 2. they are as follows:<\/p>\n<p style=\"text-align: justify;\">(A)\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 Cross Border Trade \u2013 MODE 1<\/p>\n<p style=\"text-align: justify;\">(B)\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 Consumption Abroad \u2013 MODE 2<\/p>\n<p style=\"text-align: justify;\">(C)\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 Commercial Presence \u2013 MODE 3<\/p>\n<p style=\"text-align: justify;\">(D)\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 Presence of Natural Persons \u2013 MODE 4<\/p>\n<p style=\"text-align: justify;\">In this paper the main stress is on Cross Border Supply as the research paper primarily focuses on online gambling industry.<\/p>\n<p style=\"text-align: justify;\">In Cross Border Trade a user in member state receives services from another member state through its telecommunications or portal infrastructure.\u00a0 Under cross border trade market access and national treatment which is covered in GATS is unconditional in nature. A member state under schedule of specific commitment has allowed another member state unrestricted entry in a particular sector. Then the member state is bound by the principles of national treatment and market access. The member states can only resort to inconsistent measures if there are no alternative measures available in exceptions under Article XIV under the head of public morality. The most famous case on Gambling services which cannot be ignored while talking about Gambling services is US-GAMBLING which will be dealt in this paper in detail and exceptions to it will also be dealt.<\/p>\n<h2 style=\"text-align: justify;\"><b>MARKET ACCESS <\/b><\/h2>\n<p style=\"text-align: justify;\">The market access provisions laid down in Article XVI, covers six types of restrictions that must be maintained in absence of limitations. The restrictions relate to:-<\/p>\n<ul style=\"text-align: justify;\">\n<li>The number of service suppliers<\/li>\n<li>The value of service transactions or assets<\/li>\n<li>The number of operations or quantity of output<\/li>\n<li>The number of natural persons supplying a service<\/li>\n<li>The type of legal entity or joint venture<\/li>\n<li>The participation of foreign capital<\/li>\n<\/ul>\n<h2 style=\"text-align: justify;\"><b>National Treatment (Article XVII)<\/b><\/h2>\n<p style=\"text-align: justify;\">It implies that the absence of all discriminatory measures that may modify the conditions of competition to the detriment of foreign services or service suppliers. The national treatment obligation applies regardless of whether or not foreign services &amp; supplies are treated in a formally identical way to their national counterpart. This article is concerned that there are equal opportunities to compete.<\/p>\n<h2 style=\"text-align: justify;\"><b>US-GAMBLING CASE: A DETAILED ANALYSIS<\/b><\/h2>\n<p style=\"text-align: justify;\">The United States started\u00a0 cracking\u00a0 down\u00a0 on foreign-based internet\u00a0 betting parlours\u00a0 in 1998, when\u00a0 federal\u00a0 prosecutors charged\u00a0 21 U.S. citizens connected\u00a0\u00a0 to\u00a0 offshore\u00a0\u00a0 internet\u00a0\u00a0 gambling\u00a0\u00a0 with\u00a0 violations\u00a0\u00a0 of\u00a0 the\u00a0 Wire\u00a0 Act (Hansen\u00a0 2006). Among them was Jay Cohen, an American citizen and former stock trader who had been\u00a0 operating\u00a0 the Antigua-based\u00a0 World Sports Exchange\u00a0\u00a0 (which\u00a0\u00a0 had\u00a0\u00a0 10,000\u00a0 customers\u00a0\u00a0 that\u00a0\u00a0 year)\u00a0\u00a0 (Kanigher\u00a0\u00a0 2003). Twenty\u00a0 of\u00a0 the\u00a0 indicted\u00a0\u00a0 persons\u00a0\u00a0 entered\u00a0\u00a0 guilty\u00a0 pleas,\u00a0\u00a0 had\u00a0\u00a0 their\u00a0 cases dropped, or remained\u00a0 outside\u00a0 the United States as fugitives, but Cohen