UNITED STATES LOSES W.T.O. APPEAL

6 April 2007

World Trade Organisation appeal panel judges that American government is discriminatory when it comes to online gambling

A ruling the tiny Caribbean nation of Antigua and Barbuda has been keenly anticipating was made by World Trade Association officials this week, who found in favour of the islanders in their long David and Goliath tussle over online gambling with massive neighbour the United States.

The U.S. ignored a WTO dispute ruling that found it discriminates against foreign gambling companies and nations by banning payments to gaming Web sites while allowing bets on its own soil, the global trade body's highest judges said.

The victory was immediately greeted with significant jumps in online gambling company shares trading on the London stock exchange - at Party Gaming Plc shares jumped as much as 16 percent.

Antigua and Barbuda, a Caribbean nation of 80 000 people and the smallest government ever to lodge a WTO complaint, scored an initial victory against U.S. online gambling restrictions when the WTO found in April 2005 that the U.S. had pledged to open the industry to competition 10 years earlier.

Today's (Friday) ruling rejects a U.S. appeal against that.

The U.S. exacerbated its weak position in the dispute by passing legislation five months ago aimed at denying the estimated $12 billion global business to American residents, who accounted for half of the market at the time. The U.S. Unlawful Internet Gambling Enforcement Act banned credit card companies from processing payments to online betting sites, causing extensive international commercial damage to companies and investors in the process.

Antiguan Finance Minister Dr. Errol Cort said that the ruling offers hope to the global online gambling industry currently under siege by the U.S. Department of Justice. "It [the WTO ruling] vindicates all that we have been saying for years about the discriminatory trade practices of the United States,'' Dr. Cort said in a statement.

A spokesperson for the U.S. Trade Representatives Office, Gretchen Hamel, agreed that the ruling had gone against her country, but insisted that the U.S. would maintain a ban on Internet gambling financial transactions to "....protect public order and public morals'' as long as it doesn't discriminate against foreign companies."

"We are currently reviewing our options,'' Hamel said, without commenting further on the widespread forms of betting permitted throughout the USA that have not been the subject of negative legislation.

The U.S. has argued that the prohibitions pre-dating the UIGEA in October 2006 apply to both foreign and American betting services, and the WTO's decision only applies to gambling on horseracing, which is an exempted activity under the law, to discriminate against foreign companies.

The U.S. added that its latest [UIGEA] law isn't covered by the WTO ruling and said that its 1995 commitment to open gambling to foreign companies was "an oversight" by the Clinton administration.

Aside from extensive international damage to investments and companies, the UIGEA has caused income for the 32 registered online casinos in Antigua and Barbuda to fall to $130 million a year from $1 billion in 2000, the Antiguan government claims. The country developed online gambling to boost a tourism-dependent economy after several hurricanes in the 1990s.

Antigua successfully argued in its complaint that the U.S. protects its domestic gambling industry while failing to live up to its international commitments.

The UIGEA has been widely criticised, both within and outside the USA. Congressman Barney Frank, chairman of the influential House Financial Services Committee, who is about to launch an attempt to repeal the Act, described it as "the stupidest law ever passed."

Charlie McCreevy, commissioner for the European Union's internal market, labeled the U.S. law "a protectionist measure'' early this year (2007), saying the EU should complain to the U.S. after Congress passed the legislation barring credit card companies from processing payments.

When the UIGEA was enacted, U.K. Culture Secretary Tessa Jowell compared it to the American alcohol ban of the 1920s, saying the measure may force online gambling underground into an unregulated black market.

"This is a smashing success for Antigua in every possible way,'' John Ashe, the Caribbean island nation's ambassador to the WTO in Geneva, said in a statement. "The ruling clears up any lingering doubt that Antigua has obtained a clear and convincing win over the United States and it is now time for the United States to meet its international trade obligations.''

Antigua may seek sanctions in the form of withdrawing intellectual property protection for U.S. trademarks or copyright. Known as "cross-retaliation,'' such sanctions are legal at the WTO when an economy can't afford to impose sanctions in the form of higher customs duties on goods.

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