Flight Check: Are Air Carriers Any Closer to Providing Gambling on International Flights that Land or Depart from the United States?

Abstract

This article examines the likelihood that air carriers will provide gambling entertainment on international flights that land or depart from the United States or its territories. Recently, international carriers began offering wagering activities on non-U.S. routes in an effort to tap new sources of revenue for their operations. With such opportunities available to foreign flagged carriers but non-American ones, some commentators believe that Congress will be forced to change the U.S. laws in order to keep U.S. carriers competitive.

The prohibition against in-flight gambling began in 1962 when the federal government disallowed the activity on US-flagged airlines. Northwest Airlines reignited the debate in 1994 when they tried to remove the ban on international routes. Instead, the government widened the prohibition to include the activity or carriage of such devices on any carrier, regardless of the aircraft’s country of registration, that landed or departed from a U.S. territory pending a study by the Department of Transportation (DOT).

As a result, this action by the U.S. government prompted an outcry from other sovereign nations as well as many international airlines. With a blatant disregard for those concerns and a determination that the activity could be conducted safely while flying, the DOT’s study concluded that the most prudent approach for America included a wait and see strategy to allow monitoring of foreign carriers’ progress and experience before changing course in the U.S.

Recently, other attempts by the U.S. government to force its ethic and morals upon sovereign nations resulted in court challenges, diplomatic efforts, international resolution forums, or retaliatory acts. Many treaties call for the International Court of Justice (ICJ) or the World Trade Organization (WTO) to resolve trade disputes involving member nations. One successful country convinced the WTO that the American ban on Internet gaming was hypocritical; while the European Union effectively utilized noise restrictions on aircraft to bring the U.S. government to the negotiating table for another dispute.

Finally, the crash of Swiss Air Flight 111 and the Unlawful Internet Gambling Enforcement Act (UIGEA) presents new challenges to in-flight gaming. While the Swiss Air accident seems like an unfortunate tragedy, one of the underlying causes for its demise led investigators to a faulty in-flight entertainment system that delivered gambling activities to its passengers. Moreover, the UIGEA requires the U. S. banking system to implement safeguards that prevent American citizens from participating in legal foreign gambling sites, which may be accessible while on an international flight.

Hence, the U.S. policy appears to be moving indirectly further away from allowing gambling on international flights because Congress continues to take actions that on the surface do not seem to affect aviation; but should the U.S. government be forced to change course, the layering approach by anti-gaming advocates will need reconciling.

Thus, competitive forces in the airline industry may force Congress to allow carriers to offer gambling on international flights.

Keywords: Aviation, Gaming, Gambling

JEL Classification: K2, K23, K42, L50, L83