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Costa Rica Goes after U.S. For Online Gambling Policy

July 20, 2007

Costa Rica has joined several other countries seeking compensation in the wake of negative effects on its economy since the United States began cracking down on Internet gambling. The World Trade Organization (WTO) has declared the U.S. crackdown anti-competitive.

A 2004 report from the organization found that the U.S. policy on online gambling contradicts the country’s free-market access commitments, which include access to betting services under the 1995 General Agreement on Trade Services (GATS). The United States has since announced it is withdrawing its commitment to guarantee free-market access to betting services, according to Costa Rican Foreign Ministry director Gabriela Castro.

Castro said that representatives of Costa Rica and the United States “have begun a dialogue” about the effects the U.S. withdrawal might have. She said Costa Rica and other countries will seek some form of compensation, which wouldn’t necessarily be a cash sum, but would more likely be the elimination of trade barriers.

After the Caribbean country Antigua and Barbuda filed the original case before the WTO, other countries including Costa Rica are now joining in efforts to obtain some kind of compensation. Countries include those from the European Union, India, Canada, Macau and Australia, according to Castro.

Last month, an online gambling lobbying group in the United States filed a petition in a district court to restrain the enforcement of a controversial law U.S. President George Bush signed last October that prevents U.S. credit-card companies and banks from processing payments to offshore online gambling businesses (TT, Oct. 6, 2006).

The law has had widespread effects in Costa Rica and elsewhere.

The London-based online gambling company BetOnSports, which recently announced it is closing up shop, once employed 1,200 workers in Costa Rica – the vast majority of whom are still owed severance pay from the company, according to Costa Rica’s Ministry of Labor. The industry here has taken a hit since the U.S. crackdown began, prompting as many as 20 socalled “sportsbooks” to close up shop in the past three years, according to Eduardo Agami, president of the Costa Rican Call Centers and Electronic Data Association, which represents many sportsbooks in Costa Rica.

Still, approximately 180 remaining sportsbooks have managed to maintain about the same level of employment, around 9,000, according to Agami (TT, June 15).

 

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