|A change in legislation expected to be signed by President Bush is good news for sectors of the US gambling industry. The legislation, named the Foreign Sales Corporation bill, would, when in place, repeal export tax breaks, an existing condition regarded as illegal by the World Trade Organisation.|
Passing of the bill addresses on of the several issues that the US government and the WTO have disagreed on. Republican chairman of the House Ways and Committee, Bill Thomas, said of the bill: “This legislation achieves a good balance by ending escalating sanctions on American products...and levelling the playing field for US businesses competing in a worldwide economy.' The new legislation should end one of the disputes the US have with the European Union over US tax breaks to exporters.
The benefit to the US gambling industry lies primarily in the expected effect the law change would have on its horse racing industry. The passing of the bill would result in the removal of the hefty 30 percent withholding tax on foreign wagers, which would have the effect of opening up the global horse racing market to US common pool wagering.
With the global industry being worth US$85 billion, the potential gains that could be made by the US based portion of that industry are huge. The legislation though, will not have any affect on the legal status of the online gambling sector. This is another area which has proven to be a cause of disagreement between the WTO and the US government. Most recently manifested in the WTO siding with the Antiguan company that contested the government’s stance contradicted the principles laid out in the General Agreement on Trade in Services. Many land based casino operators have voiced their desire for the ability to enter the global online market, however despite the different sources of pressure this new legislative change shows no advancement for this sector of the US industry.