re- turned\u00a0 to the United States to contest\u00a0 his case in court (Brunker\u00a0 2001). He lost in 2000 and\u00a0 was sentenced to 21 months\u00a0 in prison\u00a0 and\u00a0 fined $5,000, becoming\u00a0 the first person\u00a0 convicted\u00a0 in the\u00a0 United\u00a0 States for operating\u00a0 an offshore internet gambling website (Hansen\u00a0 2006). He outlined\u00a0 his case\u00a0 in a memo\u00a0 sent\u00a0 to the\u00a0 government of Antigua, and\u00a0 Antigua\u2019s prime minister\u00a0 hired\u00a0 Mendel\u00a0 to\u00a0 file suit\u00a0 against\u00a0 the\u00a0 United\u00a0 States\u00a0 at\u00a0 the\u00a0 WTO. In March 2003, Antigua initiated the dispute\u00a0 resolution\u00a0 process\u00a0 of the WTO to challenge\u00a0 the\u00a0 United\u00a0 States\u2019 prohibition on\u00a0 the\u00a0 cross-border\u00a0 supply\u00a0 of online gambling services.\u00a0\u00a0 A Dispute\u00a0 Panel (\u201cPanel\u201d), formed in June 2003, determined that the United States had made a commitment\u00a0 to free trade in online\u00a0 gambling\u00a0 services\u00a0 in GATS Section 10.D, \u201cOther \u00a0Recreational\u00a0 Services, Excluding Sporting.\u201d\u00a0\u00a0\u00a0 The Panel found\u00a0 that three\u00a0 U.S. federal\u00a0 laws, including\u00a0 the Wire Act, contravened this commitment\u00a0 (the other\u00a0 two were the\u00a0 Travel Act, 18 U.S.C. \u00a7\u00a0 1952, and\u00a0 the\u00a0 Illegal Gambling\u00a0 Business\u00a0 Act (IGBA), 18 U.S.C. \u00a7\u00a0 1955).\u00a0\u00a0 State laws in Louisiana,\u00a0 Massachusetts,\u00a0 South Dakota, and Utah were also found to obstruct free trade in online gambling services.\u00a0\u00a0\u00a0 The\u00a0 Panel\u00a0 determined that\u00a0 the\u00a0 cumulative\u00a0 effect of these\u00a0 laws was\u00a0 inconsistent\u00a0 with\u00a0 the\u00a0 United\u00a0 States\u2019 commitments\u00a0 under\u00a0 GATS, and made\u00a0 a confidential\u00a0 ruling in favour of Antigua in March 2004.\u00a0 The Panel\u2019s report was released publicly in November 2004 after unsuccessful negotiations between the parties.<\/p>\n<p style=\"text-align: justify;\">In January 2005, the United States appealed this ruling to the WTO\u2019s Appellate Body\u00a0\u00a0 (\u201cBody\u201d). Antigua filed a cross-appeal shortly thereafter, and both countries made oral arguments\u00a0 before\u00a0 the\u00a0 Body.\u00a0\u00a0 In April 2005, the Body issued a report that generally upheld the Panel\u2019s findings.\u00a0 It affirmed that the United States had committed\u00a0 to free trade in online\u00a0 gambling\u00a0 services\u00a0 and\u00a0 ruled\u00a0 that\u00a0 the\u00a0 three\u00a0 federal\u00a0 laws\u00a0 violated\u00a0 these\u00a0 commitments (although\u00a0 it did not refer to other\u00a0 state and\u00a0 federal\u00a0 laws that Antigua had sought\u00a0 to include).<\/p>\n<p style=\"text-align: justify;\">In January 2005, the United States appealed this ruling to the WTO\u2019s Appellate Body (\u201cBody\u201d). Antigua filed a cross-appeal shortly thereafter, and both countries made oral arguments before the Body.\u00a0\u00a0 In April 2005, the Body issued a report that generally upheld the Panel\u2019s findings.\u00a0 It affirmed that the United States had committed\u00a0 to free trade in online\u00a0 gambling\u00a0 services\u00a0 and\u00a0 ruled\u00a0 that\u00a0 the\u00a0 three\u00a0 federal\u00a0 laws\u00a0 violated\u00a0 these\u00a0 commitments (although\u00a0 it did not refer to other\u00a0 state and\u00a0 federal\u00a0 laws that Antigua had sought\u00a0 to include).\u00a0 \u201cchapeau\u201d\u00a0 condition\u00a0 that\u00a0 regulations\u00a0 not\u00a0 discriminate\u00a0 between countries, noting\u00a0 that\u00a0 some\u00a0 U.S. companies are\u00a0 allowed\u00a0 to offer internet\u00a0 gambling services by accepting\u00a0 online wagers on horseracing. In May 2007, the\u00a0 United\u00a0 States responded by invoking\u00a0 procedures under GATS Article XXI to modify its schedule\u00a0 of commitments,\u00a0 specifically excluding\u00a0 online\u00a0 gambling\u00a0 from its recreational\u00a0 services commitments.