A trans-Atlantic spat over online gambling may help
rewrite the rules of the game for Internet commerce across borders. For
a change, the Europeans stand on the side of free trade, while America
dabbles in regulatory overreach.

The European Union last month launched an internal
probe into whether the U.S. Justice Department selectively enforces its
antigambling laws against European online firms that offer wagers on
sports events. Brussels is making a narrow legal point that Washington
discriminates against Europeans by simultaneously permitting U.S.
Internet horse betting. That’s against World Trade Organization rules,
and the case may end up there.

The U.S. last year lost a similar WTO online gambling
case against Antigua and Barbuda. The island nation argued that U.S.
online gambling rules violated Washington’s GATT commitments to open
its market in “recreational, cultural and sporting services.” The U.S.
countered that its policies were justified to protect public morals and
public order, a legitimate exception under WTO rules. But the WTO panel
ruled that America wasn’t applying its restrictions equally to
foreigners and domestic operators. U.S. online horse-betting sites
aren’t banned.

Washington could have stood down then. Instead, it is
“threatening and pressing criminal prosecutions, forfeitures and other
enforcement actions against foreign online gaming operators,” according
to the London-based Remote Gambling Association, which took the
complaint to the EU. In doing so, Washington is also practicing a form
of universal jurisdiction by applying domestic law to foreigners beyond
its borders – a legal interpretation that the U.S. has, rightly,
condemned in other cases.

In 2006, the former chairman of U.K.-based gambling
firm Sportingbet, Peter Dicks, was detained in New York. The Briton was
wanted in Louisiana on online gambling charges. Then-New York Governor
George Pataki declined to sign a warrant extraditing him, and he was
released. Many European industry executives now no longer stop over in
the U.S., let alone visit the country, for fear of arrest. “There is a
list of wanted people but nobody knows who’s on it,” said Clive
Hawswood of the Remote Gambling Association.

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Author Contact Info: Wall Street Journal