WTO: US rules on offshore Internet gambling sites illegal

Ruling opens door to possible commercial sanctions unless Washington changes its rules governing online betting.

gambling 88 (photo credit: )
gambling 88
(photo credit: )
The United States has failed to comply with a ruling that it illegally restricts Internet gambling sites based overseas, the World Trade Organization said Friday, opening the door to possible commercial sanctions unless Washington changes its rules governing online betting. In a 215-page decision, a three-member WTO compliance panel sided with Antigua and Barbuda in ruling that Washington had failed to change legislation that unfairly targets offshore casinos. The Geneva-based trade referee has said Washington can maintain restrictions on online gambling, as long as its laws are equally applied to American operators offering remote betting on horse racing. Shares in London-listed gaming stocks rose after the announcement. Leisure & Gaming PLC closed up 11 percent at 19.75 pence (38.9 U.S. cents; 29.1 euro cents), while PartyGaming PLC was 4.5 percent higher at 52.25 pence (US$1.02; 77 euro cents), after initially surging by 16 percent. 888 Holdings PLC lifted 3 percent to 124.75 pence (US$2.46; €1.85). "It vindicates all that we have been saying for years about the discriminatory trade practices of the United States in this area, and we look forward to the United States opening its markets," Antiguan Finance Minister Errol Cort said in a statement. Washington claimed victory in the WTO's initial ruling two years ago because the body recognized its right to prevent offshore betting as a means of protecting public order and public morals. But the US acknowledged Friday that the latest decision was a setback. "The compliance panel did not agree with the United States that we had taken the necessary steps to comply with the WTO recommendations," said Gretchen Hamel, a spokeswoman for the office of the US Trade Representative. She added, however, that "nothing in the panel's report undermines the broad, favorable results that the United States obtained from the WTO in April 2005." Washington still has yet to say if it will appeal the compliance panel's findings. A final ruling upholding Antigua's claims would allow the twin-island nation to seek trade sanctions on the United States for its failure to comply. To avoid the penalties, the US government would then have to either permit Americans to gamble over foreign-based sites or eliminate exceptions for off-track betting on horses, including over the Internet, as permitted under the 1978 Interstate Horseracing Act. Nevertheless, it appears unlikely that the US will ease access to companies with servers licensed in the nation of 80,000 people, whose legal efforts were largely bankrolled by British-owned Internet gambling operators.