Antigua Granted WTO Hearing On US Online Gambling Ban

by Amanda Banks, Tax-News.com, London

24 July 2003

The WTO (World Trade Organisation) this week granted Antigua and Barbuda the right to a hearing by the WTO Dispute Settlement Body concerning its long standing complaint against the United States, which has restricted the right of US citizens to gamble online - a major lifeline for the Caribbean jurisdiction's economy.

"We greatly value our relations with the United States and would have preferred not to have a dispute at all," A&B's Chief Foreign Affairs Representative Sir Ronald Sanders told the Settlement Body, but he added that the government has "a responsibility to our people to maintain their jobs and defend our small and vulnerable economy in a highly competitive world."

The dispute originates from an Act championed by Representative James Leach (R- Iowa), who claimed studies have found that Internet gaming sites are at risk of being used by criminals to launder funds and evade taxes, and provide a direct pipeline of dollars into terrorist hands. "The very characteristics that make the Internet such a valuable resource are also the reasons why it has such a huge potential to impinge on the stability of the American family, American financial institutions and our national security," Leach announced during the passage of the bill earlier this year.

Therefore, "To prevent the use of certain bank instruments for unlawful Internet gambling, and for other purposes," the Leach Act has made it illegal to use credit cards or any form of electronic payment for this (supposedly illegal) offshore activity.

Partly as a result of the legislation, Visa, MasterCard and PayPal now refuse to process betting transactions by their customers. This is causing major problems for the estimated 1,500 Internet betting and gaming sites, most of which are based 'offshore', in jurisdictions such as Antigua, Costa Rica, Vanuatu, Alderney, the Isle of Man and Malta.

Consequently, the online gaming industry in Antigua and Barbuda has seen the loss of many firms recently. Estimates suggest that the government has foregone between $20 million and $30 million as a result of the US action.

"As a result of this, it has damaged Antigua & Barbuda's economy. Over 5,000 people were employed in the Internet gaming business," Prime Minister Lester Bird commented on the damage to the jurisdiction's economy. "It left a significant, negative effect upon the economy of this country."

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