WTO Rules in Antigua's Favor Again re Online Poker & Online Gambling

The World Trade Organization (WTO) has again ruled against the United States in favor of Antigua and Barbuda, this time for not taking 'the necessary steps to comply' with the April 2005 WTO ruling to correct discrimination against foreign Internet gambling operators, Reuters reported late last week.

The tiny island nation of Antigua and Barbuda had built up an Internet gambling industry to create jobs when their tourist industry declined.

In a case first brought to the WTO in 2003, Antigua originally challenged US laws blocking non-US internet gaming companies from operating inside US borders in 2004. It argued that US trade officials had signed the 1995 GATS treaty, committing it to allowing foreign entrants to its lucrative online gaming market.

In April 2005, the WTO Appellate Body in response to an appeal lodged by the US ordered the United States to comply either by lifting its ban on foreign operators or by withdrawing a "discriminatory" exemption for US online horse-racing betting sites, within 18 months.

Antigua and Barbuda complained the US had not complied with the 2005 ruling, so the WTO agreed in July 2006 to investigate their complaint, which resulted in the ruling last Thursday.

Gretchen Hamel, a spokesperson for the U.S. Trade Representative, told Reuters that the United States will have opportunity to submit comments to the WTO before it issues its final, public report in March.

After the final panel decision ruling in March, the United States has an option to appeal, and is widely expected to do so.

The issue is a touchy one for the Bush administration, which claims to support free trade. Their position was made even more touchy when conservatives in Congress snuck through the Unlawful Internet Gambling Enforcement Act (UIGEA) last October making it illegal for banking institutions to handle transactions between online gambling sites and US residents, in an attempt to shut down access to online gambling businesses.

The exception the UIGEA granted to US online horse betting sites and state lotteries will not help the US WTO case either.

Hamel suggested that broad legislation, such as the UIGEA, may need to be modified when she said, "The panel report clarifies that compliance does not necessarily require new legislation, but could involve other steps such as administrative or judicial action."

What remains to be seen is whether Antigua and Barbuda, as the WTO's tiniest member, will have the clout to get any rulings enforced, or whether the US will continue to make appeals to prolong having to take any corrective actions while it wipes out foreign competition.

It also remains to be seen whether other countries whose licensed online gambling industries are likewise affected by the US will provide Antigua with any assistance.

One especially looks toward the UK whose online gambling industry was decimated after UIGEA's passage, and whose executives are either being arrested or subpoenaed in connection with online gambling and online gambling IPOs.

If the US remains unchecked, will the UK have a viable online gambling industry to be able to implement the Gaming Act of 2005 this coming September? Or, as the Telegraph reported, do the Americans 'want to drive foreigners out to establish their own Vegas gambling brands?'

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