WTO Rules against US Online Gambling Ban

The World Trade Organization (WTO) has ruled that a US prohibition on online gambling unfairly targets offshore casinos, thereby opening the door to sanctions by WTO members against the US. The Caribbean island nation of Antigua and Barbuda argued that the US ban on online gambling violated America's WTO trade commitments, and is harming Antigua's efforts to diversify its economy. US trade officials argued that gambling was not supposed to be included in WTO trade commitments. The three-member WTO compliance panel found that the American ban on online gambling was invalid unless the US also banned remote betting on horse racing. Two years earlier, the WTO had ruled that the US had the authority to ban online gambling as a means of protecting public order and public morals. The US ban on online gambling prohibits banks and credit card companies from settling payments to online gambling web sites. However, it contains exemptions which allow off-track betting on horse racing to be performed over the Internet, as permitted by the 1978 Interstate Horseracing Act. Essentially, the WTO panel ruled that such an exemption amounted to discriminatory trade practices which singled out online gambling web sites. Last year the online gambling industry was worth US$15.5 billion. But after the US ban was enacted, several British-based online gambling companies were sold off or shut down their US operations. Other European and Australian-based online gambling companies were also sold off or else they shut down their US operations. As a result, these companies lost 80% of their combined business. The US online gambling ban also had a negative impact on the Antiguan economy. Although there are currently 32 online casinos in Antigua which employ 1,000 people and generate $130 million in annual revenue, seven years ago Antiguan online casinos had annual revenues of almost $1 billion. If the US refuses to change its online gambling ban to include off-track betting on horse races, then Antigua could seek trade sanctions against the United States for failing to comply with the WTO ruling. It seems unlikely that the US will change its online gambling ban to comply with the ruling. For more information, see: http://tinyurl.com/2ahey8 Summary by: Andrei Edwards