Antigua Finally Wins WTO Case Against USA

by Leroy Baker, Lawandtax-News.com, New York

03 April 2007

A World Trade Organization Dispute Resolution Panel concluded last week that the USA has failed to comply with a 2005 ruling that it should change its legislation banning payments to offshore gaming web-sites.

The case had been brought by Antigua and Barbuda. The original ruling had been confirmed by an Appeals Tribunal in 2006, and the US had asked for time to implement changes. When nothing happened, Antigua and Barbuda went back to the WTO to request a Panel, which has now concluded its work.

In a minutely argued report, the Panel comprehensively dismisses all attempts by the US to wriggle out of the need to bring its laws into conformity with the GATS, either by banning equivalent domestic betting transactions, or by allowing parity for overseas transactions.

Shares of online gambling sites including Gibraltar-based PartyGaming and SportingBet rose after the WTO's announcement.

Antiguan Finance Minister Errol Cort responded to the ruling with delight: 'The ruling vindicates all that we have been saying for years about the discriminatory trade practices of the United States,' he said. The office of the USTR said it was reviewing its options.

Far from complying with the WTO's original ruling, the US last year passed the Unlawful Internet Gambling Enforcement Act of 2006, which while expanding domestic opportunities for legal gaming, effectively bans all international and inter-state online gaming, by making it illegal for banks and credit card firms to make payments to such internet operations. The Panel said that this Act confirmed the lack of conformity of US law with its obligations under the GATS.

Antigua and Barbuda could now apply to the WTO for permission to place sanctions on the US; but this is a blunt weapon given that bilateral trade is tiny. Alternatively, the islands might be able to disregard its obligations under TRIPS in order to gain some compensation for the massive loss of revenue it has suffered, with gaming turnover on its territory falling dramatically in the last two years.

In a parallel development, Gary Kaplan, founder of Betonsports, and who had been on the run since the US pounced on the company last year, was arrested last week in the Dominican Republic and transferred to the US authorities. Kaplan, 48, was indicted by a US grand jury last June along with his company and 10 other individuals for alleged racketeering and conspiracy related to Internet gambling.

Charlie McCreevy, European Commissioner for Internal Market and Services, said recently that the US rules against processing of international on-line gaming transactions were a prima facie case of protectionism and that the World Trade Organisation was a possible venue for tackling them. But he said that while negotiations were continuing over the WTO's Doha Round, he would not rush to file a complaint. "It's not something of major momentum," McCreevy said.

He told the the European Parliament: "In order to protect, I'd say, their own business, their industry there, they have de facto prevented foreigners from online betting into the United States. In my view it is probably a restrictive practice and we might take it up in another forum." McCreevy said he had not discussed the issue in any depth with Peter Mandelson, the EU trade commissioner, who would front any EU attempt to challenge the US legislation.

Recommended