GOOD Wall Street Journal Story

[counthomer]

I thought I was going to be the first to suggest this is not a good article at all, but it seems others have their concerns too.

Unfortunately, objective analysis of the article has one again been damaged by yet another one-eyed Jay Cohen post (on WTO issues, I have no major problem with his other ones). I appreciate that you have an interest in this Jay, but you do a disservice to everyone when you try to simplify a very complex issue and conveniently ignore any aspects you don't want to address.

Anyway, I going to argue that this article is very BAD for us - the reason being is that I think we have all read this with some underlying assumptions which don't hold true, and some of the less opinionated statements in it don't seem to fit with our current world view.

I think our biggest mistake is to assume that our government will somehow be forced to do something in our favor as a result of the EU et al joining the Antigua case (as it made the compensation costs substantially larger).

There are two major problems with this assumption. Firstly increases in cost (taking the form of sanctions, market access etc) to resolve the issue does equate to more pressure for a solution, but the next logical leap that a lot of us have seem to have made (that it will lead to our solution) does not hold. There is no reason to assume that Mr Delaware law company doesn't come down on the side of banning all gaming (which is obviously bad for us). Given the opportunity to put the final nails in the coffin, we could see ourselves up against a collaboration of FoF, Kyl, right leaning corporations and all our traditional enemies. The non right-wing corporations will probably go for the quickest resolution option rather than support us. Having said that, who knows how the politics plays into this? Not me, certainly not Jay Cohen, but I hope we can all see how it is not in any way clear cut.

Furthermore, and this is something which everyone seems to miss, the WTO is the arena of big politics and big deals. In our forum we tend to view every article and step in the process through a narrow prism of our poker world, but the government doesn't care about us or remote gaming. Look at the Doha round of negotiations (and any previous trade round) and you will see how big trade politics works. It is a massive subsidy loss here for a bigger market access gain there. We have zero visibility on issues of this size - there is no reason to assume that we not would welcome a arbitrated settlement against us on the Antigua issue if it allows us to leverage the WTO on issues involving China. We might lose billions to Antigua and friends, but get more back from China. It's impossible to tell.

On this point, the fact that Jay posts about his shock that the EU has no interest in gaming and has joined the case to get concessions elsewhere shows the naivety of thinking this is all about gaming (and Jay, I don't for one moment think you were ever naive enough to believe that, so I seriously question you motives for posting it). It is about trade, it is about money - gaming is just this weeks weapon of choice.

I think we should never forget that the WTO has two long terms solutions (to give an extremely crude simplification, all gaming or no gaming) and that either one is a possibility. Jay hates to mention the possibility that we could pull the plug completely, but I say it is real possibility. All these industries that get harmed by sanctions or market access could easily demand a resolution (as we rightly expect - why should they pay for someone else's decision), and the best resolution for US Inc (as i see it - feel free to argue on this one) is to cut everything off for a period before starting up again with regulation.

By pulling the plug completely we would destroy the Antiguas (and their gaming economies), and in a year or so we could push through a study bill followed by regulation. The entire US market would be therefore effectively brought onshore. WTO issue resolved, sanctions avoided, net benefit to our taxman.

Now would the horse racing lobby go bananas at the thought of losing their cash cow? Absolutely, but then look at the value of the sanctions being proposed and weight it up - it isn't worth protecting the our current bits and pieces remote gaming market if it hurts us elsewhere. Much better to say to Mr HorseLobby, 'We'll have to stop remote gaming for a year, but you'll be sure to be first to the market in a year or so when the law changes'. All we would have to do is make the medium term returns to those who would lose out worth the short term pain - something which would be very easy to do given our propensity for favouritism on such matters.

I think we have to ask serious questions why our government is looking to do deals on this when it seems so obvious to us. If this is true, then it says to me that we haven't appreciated the whole scheme of things, and as such I won't be listening to someone who has an direct interest in a positive outcome for Antigua (which is not necessarily a positive outcome for us poker players by the way).

We should always remember that articles like this always have an angle, and this one seems to be trying to promote the iMEGA suit (can't see why) - I just think we have to be very wary of the whole WTO thing - it is mind bogglingly complex and there is little point getting carried away because some reporter tries to package it up into 300 words.

I've always seen the WTO as a mere signpost along the road to where we will inevitably end up. I don't even think it will accelerate the inevitable process of regulation. There are far more significant and interesting things afoot - the only reason the WTO gets even a sniff of interest in the industry is because there are those operators (maybe like Mr Cohen and friends) who have missed the boat when it comes to the real solutions.

[TheEngineer]

[ QUOTE ]
This is one we need Engineer to add to the PPA site and an action alert to Congress.
Plus, it clears up the status of negotiations with the WTO, congress WILL have to approve the deal!

[/ QUOTE ]

Thanks for sharing the news. I think we should write to Congress, of course, but we should REALLY write to all media possible as well as companies that are potentially affected.

