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DoJ has outdated ideas about online gambling

The case has been dragging on since 2003 when Antigua commenced dispute resolution process of the World Trade Organisation to challenge the prohibition on cross-border gambling by the US. In 2004 the WTO Dispute Panel ruled in favour of Antigua saying that the restrictions on online gambling violated international treaties. This ruling brought online gambling closer to legalisation in the US and the rest of the world.

Antigua and the US again entered into discussion in order to resolve their trade dispute but without success as the US was not willing to deviate from their stance that federal law prohibits online gambling and therefore Antigua could not service the massive US gambling market.

The US appealed against the WTO ruling but the ruling was upheld on narrower grounds. The General Agreement on Trade in Services to which the US is signatory, makes it illegal for the US to prohibit free trade or as in this case the provision of online gambling services to the US from Antiguan based companies. Also since the US already allows US based companies to conduct “remote” gambling, there would be no basis for it to withhold the same rights from Antigua.

Thus far the US has failed to comply with the ruling that it should revise its laws regarding remote online gambling. Antigua is now entitled to impose trade sanctions against the US to “encourage” the meeting of international trade obligations to Antigua. But the US is considering withdrawal from the cross-border provision of gambling and betting services. This will entail that the US will compensate Antigua for losses incurred, what and how much compensation is still uncertain.

Is this all because the US wants to protect the domestic online gambling industry? If the EU also gets involved in this dispute and decide to impose trade sanctions against the US it will certainly be a catastrophe.

Jenny McKinnley is OCA’s financial correspondent. After spending years on the trading floor in both NY and London, he offers insight from the inside out on world financial news and events.

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