As if the off-track betting industry needs any more problems, the New York Times today reported on the recent W.T.O. Ruling that may impact on-line betting of horse racing. The decision dates back to 2004. In 2005, the appellate body upheld the decision and finally, in March the organization upheld that ruling for a second time and declared Washington out of compliance with its rules.

The decision is based on a complaint filed by Antigua and Barbuda, two tiny Caribbean nations, which challenged the United State’s ability to ban on-line gambling. The islands also claim $3.4 billion of damages based on the fact that some off-shore betting shops were set up in their territories. As the attorney for the Islands explained “This [the United States] is the world’s biggest consumer and exporter of gambling services trying to prohibit a small country from developing its economy by offering these same services. And we find that deeply hypocritical.”

The New York Times reports:

“Complying with the W.T.O. ruling, Professor Jackson said, would require Congress and the Bush administration either to reverse course and permit Americans to place bets online legally with offshore casinos or, equally unlikely, impose an across-the-board ban on all forms of Internet gambling — including the online purchase of lottery tickets, participation in Web-based pro sports fantasy leagues and off-track wagering on horse racing.”

Either of those results would impact racing heavily. (i) If Americans are allowed to bet casinos over the internet, horse racing would suffer because it has proven that it is not able to compete with casinos or other types of gambling that do not carry the large takeouts and huge overhead costs associated with racing. (ii) If off-track wagering is prohibited then the largest vehicle for recent growth in the industry would be immediately eliminated. The damage to race tracks would be immense.

There are alternative solutions on the table, but those solutions seem equally unlikely to be granted by the US government. The alternative solutions proposed by Antigua include “permission for Antiguans to violate intellectual property laws by allowing them to distribute copies of American music, movie and software products, among others.”

So far the US government shows no signs or willingness to comply with the W.T.O. order. However, the impact of the decision for the W.T.O. could be huge. In the balance lies its credibility as the international community closely scrutinizes the W.T.O.’s actual power to enforce its own rules.

For the US, the attitude so far has been of non-compliance:

“One day they’re out there saying how scandalous it is that China doesn’t respect W.T.O. decisions,” he [Lode Van Den Hende, an international trade lawyer] said. “But then the next day there’s a dispute that doesn’t go their way and their attitude is: The decision is completely wrong, these judges don’t know what they’re doing, why should we comply?”

Only time will tell how this problem will be resolved and whether or not the W.T.O. has any power to enforce this ruling.

Perhaps it is time for the industry to stop the bickering between TVG and HRTV and starts focusing on major problems that can mean the end of the sport as we know it.

Full Article: http://www.nytimes.com/2007/08/23/business/worldbusiness/23gamble.html?pagewanted=2&ei=5087%0A&em&en=45639b242bae8fd2&ex=1188014400