The WTO’s appellate body has upheld an earlier decision that seems to give Antigua-based remote wagering sites–online sportsbooks–the right to market and sell cross-border betting services to American citizens. Though the body found that the US federal government did have the right to restrict gambling as a morals issue, because the Interstate Horseracing Act allows remote account wagering, it can’t claim that remote account wagering is an affront to the public morality.
Here’s the Antiguan press release:
The World Trade Organization (WTO) appellate body today upheld a ruling in favour of Antigua in the trade dispute with the US regarding cross-border online gambling. This is a landmark victory for Antigua as the first, and smallest, WTO member to defeat the United States, the largest member, in this well-respected international trade court.�The impartial dispute resolution machinery of the WTO has functioned as we had expected,� says Mark Mendel, lead legal counsel for Antigua�s case. �Justice has been served and potential compliance issues facing various US corporations and the US Department of Justice will now be resolved in a manner favorable to fair and responsible international commerce.�
The WTO ruling is anticipated to pave the way for new media opportunities for Antiguan gaming operators. Previously US companies such as Citibank, Chase Manhattan, Bank of America, Clear Channel Communication, Discovery TV, Yahoo and MSN were discouraged from conducting financial transactions or broadcasting advertisements involving online gaming products. The WTO determination is expected to end subpoenas or threats of prosecution from the United States Justice Department to US companies who choose to do business with Antigua offshore gaming companies. �This is a country-specific ruling,� says Mendel, �but it may have far-reaching implications.�
In the ruling, the Antiguans argued that it is inappropriate to treat businesses that conduct transactions online as if they are unequal to or somehow less credible than traditional brick-and-mortar operations. Additionally, it was underscored that it is inappropriate for the US government to assume an industry lacks integrity in the absence of objective evidence.
The US now faces compliance issues that will require the United States government to thoughtfully address its approach to on-line gaming rather than simply prohibiting it altogether. Mendel states that this WTO ruling will ultimately result in US companies making accommodations to Antiguan gaming operators.
�At the end of the day,� said Mendel, �we expect that major internet search engines, including Google and Yahoo, financial institutions and credit card service providers will be required to accept advertising from Antiguan internet gaming sites as they do currently with US gaming interests, including hundreds of American casinos and state lotteries.�
You can read a summary of the WTO appellate ruling as well.
Basically, the panel found that the US had committed to free trade in gaming, that Antigua proved that the three federal laws invoked by the US (including the Wire Act) blocked its access to American citizens. The panel ruled that state laws against Internet gaming did not do so, but that the federal permission of account wagering via the Interstate Horseracing Act undercut the principle that federal legislation was strictly about morality.
From here, the dispute resolution grinds along into its next phase, in which both sides negotiate how to bring the US into compliance. This case is by no means over, and it is now going to get very interesting.