US Tries to Avoid WTO Sanctions from Online Gambling Case Ruling

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The U.S. is looking to World Trade Organization (WTO) procedure to clarify its stance on its online gambling ban, to avoid any WTO member seeking or expecting compensation, a U.S. Trade Representative told reports Friday.

The WTO process would allow the U.S. to clarify its stance on the Unlawful Internet Gambling Enforcement Act (UIGEA) which was at the heart of the WTO appeal the US lost March 30.

In a long-running David versus Goliath case brought by the tiny Caribbean nation of Antigua and Barbuda against the United States, the WTO ruled in 2005 that the US discriminates against online gambling operators that are not located within the United States, and ordered the US to take corrective action to comply with the rulings.

Washington can maintain the anti-gambling law if it is applied equally to remote betting on horse racing, the global trade mediator ruled.

On March 30, the WTO turned down the appeal the US lodged against the WTO ruling (click here to read related article).

Reuters pointed out that the WTO now allows other WTO members, ranging from tiny Antigua and Barbuda to the 27-nation European Union, to seek potential damages from the US through the WTO.

However, Deputy U.S. Trade Representative John Veroneau told reporters the United States did not believe there was any basis for other countries to receive compensation.

Veroneau argued that a case brought by Antigua and Barbuda several years ago took advantage of a "drafting error" made by the United States as part of its commitments in the early 1990s to open its recreational services market.

Even though U.S. law has banned interstate gambling for years, the United States had failed to make clear that its commitments "did not extend to gambling," Veroneau said. "Neither the United States nor other WTO members noticed this oversight in the drafting of U.S. commitments until Antigua and Barbuda initiated a WTO case ten years later."

"U.S. federal and state laws have banned interstate gambling for decades, therefore it would be nonsensical for the U.S. to make a commitment to open up interstate gambling for foreign providers when it was unlawful for U.S. providers," Veroneau told reporters.

It is somewhat ironic that his statement comes the same time that New York State regulators approved interstate horse betting, between the states of New York and Connecticut.

The New York Racing Association Inc., a private, non-profit association that owns and operates the three largest race tracks in New York (Aqueduct, Belmont Park and Saratoga) recently received approval from New York State gambling regulators allowing it to accept online bets from residents of New York and Connecticut.

However, since Internet gambling is illegal in Connecticut according to Connecticut Attorney General Richard Blumenthal, he is asking New York gambling regulators to block Connecticut residents from placing Internet bets on horse races in New York State, according to an article in the Hartford Courant.