Over the weekend, Congress approved a bill making it illegal for banks and credit card companies to make payments to online gambling sites.  (story here)

An enormous amount -- certainly more than half -- of online gaming happens here in the U.S.  We're addicted to online poker as a people.  (If they've heard about the proposed ban on payments, there are 23 million annoyed online poker players in the US today.)  That's a lot of revenue that casinos here in the U.S. would like to be gathering. But because prosecutors here take the view that online gambling violates the Wire Act, U.S.-based casinos can't get into the online gambling business.

The question is whether what's happened here -- outlawing payments to these offshore sites -- is merely designed to protect U.S. businesses.  Back in 2005, an appellate body of the World Trade Organization ruled that US gambling laws were covered by the General Agreement on Trade in Services, asserting that the US couldn't take advantage of a "public morals" exception (because there are some kinds of gambling that we legally favor).  The US ignored the ruling.

The bill passed over the weekend will undoubtedly be signed into law by President Bush.  Then we'll see what happens in the next WTO challenge.  If the UK goes after us instead of Antigua (online betting has a large UK financial presence) we may be risking alienating one of the few countries that still likes the U.S.