My letters will refer a lot of freedom and liberty. They will also point out the fact that the U.S. could have gotten out of this my making all Internet gaming illegal, and that these companies are essentially being asked to subsidize our horse racing industry. I'll assign a name to this horse racing tax -- Sen. McConnell.

[oldbookguy]

Good, though perhaps the Horse Racing Corporate Subsidy may be better than tax. Afterall, to keep HR legal while banning other forms, the USTR and Bush will be asking congress to approve trade deals AGAINST their states interests for this, thus uninterested business' will 'subsidize' keeping HR legal.

obg

[TheEngineer]

[ QUOTE ]

Good, though perhaps the Mitch McConnell Horse Racing Subsidy may be better than tax. Afterall, to keep HR legal while banning other forms, the USTR and Bush will be asking congress to approve trade deals AGAINST their states interests for this, thus uninterested business' will 'subsidize' keeping HR legal.

obg

[/ QUOTE ]

I'll work up a letter.

[oldbookguy]

Excellent!

Well, I am off to an auction to look at some antique books then a little cards later tonight.

obg

[MiltonFriedman]

GOOD analysis.

There will still be Antigua to pay off ... although I expect that their price is nowhere near as high as their demand.

I agree that the US market will be available in 3 years or so, with a regulatory scheme in place to "qualify" entrants and keep out the rif-raff like the folks who built the industry to begin with ...... (How many casinos in Las Vegas are mob-run today ? I'd say zero. .... A real change from 30 years ago.)

Capital is relentless, it doesn't eat, it doesn't sleep, it can't be negotiated with, it will never quit until it can raise effective barriers to entry for those less capitalized. It will also steal a crutch from a cripple (gaming,) if it can push a more powerful agenda instead.

[oldbookguy]

That is why I like this board.

We have good, diverse views.

Are elements of the story bad, perhaps.

I however, look at the end result of the negotiations with the E. U.

Congress is going to have to approve this, either this fall or spring. Congress is then, if approved, going to have to go home and tell several business, hey, guess what, I just gave away much of your business.

Tell your employees who may / may not be effected, well, I promised to ban internet gambling and this is the price you and the company you work for must pay.

BTW, do vote for me this fall, I delivered on my promise, no Internet Gambling!

obg

[Skallagrim]

Counthomer, the problem I see in your analysis is that you think the Delaware law firm will say "oh OK, we too think online gambling is evil and are prepared to sacrifice some of our revenue to help you stop it." .... No law firm I have ever known has ever uttered the phrase "we are prepared to sacrifice revenue."

This is very good news for us because it creates allies.

Under the WTO ruling, its not just online horseracing the US would have to ban, its ALL gambling (at the very least its all remote access gambling, i.e., online or offtrack). Again at the very least THIS WOULD REQUIRE THE CONGRESS TO BAN INTERNET FANTASY FOOTBALL/BASEBALL FOR MONEY. Time for the NFL to change its tune too....

I am already composing the letter I will write to my representatives saying how I dont want federal laws telling me I have to compete with foreign lawyers for clients. As news of this gets out, I would expect EVERY state bar association to do the same.

The point made when we first began discussing the WTO is now finally coming true; legalize and regulate internet gambling or be prepared to send billions of dollars overseas (one way or another).

Cant ask for a much better reason for action than that.

Skallagrim

[counthomer]

Funnily enough I think Antigua lost their chance of getting paid off the moment it allowed all the other countries/trading blocks to jump on board. This instantly made the price of compensation more than it was worth paying.

It is possible that they will get paid off, as I can foresee no scenario where the Republicans would want to be seen to have lost on a moral point that drives their core vote (one of Rove's principles), which an open market solution would represent.

Interestingly enough, Jay and the rest of the Antigua noise makers never want to discuss compensation as an option. My guess is that deals have been done behind closed doors and the Antiguan govt can't be seen to be throwing its 'crucial industry' under the bus...

Then again, like I said, this is all very, very complex politics, and as such I think we play with fire if we try to use this to our advantage..

[counthomer]

[ QUOTE ]
Counthomer, the problem I see in your analysis is that you think the Delaware law firm will say "oh OK, we too think online gambling is evil and are prepared to sacrifice some of our revenue to help you stop it." .... No law firm I have ever known has ever uttered the phrase "we are prepared to sacrifice revenue."

[/ QUOTE ]

I don't understand your point here, Skall. At the moment Mr Delaware law firm is facing a scenario where foreign competitors may be able to compete. It is therefore going to lose out, and is effectively subsidizing our protection of certain interests (horse racing etc).

My point is that they may look at this scenario and say, hang on, why should we pay so that Mr Horse Lobby can have their games? Then they will look at the options, which are:

a) All gaming
b) No gaming

If they are right leaning, anti gaming or if they think getting all gaming banned is the quickest option they will be against us.

Now you are correct, the lobbies (NFL etc) are massively powerful, but they are tiny compared with the interests of non-gaming companies that could be harmed by the type of sanctions being demanded.

We could therefore easily end up with big business against us, and the NFLs accepting a short term loss as they have been promised first run at the 'new US market' a couple of years down the line..