The Canadian horse tracks do have a legitimate concern in that they have lost business over the years to online gaming. And while the horse tracks pay taxes and provide local jobs, the vast majority of the online industry contributes little to the local or national economies. “They take a lower commission on the bet because they don’t have infrastructure costs and pay purses. How many jobs are they creating here? None,” Jane Holmes, vice-president of corporate affairs for Woodbine Entertainment Group said. “If we tried to do what they’re doing, we would lose our licenses. It provides them with an unfair competitive advantage.” But if this is the problem, is UIGEA-like legislation the solution?

Michael Lipton, a Toronto lawyer specializing in gaming law, points out that the US is still hard pressed to implement any meaningful enforcement of the UIGEA, stating, “They are completely bogged down on how to block this system.” The recent comments by the American Banking Association on the proposed UIGEA rules appear to support Lipton’s remarks. Lipton instead sees a much more tenable solution through government regulation, whereby the industry could be held accountable, provide tax revenues, and develop into an internationally competitive trade resource for Canada. Instead of developing a trade resource, however, UIGEA-like legislation would likely represent a trade liability for Canada. Canada is a World Trade Organization member and legislation that is deemed discriminatory to foreign online gaming competitors would likely open them to sanctions like those triggered by Antigua’s WTO case against the US.

Somewhere in the crosshairs of this debate is the sovereign territory of the Kahnawake, located near Montreal, which plays host to over 400 online gambling sites. The Kahnawake have always contended that their operations are not governed by Canadian or provincial law, and would not be effected by any law Canada may pass in the future. Responding to inquiries about the potential for a legal showdown with Canada over the Mohawk Nation’s online operations, Joe Delaronde, spokesperson for the Mohawk Council of Kahnawake said, “It would be very unwise of the government. This operation is taking place in our jurisdiction. If they really want to come to some sort of resolution on this, the best idea would be to contact our grand chief and talk about it. We’re very open to discussion.” In every respect, Canada’s potential legislative reach will mirror the limitations of the US’s UIGEA legislation, which acknowledges its inability to alter state or Indian territorial law relative to gambling.

If all the horseracing industry wants is a level playing field, why go to such great lengths to eliminate the competition? These lengths potentially involve a law that will be hard to enforce, conceding potential tax revenue, international trade liabilities, and a tussle with an indigenous sovereign nation. If they want it level, give them level and regulate online gambling just as Canada regulates its horseracing industry. It’s just a thought, but one we hope MP Roy Cullen might consider before taking Canada down the UIGEA path.

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The statement made by WIPO official Jorgen Blomqvist stated that since Antigua was a signatory to the Berne Convention for the Protection of Literary and Artistic Works, Antigua would be bound to honor the international copyright protection afforded by the treaty, despite the WTO judgment awarded to Antigua in the matter. However, the WIPO later denied formal responsibility for Blomqvist’s
statements, labeling them as “personal views.”

Antigua’s Minister of Finance and the Economy, Errol Cort, was also quick to dismiss Blomqvist’s assertion. Cort has been the lead official for Antigua’s online-gambling interests throughout its battle with the US. “I would have a big difficulty accepting what is being suggested,” said Cort, “because if that is so, it puts a nonsense to the whole World Trade Organisation and the rulings and sanctions. It just brings the whole thing into disrepute. So I don’t accept that.” This came even as Cort and an Antiguan delegation returned from continuing negotiations with the the US Trade Representative office in the matter.

Other international trade experts quickly checked in with opinions on the matter, with the large majority siding with Cort and the Antiguan viewpoint. Frederick Abbott, an international-law professor at Florida State University, noted that countries “often have supplementary treaty obligations that overlap with WTO commitments, and the theory that a member is legally precluded from exercising rights under the ‘Dispute Settlement Understanding’ because of those supplementary overlapping treaties would undermine the effective operation of WTO dispute settlement.” Abbott also cited a legal principle called estoppel, meaning that since the US agreed to the WTO judgment, it cannot later allege a breach of Berne Convention terms regarding copyright matters.

No official announcements were made as a result of the latest talks between Antigua and the US, leaving the matters discussed still under negotiation.

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The lawsuit claims to seek to enjoin the defendants from advertising online gambling in California; something the companies have already voluntarily done. The lawsuit also seeks to have the companies turn over all the revenue that they collected for online gambling ads. The legal complaint cites the goal of the financial forfeiture is to give restitution to legal California gambling establishments and to those that lost money by participating in online gambling. There are a couple of problems with this claim, however. For one thing, the court has already decided that state law prohibits the court from aiding gamblers in recovering money. The other issue is that legal gambling establishments are not defined as members of the class. What is clear, though, is that the law firm of HBSS will get a pretty decent cut of the action if a settlement is reached or damages awarded.

This is not to say that the California class action doesn’t have a case against the online sites, but litigating such a case would have been expensive and risky, potentially one reason HBSS didn’t pursue the case until now. Once Yahoo and Google showed their willingness to settle with the DOJ, much of the risk associated with such a case dissipated. Even though the online portals admitted no guilt as part of their DOJ settlement, once they settled, everyone knew they were likely to settle again.

If the California class-action civil suit does settle before its scheduled court date of February 11th , look for more state civil suits to follow. In such an event, it’s likely that HBSS or another class-action specialist will be there to help them file the necessary paperwork.

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