- The Washington Times - Tuesday, July 4, 2006

Mark Mendel doesn’t gamble.

But he took a seeming long shot when he signed on to lead Antigua and Barbuda’sefforts to sue the U.S. over its laws regulating online gambling.

The case pitted one of the World Trade Organization’s smallest members — a tiny Caribbean nation with a population not much bigger than that of the city of Lynchburg, Va. — against one of the WTO’s biggest.

Mr. Mendel, in Washington last week to meet with U.S. trade officials about the case, said the WTO provided the best forum for Antigua to take on one of the globe’s economic titans.

“I think I must have thought we would win from the beginning,” said Mr. Mendel, a 49-year-old lawyer born in Germany, raised in California and now practicing law from Cork, Ireland.

Mr. Mendel, a stout man with surfer-blond hair, took a personal interest in U.S. gaming laws after a friend was convicted for violating the Wire Wager Act, which prohibits using phone lines for gambling.

A federal court in 2000 ruled that Jay Cohen, president of World Sports Exchange, an online gambling operation based in Antigua, violated the act when his company used the Internet and telephones to transmit calls from bettors in New York to his company in Antigua.

The conviction, upheld by the 2nd Circuit of the U.S. Court of Appeals, was a win for the Justice Department, which maintains that online gambling is illegal, an unregulated temptation for minors and a conduit for money launderers.

It was a blow to Cohen, who was sentenced to 21 months in prison, and a setback for Antigua, a country with almost no natural resources other than its beaches and a warm climate to attract tourists. Antigua had been building its gaming industry to diversify its economy.

Mr. Mendel, who has little background in international trade law, told Antigua it could win its case at the WTO, and he was hired. He helped the country file a WTO case in 2003, arguing that U.S. law discriminated against companies in Antigua that provide a service similar to bricks-and-mortar casinos.

A WTO tribunal in April 2005 decided that portions of the Wire Act, Travel Act and Illegal Gambling Business Act violated international trade rules.

The U.S. says it is complying with WTO rules that allow it to maintain “public morals” and “public order.” Antigua says the U.S. is simply stalling rather than changing its laws to comply with the decision. Last month, Antigua moved to bring the U.S. back before a WTO court.

“This is Antigua’s right under the WTO agreement. But the United States does not view this as a productive step. And we will vigorously defend the WTO consistency of U.S. gambling laws,” said Steve Norton, a spokesman for the U.S. trade representative’s office.

A final decision is expected by early next year.

If Antigua wins, it would be allowed to retaliate by imposing trade sanctions on U.S. products it imports or by disregarding some WTO rules that protect U.S. companies.

Antigua would have little leverage with sanctions — it buys less than 0.02 percent of all U.S. exports. Instead, Mr. Mendel said the country would look to suspend its obligations to respect U.S. patents and copyrights.

“We think we could probably get their attention if Antigua could produce Microsoft Office and sell it for $5 a copy,” he said.

The WTO would determine damages. There are 37 licensed gambling operations in Antigua generating $130 million a year. That is down from about $1 billion a year in 2000, and Antigua estimates it may have lost $24 billion over the past six years due in part to the U.S. laws.

While Antigua’s casino business has declined, the international market for online gambling has taken off. Global revenue for online sports betting, poker, bingo and casino games totaled $3 billion in 2001 and is expected to rise to $18 billion by next year, according to Christiansen Capital Advisors, an industry consulting group in New Gloucester, Maine.

While it is illegal in the U.S., the country accounts for more than half of global consumer spending on Internet gambling, Christiansen said.

U.S. lawmakers have introduced bills to crack down on online gambling conducted via offshore companies. The House Judiciary Committee in May passed a bill to clarify that federal prohibitions against gambling apply to the Internet and other new technologies, and to stiffen criminal sentences for violators. The full House has not voted on the legislation.

Mr. Mendel said the proposed law also is a violation of global trade rules, but he acknowledged that Antigua faces a difficult fight to win legal access to the U.S. market.

Instead of a succession of WTO hearings, the country would prefer a compromise solution where it regulates its online casinos to Washington’s satisfaction.

“We are trying to influence public opinion as much as we can as a small country. We’re hoping our willingness to compromise will get us the right ear and a negotiated solution will come about,” Mr. Mendel said.

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