Antigua Notches Latest Victory in WTO Dispute with the US

30 March 2007

Certain U.S. restrictions on offshore Internet gambling sites are illegal, the World Trade Organization (WTO) said Friday, upholding a previous decision that allows for the possibility of retaliatory trade sanctions if the United States continues its standpatter stance on I-gaming.

In a 215-page decision, a three-member WTO compliance panel found in favor of the Caribbean island nation of Antigua and Barbuda (Antigua), ruling that the United States had failed to amend legislation that unfairly targets offshore I-gaming operators.

The Geneva-based trade referee has said the U.S. government may continue to maintain restrictions on online gambling as long the same restrictions are applied to domestic operators offering online horse-betting services.

In the event the two countries fail to reach a settlement, Antigua may apply for sanctions in an annual amount equal to the estimated damage to its economy based upon U.S. non-compliance, said Mark Mendel, counsel for the Antiguan government.

Antigua is already claiming victory.

"This is a smashing success for Antigua in every possible way," said John W. Ashe, Antigua's ambassador to the WTO. "The report will sweep away any lingering doubt that Antigua has obtained a clear and convincing win over the United States in this matter."

"It's a fantastic decision for us," Mendel echoed. "I was quite confident we were going to win at this stage, but I thought that the WTO would probably take the easy way out and just say that the United States had done nothing, and leave it at that."

"I think that the ability of the U.S. government to spin the ruling in its favor is completely taken away now. I just think it's fantastic."
- Mark Mendel

Doubts, however slight, may linger as the United States retains the option to appeal, though it did concede that the latest ruling was a setback.

"The compliance panel did not agree with the United States that we had taken the necessary steps to comply with the WTO recommendations," said Gretchen Hamel, a spokeswoman for the office of the U.S. Trade Representative, in an e-mailed statement to Bloomberg. She did say, however, that "nothing in the panel's report undermines the broad, favorable results that the United States obtained from the WTO in April 2005."

The United States had claimed victory after the WTO's initial ruling two years ago, using to its advantage a WTO Appellate Body provision which allows for I-gaming prohibition if enacted to protect public morals or to maintain public order.

The U.S. government has not yet said whether it will appeal the compliance panel's findings.

"We are still reviewing our options," Hamel said.

Antigua initiated the WTO's dispute settlement process in June 2003, and in April 2005, the twin-island nation with a population of 80,000 obtained a ruling that the United States gives preferential treatment to domestic I-gaming operators, which is a violation of an international pact called the General Agreement on Trade in Services (GATS).

The United States was advised by the WTO's Dispute Settlement Body to adjust its laws to provide fair treatment to both domestic and foreign I-gaming providers, giving it until April 3, 2006 to do so.

News of the WTO ruling saw shares rise on the London Stock Exchange. PartyGaming was up 1.75p to 51.75, Sportingbet was up 1.5p to 66.75 and 888 was up 4.25p to 125.50.

Chris Krafcik is the editor of IGamingNews. He lives in St. Louis, Mo.