<\/p>\n<h2 style=\"text-align: justify;\"><b>Consequences of Such Act: Retaliation<\/b><\/h2>\n<p style=\"text-align: justify;\">The WTO generally grants aggrieved countries\u00a0 the right to suspend concessions and other obligations\u00a0 when\u00a0 partners\u00a0 violate their trade commitments, but\u00a0 these\u00a0 remedies\u00a0 are\u00a0 usually\u00a0 narrow,\u00a0 specific\u00a0 adjustments\u00a0\u00a0 to\u00a0 bilateral trade,\u00a0 aimed\u00a0 at prohibiting\u00a0 an amount\u00a0 of offending-country exports\u00a0 equal in value to the damage\u00a0 caused\u00a0 by the offense (often through\u00a0 the imposition of ad valorem tariffs) (Chang 2004). In Article 22.3 of its Dispute Settlement Understanding, the WTO states that suspensions should be confined to the same sector where the violation occurred if possible (WTO n.d.). However, when\u00a0 no same-sector\u00a0 retaliation options\u00a0 would\u00a0 provide\u00a0 adequate compensation,\u00a0 the\u00a0 WTO has\u00a0 been\u00a0 willing to authorize\u00a0 cross-retaliation. Antigua successfully argued that raising duties on U.S. services imports would harm its economy without significantly affecting the United States.\u00a0 About 49 per- cent\u00a0 of Antigua\u2019s total goods\u00a0 and\u00a0 services\u00a0 imports\u00a0 come\u00a0 from the\u00a0 United States,\u00a0 but\u00a0 this\u00a0 amounts\u00a0 to\u00a0 less\u00a0 than\u00a0 0.02\u00a0 percent\u00a0\u00a0 of\u00a0 total\u00a0 U.S. exports. No country has actually suspended IP rights in accordance with a WTO ruling, so the online gambling dispute is in uncharted territory.\u00a0 Antigua could ignore U.S. copyrights on software, movies, and music owned by U.S. companies, and sell up to $21 million worth of these media annually in domes- tic markets. Antigua could also grant compulsory\u00a0\u00a0 licenses and produce U.S.-patented products such as pharmaceuticals.\u00a0 However,\u00a0 while it is inexpensive\u00a0 to\u00a0 reproduce most\u00a0 copyrighted materials,\u00a0 many\u00a0 patented goods need\u00a0 to be\u00a0 manufactured, and\u00a0 Antigua\u2019s potential\u00a0 gains\u00a0 from patent\u00a0 suspension\u00a0 are limited by its lack of capacity\u00a0 to produce goods\u00a0 such as pharmaceuticals.\u00a0\u00a0 And getting rid of trademarks,\u00a0 which identify the producer of a product\u00a0 and\u00a0 inform\u00a0 consumers where\u00a0 to\u00a0 seek\u00a0 recourse\u00a0 if the\u00a0 product fails, could\u00a0 erode\u00a0 the\u00a0 quality\u00a0 and\u00a0 safety\u00a0 of\u00a0 consumer\u00a0\u00a0 goods.<\/p>\n<h2 style=\"text-align: justify;\"><b>Conclusion<\/b><\/h2>\n<p style=\"text-align: justify;\">The Antigua-United States online\u00a0 gambling\u00a0 dispute\u00a0 resulted\u00a0 from a combination\u00a0 of U.S. legislative processes\u00a0 that struggled\u00a0 to balance\u00a0 competing\u00a0 interests\u00a0 and\u00a0 U.S. services\u00a0 trade\u00a0 commitments\u00a0 made\u00a0 in a sector\u00a0 that\u00a0 developed\u00a0 unexpectedly.\u00a0 As the online gambling industry grew, U.S. laws governing online gambling were stuck in a state of ambiguity, and in the eyes of the WTO the United States failed to resolve this ambiguity in a way that complied with its trade commitments. But suspending IP rights is a thorny means of retaliation.