Against Monopoly

defending the right to innovate

Monopoly corrupts. Absolute monopoly corrupts absolutely.

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The WTO, Gambling, and Intellectual Property

The United States Puritanical values collided with its neoliberal ideology in passing a law that prevented online gambling. Several companies -- Microsoft, Google, Yahoo -- just paid fined for posting ads for Internet gambling. Antigua and Barbuda protested since the US allows other forms of domestic gambling. They demanded huge compensation for their loss of business. The WTO judgment offers a much smaller amount, but it gives the country the right to violate intellectual property up to $21 million.

Kanter, James and Gary Rivlin. 2007. "In Trade Ruling, Antigua Wins a Right to Piracy." New York Times (22 December). link here

"Antigua and Barbuda won compensation from the United States on Friday in a long-running trade dispute about gambling, but the amount was far lower than the tiny Caribbean nation had been seeking. A World Trade Organization (WTO) arbitration panel granted Antigua's request to levy trade sanctions on U.S. intellectual property, for instance by lifting copyright on films and music to sell it themselves, prompting concern from Washington."

"The WTO panel said Antigua was entitled to compensation of $21 million a year from the United States for being shut out of the U.S. online gambling market. The ruling is only partial consolation for the former British colony, which built up an Internet gambling industry to replace declining tourism revenues, only to find itself shut out of the world's biggest gambling market."

"The award falls far short of what Antigua had demanded -- $3.44 billion in "cross-retaliation," allowing it to seek damages outside the original services sector. Washington had argued Antigua was entitled to only $500,000 in compensation."


I doubt this has much to do with puritanical values, but rather with preserving a lucrative monopoly - one held for the most part by state lotteries.
Preserving lucrative monopolies is no doubt at the heart of these laws, but they are lobbyied for by a diverse coaltion which includes religious conservatives--evangelical Christians and others, such as Ralph Reed of the Christian Coalition. Pastor Tom Grey and the evangelical Anita Bedell lobbyied for anti-gambling legislation in Illinois. The latter figure represented a group of churhes.

I would note that values other than Puritanical ones are at work in this field. The Nation magazine and Mother Jones have both written disparagingly of the gambling industry, although I don't know what they think of online gambling. The Nation once characterized the "New American Economy" as "casinos plus part-time jobs," as if working part-time is the secular equivalent of a sin. Of course, they are against capitalism, and casinos are owned by capitalists.

So the religous right focuses on free choice, whereas the secular left focuses on social class.

I suspect that both groups want to restrict online gambling in order to keep it physically restricted to licensed casinos on Indian reservations and other places. After all, the son of a pastor or magazine publisher might be able to login to his favorite gambling site when he should be reading his Bible or doing his homework. It's more difficult for the kid to go to Las Vegas or Atlantic City, expecially if he's under age.

But the effect is to prop up state-granted monopolies and their rent-seeking (hi Donald!) beneficiaries.

What struck me about this case was the bite in the penalty. This is going to drive the MPAA and RIAA and a bunch of others bananas. All Antigua need do is invite Pirate Bay in for awhile.

And who is going to determine when the $21 million penalty limit has been reached (and how)? Schadenfreude will reign briefly amongst us in the anti IP monopoly crowd. Too good to last.

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