The World Trade Organization (WTO) ruled today that the US internet gambling ban continues to violate the free trade agreement by discriminating unfairly against foreign betting companies. According to the WTO the Unlawful Internet Gambling Enforcement Act (UIGEA) confirmed the US is in violation.
The dispute over internet gambling was initiated by Antigua and Barbuda back in 2003. In April 2005 the WTO Appellate Body ruled that the US could restrict online gambling on moral grounds, but only if it applied these restrictions equally. According to the WTO the US failed to do that, by allowing internet betting with American horse-racing companies.
In 2005 both the US and Antigua interpreted the WTO ruling as a victory, however today's ruling removes any doubt that the US lost the case.
The US may decide to appeal but Mark Mendel, the head of Antigua’s legal team, believes that the chances of reversal are remote. “The panel’s logic is impeccable and the law and facts are just as much in our favor as they could possibly be. The United States on one hand prohibits competition in remote gambling from Antigua while on the other promoting and protecting a massive domestic industry. If the WTO agreements apply under any scenario, they apply here.”
If the US loses the appeal, Antigua and Barbuda may enforce trade sanctions against the US. To avoid trade sanctions the US would either have to remove the exemptions for the horse-racing industry or to permit Americans to wager on foreign internet betting sites.
The WTO points out that the enactment of the Unlawful Internet Gambling Enforcement Act (UIGEA) clearly demonstrates the US is violating the free trade agreement. The UIGEA explicitly exempts the interstate horse racing industry from it's definition of unlawful internet gambling: "The term 'unlawful Internet gambling' shall not include any activity that is allowed under the Interstate Horseracing Act of 1978 (15 U.S.C. 3001 et seq.)."
The WTO concludes that "This provision [...] shows that since the original proceeding the United States had an opportunity to remove the ambiguity and thereby comply with the recommendations and rulings of the DSB.1 Instead, rather than take that opportunity, the United States enacted legislation that confirmed that the ambiguity at the heart of this dispute remains and, therefore, that the United States has not complied (i.168)."