[Congressional Record Volume 153, Number 145 (Thursday, September 27, 2007)]
[Extensions of Remarks]
[Pages E1995-E1996]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




           LEGALIZING INTERNET GAMBLING WOULD HARM U.S. TRADE

                                 ______
                                 

                          HON. EDOLPHUS TOWNS

                              of new york

                    in the house of representatives

                      Thursday, September 27, 2007

  Mr. TOWNS. Madam Speaker, as I stated here a couple of months ago, I 
believe very strongly that whatever our policy is on other types of 
gambling, we need to maintain a firm line against any form of sports 
gambling. Gambling on sports events undermines the integrity of 
American athletics. It can create corruption or the appearance of 
corruption, and it taints the image of sports as wholesome, family-
friendly entertainment.
  I also stated that I opposed legalization of online sports gambling 
in H.R. 2046. It is not enough to allow sports associations to say 
``not on my game'' if Congress is sending the message to the public 
that sports gambling is fine. If we are going to consider any loosening 
of laws against online gambling, we need to say ``not on sports, 
period.''
  But yesterday I received a letter from Stuart Eizenstat, a very well-
respected trade expert who was formerly U.S. Ambassador to the European 
Union and Under Secretary of Commerce for International Trade, writing 
on behalf of the National Football League. Ambassador Eizenstat's 
letter informs me that, under the present circumstances, even ``not on 
sports, period'' could leave the NFL and other great American athletic 
institutions vulnerable to assault by the offshore gambling interests 
who want to make money off the popularity of these games.
  According to Ambassador Eizenstat's letter, a law that legalizes most 
online gambling but includes limited exceptions, such as a sports 
gambling exception, will be vulnerable to attack in the World Trade 
Organization. If the WTO rules against the U.S. law, the U.S would have 
to choose between eliminating the exception--feeding our treasured 
sports to the gambling wolves--or paying billions in compensation to 
our trading partners. I, for one, think we should avoid having to 
decide which of these is the lesser of two evils if we can.
  It appears that the U.S. does have a way out, by withdrawing any 
commitments to free trade in gambling. The U.S. Trade Representative is 
currently in the middle of negotiating this withdrawal. But this 
requires compensation too, for taking away market access from our 
trading partners. How much compensation? Not much at all, given that 
almost all Internet gambling is illegal. But if we make it legal, even 
if sports gambling is excluded, then there is a big legal market for 
which we will owe compensation.
  As Ambassador Eizenstat says, ``withdrawal negotiations should be 
brought to a conclusion before Congress passes any new gambling 
legislation.'' In the interest of protecting American athletics, I plan 
to take this advice to heart.
  Madam Speaker, I ask unanimous consent to enter Ambassador 
Eizenstat's letter into the Record.


                                     Covington & Burling, LLP,

                             Washington, DC, September 24th, 2007.
     Hon. Edolphus Towns,
     Rayburn House Office Building,
     Washington, DC.
       Dear Representative Towns: I am writing on behalf of the 
     National Football League, NFL, to urge you to oppose H.R. 
     2046, the ``Internet Gambling Regulation and Enforcement 
     Act,'' which would legalize Internet gambling. Along with all 
     other major U.S. professional and amateur sports 
     associations, the NFL is very concerned about protecting the 
     integrity of American athletics from the adverse effects of 
     sports gambling. As the recent National Basketball 
     Association referee scandal shows, this is a very real 
     concern. From a trade perspective, H.R. 2046 is fundamentally 
     flawed. This bill, and any other legislation legalizing 
     Internet gambling, also may have the unintended consequence 
     of giving foreign service suppliers greater access to the 
     U.S. market in a range of services sectors.
       H.R. 2046 reverses 50 years of U.S. public policy by 
     endorsing and legalizing sports betting, and it vastly 
     expands access to all forms of gambling. Although the bill 
     allows sports leagues and states to opt out of this gambling 
     legalization scheme, these exceptions may be successfully 
     challenged in the World Trade Organization, WTO, under 
     existing trade rules. While the WTO General Agreement on 
     Trade in Services permits a

[[Page E1996]]

     complete gambling prohibition that is ``necessary to protect 
     public morals,'' a patchwork approach that legalizes most 
     gambling and includes limited opt outs may be difficult to 
     defend. Indeed, Antigua's WTO counsel, emboldened by 
     Antigua's successful challenge to current U.S. laws that 
     prohibit gambling, already has stated his belief that the opt 
     out provisions in H.R. 2046 are inconsistent with the United 
     States' WTO commitments. Given Antigua's past success in 
     challenging U.S. anti-gambling statutes in the WTO and 
     Antigua's current demands for $3.4 billion in compensation, 
     the stakes are high. Passage of H.R. 2046 could well lead to 
     further WTO litigation.
       After losing the gambling dispute with Antigua, the United 
     States Trade Representative (USTR) took the important step 
     last May of notifying the WTO of its intent to modify its WTO 
     commitments to explicitly exclude gambling and betting 
     services. The USTR is now in the process of negotiating with 
     eight WTO countries who claim that they are adversely 
     affected by this withdrawal. These withdrawal negotiations 
     should be brought to a conclusion before Congress passes any 
     new gambling legislation. This is especially so since passage 
     of H.R. 2046 would, for the first time, create a legal 
     American market for Internet gambling, significantly 
     complicating ongoing negotiations and making it much more 
     costly to withdraw the U.S. commitment on gambling 
     services.
       Specifically, as part of the withdrawal negotiations, the 
     United States has to make ``compensatory adjustments,'' i.e., 
     further open the U.S. services market to foreign suppliers to 
     compensate for the withdrawal of the gambling services 
     commitment. Currently, given that remote gambling services 
     are largely illegal in the United States, the access that 
     foreigners will get to the U.S. market as a result of the 
     gambling commitment withdrawal is minimal. Passage of H.R. 
     2046 will create a large, legal gambling market in the United 
     States. Foreigners will then be able to demand far greater 
     access to the U.S. market in the ongoing withdrawal 
     negotiations. Greater market access demands could conceivably 
     impact the U.S. financial services sector, the 
     telecommunications sector, and others.
       The negative impact of H.R. 2046 on U.S. industries and 
     U.S. trade negotiations could be significant. This bill--and, 
     in fact, any bill that authorizes Internet gambling of any 
     kind--will greatly complicate the USTR's efforts to withdraw 
     the United States' gambling commitment by providing foreign 
     countries with leverage to demand greater access to the U.S. 
     services market. Furthermore, under the current WTO rules, 
     the bill's opt out provisions for sports leagues and states 
     could very likely be challenged in the WTO, potentially 
     leading to a situation where foreign gambling companies could 
     provide gambling services to Americans over the objections of 
     the NFL, other sports leagues, and state governments. For all 
     of these reasons, I urge you to oppose H.R. 2046 and any 
     other proposals to legalize Internet gambling in the United 
     States.
           Sincerely,
     Stuart E. Eizenstat.

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