WTO backs Antigua, rules U.S. online gaming ban is illegal

Wednesday, Nov. 10, 2004 | 9:35 a.m.

BLOOMBERG NEWS

Antigua and Barbuda, the Caribbean island nation, won a World Trade Organization ruling that U.S. legislation criminalizing online betting violates global laws.

Antigua, with a population of 67,800, won its complaint that a U.S. ban on Internet gaming violates American commitments at the Geneva-based WTO. The ban has slashed revenue in Antigua, which developed online gambling to boost an economy whose main income, tourism, suffered after a series of hurricanes in the four years to 1999.

Internet companies in Antigua handle a quarter of online bets in a global industry worth about $6 billion. The country has lost more than $90 million in income from the U.S. ban.

"The U.S. measures prohibit" online gambling "in a manner inconsistent with" WTO rules, arbitrators wrote in a 287-page report published today on the WTO's Web site. "We have not decided that WTO members do not have a right to regulate, including a right to prohibit, gambling and betting activities."

The United States, the world's biggest consumer of all forms of gambling and betting services -- worth $69 billion in 2002 -- said in March that it planned to appeal the decision. Today's publication confirms an initial ruling reported to the two governments March 24.

According to the United States, pledges to the WTO, which came into effect in 1995, were "clearly intended to exclude gambling."

The United States is considering a nationwide block on the use of credit cards for Internet gambling. The House of Representatives' financial-services committee last month thwarted efforts to introduce a ban in U.S. terrorism legislation.

Citigroup Inc., the world's biggest issuer of credit cards, agreed in 2002 to stop processing online gambling transactions using its cards. In most U.S. states, unauthorized betting and gambling are illegal, regardless of whether it is done online.

In a bid to prevent fraud and reduce indebtedness, American Express Co. and Citigroup last month blocked their credit cards in the United Kingdom from being used to pay for online gambling.

Before the U.S. prohibitions, Antigua's Internet gambling industry employed 5,000 people in the country in 119 companies. That dropped over three years to 1,000 people in 30 companies.

Antigua is the smallest WTO government and the first Caribbean nation ever to lodge a complaint with the trade body.