New Jersey could be the first American state to legalize online gambling, but nuances within the law is likely to create new issues between the United States and the World Trade Organization (WTO).
International trade law asserts that if one nation offers a product or service to the world, that nation must allow permit the rest of the world to return similar products and services. Thus, if the United States (or even just one of them) offers internet gambling to the international market, Americans must allow be permitted to wager on the global market.
The draft legislation will enable both New Jersey residents and gamblers outside United States borders to amuse themselves by gambling in internet casinos hosted within Atlantic City, New Jersey. American residents outside of New Jersey will not be allowed to wager at these online casinos because federal American gambling laws prohibits interstate and international transfers from American banks to gambling operations. However, as long as the financial transfers do not transcend New Jersey’s borders, the federal laws won’t be relevant.
Likewise, foreigners will be able to wager at New Jersey’s internet casinos because the federal laws aren’t designed to keep foreign money out of America. While the government of New Jersey will welcome this influx, therein lays the conflict with the WTO. Because foreigners will be able to wager at online casinos in the US if they are based in New Jersey, but American residents (regardless of location) will not be able to gamble at any international internet gambling sites, this is construed as an unfair practice.
However, the New Jersey draft legislation does not resolve the outstanding federal legislation issue which prevents Americans (regardless of location) from betting online because the banks remain prohibited from transferring the funds.
This issue is not a surprise. New Jersey Senator Raymond Lesniak expected the bill to “raise World Trade Organization issues”. Moreover, he desires to demonstrate how immature the American government is when it comes to internet gambling.
America has long been at odds with the World Trade Organization over American gambling laws. The ongoing inability to resolve these issues may ultimately have a serious impact upon the WTO’s credibility.