Online gaming may recruit Costa Rica in its U.S. push

WASHINGTON — The international gaming industry is apparently eyeing Central America as a viable entry point to more freely expand Internet gambling in the lucrative U.S. market, including Utah, where such games are not legal.

The Office of the U.S. Trade Representative is assuring the various states that they can still regulate Internet gambling, despite a recent negative ruling by the World Trade Organization. But it now appears the online casinos that prompted the dispute between the United States and the tiny island nation of Antigua in the WTO case could be trying to sneak in through Costa Rica.

The focus of concern is language in — and not in — the Central American Free Trade Agreement. CAFTA contains numerous free-trade provisions, but, unlike the WTO agreement, it has no "public morals" exception to traded goods and services that would specifically allow the United States or any of the 50 states to regulate the online gaming industry.

"I don't know why it hasn't gotten more attention" in the Senate, where CAFTA is now being debated, "and I can only assume the folks there aren't aware of it," said Peter Riggs, director of the Forum on Democracy and Trade, a respected public policy think-tank that works closely with state lawmakers.

Sen. Orrin Hatch, R-Utah, also said Wednesday that Utah and the United States do need to be careful and vigilant.

"I think people are right to be concerned because of what happened before the WTO," he said. "The U.S. trade representative has assured me that CAFTA does not jeopardize any existing state laws, including Utah's anti-gambling laws. We will have to stay on top of this, though."

Letter in question

The U.S. trade representative is aware of potential problems, and Riggs said the office is clearly worried. The Center for Democracy and Trade obtained a letter exchanged between the Costa Rican and U.S. governments that "clarifies" the U.S. government's interest in regulating gaming, but the letter itself raises questions.

It is that letter that has Senate insiders saying gambling is non-issue with CAFTA. And they specifically point to language in the letter and in the trade agreement that specifies any laws in place prior to the agreement remain in effect under a grandfather clause.

That means Utah's total prohibition on gambling would likely remain intact.

However, legal experts at Georgetown University who examined the letter said it is questionable whether the letter would be legally binding in a dispute, and that it is therefore exceptionally weak.

The letter states there is nothing in the agreement that would prevent regulation of gambling.