Antigua Wins WTO Dispute; Compensation Falls Short

The good news for online poker players: Antigua won its online gambling dispute with the United States last week.  The bad news: the punishment was virtually a slap on the wrist. 

On December 21, the World Trade Organization (WTO) awarded Antigua $21 million in compensation from the U.S. in the case United States – Measures Affecting The Cross-Border Supply Of Gambling And Betting Services.  Additionally, Antigua may suspend the recognition of U.S. intellectual property laws, as long as their value does not exceed the $21 million that it was awarded.   

The case actually goes all the way back to a 2003 complaint by Antigua and Barbuda, which argued that by restricting its citizens’ access to internet gaming, the U.S. was unfairly hurting the tiny island nation.  Antigua and Barbuda has derived significant revenue from online gambling over the last few years, as it has attempted to lessen its reliance on tourism.    

The WTO ruled against the U.S. in the case.  While the body said it was fine for the U.S. to use a “morality” defense, in that it will not allow internet gambling because it hurts the moral fiber of society, it did not accept that defense in this case because the U.S. still allows other forms of remote gambling within its borders.  Essentially, the U.S. either had to allow remote gambling completely or outlaw it completely.  In April, the WTO confirmed the ruling and said that the U.S. had not done anything to comply.  

In May 2007, United States Trade Representative (USTR) made the surprising announcement that, rather than appeal one more time, it was just going to remove its gambling commitments from its General Agreement on Trade in Services (GATS) schedule.  It was taking its ball and going home. 

Antigua filed a claim with the WTO for $3.4 billion annually in compensation from the U.S.  Thus, the $21 million falls far short of this mark.  The WTO arbitrator agreed with the United States’ assertion that it would have never allowed unfettered access to its online gambling markets, had it known back in 1993 (the year the GATS schedule was drawn up) what the online gambling landscape would look like today.  The arbitrator also decided that the U.S. would have only allowed Antigua entry into its online horseracing market. 

The USTR was obviously quite happy with the result.  “Antigua's claim was patently excessive,” said the USTR’s office in statement.  “The United States is pleased that the figure arrived at by the arbitrator is over 100 times lower than Antigua's claim. Because the United States is already taking steps to bring itself into compliance by clarifying its WTO commitments with respect to Internet gambling, the Arbitrator's award issued today is not paramount.”