\u00a0 Antigua set a precedent that provides\u00a0 small countries\u00a0 with useful leverage in trade disputes;\u00a0 but the difficulties of implementation and\u00a0 the\u00a0 harm\u00a0 done\u00a0 to Antigua\u2019s reputation might overwhelm\u00a0 and outlast the economic\u00a0 benefits. The spirit of the GATS would be defeated if the member nations refuse to act on its market commitments. Under WTO GATS a member nation in has to act in less inconsistent manner possible to trade when the other member nation refuses to act on its market access commitments. If there is no less inconsistent measure available then the member nation can resort to inconsistent measure or retaliatory measure. Similarly in US-Gambling after USA failed to comply even with the panel\u2019s report Antigua was left was no choice other than to adopt retaliatory measures which it did by suspending the IP rights in relation to USA which could not be suspended due to TRIPS obligation. US-Gambling case is a landmark ruling by the panel as it has cleared the way for many such gambling trade services across the world.<\/p>\n<h2 style=\"text-align: justify;\"><b>References<\/b><\/h2>\n<ol style=\"text-align: justify;\">\n<li>NEIL MUNIN, LEGAL GUIDE TO GATS, 140 (Kluwer Law International , 2010).<\/li>\n<li>Appellate body report, US-Gambling, United States \u2013 Measures Affecting The Cross-Border Supply Of Gambling And Betting Services, WT\/DS285\/AB\/R, 10 November 2004<\/li>\n<li>KRAJEWSKI &amp; ENGELKE, WTO-TRADE IN SERVICES, 412 (Martinus Nijhoff Publisher, Vol 6, 2008).<\/li>\n<li>Williams Robert &amp; Robert Wood, University of Lethbridge, Alberta, at the Alberta Gaming Research Institute Annual Conference held on 27th Mar. 2009, available at &lt;http\/\/.gaming.uleth.ca\/agri_downloads\/4455\/Williams_AGRI_Conference_2009.ppt<\/li>\n<li>Black\u2019s Law Dictionary, (West Group Publishers 7th ed, 2002).<\/li>\n<li>Concise Oxford English Dictionary, (Oxford University Press, 10th ed, 1999).<\/li>\n<\/ol>\n<h2 style=\"text-align: justify;\">\u00a0WEBSITES:<\/h2>\n<ol>\n<li style=\"text-align: justify;\"><a href=\"http:\/\/www.westlawindia.com\/\" target=\"_blank\" rel=\"noopener\">www.westlawindia.com<\/a><\/li>\n<li style=\"text-align: justify;\"><a href=\"http:\/\/www.manupatra.com\/\" target=\"_blank\" rel=\"noopener\">www.manupatra.com<\/a><\/li>\n<li style=\"text-align: justify;\"><a href=\"http:\/\/www.wto.org\/\" target=\"_blank\" rel=\"noopener\">www.wto.org<\/a><\/li>\n<\/ol>\n","protected":false},"excerpt":{"rendered":"<p>Parth Chandra ((Hidayatullah National Law University, Raipur))and Sajid Sheikh ((National Law University, Jodhpur)). In World Trade Organisation (WTO) jurisprudence, \u2018gambling &amp; betting services\u2019 includes any activity involving the placing of&hellip;<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"jetpack_post_was_ever_published":false,"_jetpack_newsletter_access":"","_jetpack_dont_email_post_to_subs":false,"_jetpack_newsletter_tier_id":0,"_jetpack_memberships_contains_paywalled_content":false,"_jetpack_memberships_contains_paid_content":false,"footnotes":"","jetpack_publicize_message":"","jetpack_publicize_feature_enabled":true,"jetpack_social_post_already_shared":true,"jetpack_social_options":{"image_generator_settings":{"template":"highway","enabled":false},"version":2}},"categories":[75],"tags":[304,488,505,581,1299,1301,1466,1518,1714,2393,2395,2396,2873,2874,3135,3485,3502,3613,3623],"class_list":["post-4877","post","type-post","status-publish","format-standard","hentry","category-articles","tag-antigua","tag-betting-services","tag-bingo-games","tag-casino-games","tag-gambling-dispute","tag-gambling-services","tag-html","tag-including-table-games","tag-java","tag-online-betting","tag-online-gambling","tag-online-gaming","tag-rummy","tag-rummy-online","tag-slot-machines","tag-united-states","tag-us-gambling-case","tag-world-trade-organisation","tag-wto","no-post-thumbnail","clearfix","entry"],"jetpack_publicize_connections":[],"yoast_head":"<!-- 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