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WTO Rules Against US In Online Gambling Dispute

Law, 2007-03-30, by TwoGun

Online gambling is one of the leading industries in the tiny Caribbean nation of Antigua. Many of the Antiguan online gambling companies derive most of their revenues from US players and have been significantly affected by the US crackdown against online gambling.

For several years, Antigua has been battling the United States over the US stance against online gambling. In 2003, Antigua filed a complaint with the WTO arguing the American stance against online gambling is a violation of trade agreements.

In April of 2005, the WTO ruled in favor of Antigua. The WTO's decision was primarily the result of the horse racing exception present in US law. The WTO believed the United States had the right to ban online gambling, provided they banned both domestic and foreign operators.

While the US has taken a stand against online gambling in general, it has also made an explicit exception for horse racing betting. Companies like US-based YouBet.com are allowed to take US bets on horse racing, while Antiguan companies are not. The WTO found this to be an unfair trading practice and therefore ruled against the US.

The WTO gave the United States time to clarify its laws so that it would no longer be in violation of the ruling. The US could have complied in two ways. It could ban all online gambling, including horse racing, or relaxed its stance against online gambling and allowed Antiguan operators access to the US market. Instead, it passed the UIGEA, which hardened its stance against online gambling, though still made the explicit exception for domestic horse racing.

Today, a WTO compliance panel issued a ruling declaring the United States has failed to comply with the WTO's decision. The US still can appeal the compliance panel's decision, though chances are the compliance panel's decision will be upheld.

It is unlikely the United States will alter its position on online gambling due to the WTO's decision. Any punishment the United States receives will likely not be significant enough to sway its stance on online gambling. A final Antiguan victory in the case merely allows Antigua to seek trading sanctions against the United States.

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