U.S.and Antigua battle over WTO sanctions for U.S. ban on Online Gambling

28 September 2007

U.S.and Antigua battle over WTO sanctions for U.S. ban on Online Gambling

Along with the iMEGA battle, WTO and iMEGA feel very confident over the win of both battles.

GENEVA – The United States estimates that its Internet gambling restrictions have only cost Antigua and Barbuda $500,000 in annual lost revenue – a figure the tiny Caribbean nation’s chief counsel flatly rejected Friday.

Antigua, the smallest country to ever win a World Trade Organization case, is seeking the right to impose $3.4 billion in commercial sanctions against the U.S. for its failure to comply with a ruling on its online betting ban.

Washington stopped U.S. banks and credit card companies last year from processing payments to online gambling businesses outside the country.

The decision closed off the most lucrative region in a market worth $15.5 billion. About half of the world’s online gamblers are based in the United States.

In March, the WTO upheld the U.S. right to prevent offshore betting as a means of protecting public order and public morals. But it said it was illegal to target online gambling, without equally applying the rules to American operators offering remote betting on horse and dog racing.

After losing the WTO case, Washington declared its intention to explicitly remove Internet gambling from its obligations under the WTO’s treaty on trade in services. Australia, Canada, Costa Rica, India, Macau, Japan and the 27-nation European Union have all joined Antigua in filing compensation claims as a result, under a procedure that is separate from the U.S.-Antigua sanctions arbitration.

Antigua, which was hurt by a series of hurricanes in the late 1990s, had been promoting electronic commerce as a way to end the country’s reliance on tourism. There are 32 licensed online casinos in the former British colony, employing 1,000 people and generating yearly revenue of about $130 million. Seven years ago, its casinos had an annual income closer to $1 billion.

Antigua is confident the WTO will rule in its favor again.

“That’s the typical position the U.S. has taken to Antigua in this case, but we’ve proven them wrong in every instance,” Mark Mendel, the lawyer who masterminded the twin-island’s legal victory, said of the U.S. claims.”It’s completely without any basis whatsoever. We feel very confident that it will be quite easy to demonstrate that.”

Mendel told The Associated Press that he would meet with U.S. trade officials and WTO arbitrators next month in Geneva. After that, it will be up to the arbitration panel to decide whether to authorize the second-highest sanction in the body’s 12-year history.

The United States said in a submission to the WTO dated Sept. 19 that Antigua’s estimate of impairment from the U.S. online gambling restrictions was “wildly disconnected” from economic reality. The $3.4 billion is nearly four times Antigua’s entire gross domestic product and a thousand times greater than any real effect to the country’s economy, the U.S. said in the 22-page document.

EU online gambling sites – which largely bankrolled Antigua’s legal efforts – have claimed the U.S. owes the European Union a jackpot of up to $100 billion in trade concessions to compensate for its illegal ban on foreign gambling companies.

Watch here as we keep you informed of WTO, UIGEA, Barney Frank, and iMEGA as they battle it out with the U.S.