NEWS

SOURCE: Bloomberg

The World Trade Organization ruled that the U.S. can maintain a ban on online gambling challenged by the Caribbean island of Antigua and called for changes to prevent discrimination against foreign companies.

Antigua, a nation of 67,800 people and the smallest WTO government ever to lodge a dispute, scored a victory against U.S. online gambling restrictions in November, when WTO judges said the U.S. had failed to justify the ban on moral grounds and had committed itself to open the industry in 1995. Today's ruling was in response to an appeal by the U.S. against that decision.

"This win confirms what we knew from the start: WTO members are entitled to maintain restrictions on Internet gambling," acting U.S. Trade Representative Peter F. Allgeier said in an e- mailed statement. "If we clarify U.S. Internet gambling restrictions in certain ways, we'll be fine."

Antigua-registered companies such as Sportingbet Plc and BetWWTS.com account for about a quarter of wagers in the estimated $7 billion to $12 billion global industry. The island, which developed online gambling to boost its tourism-dependent economy after a series of hurricanes, is seeking access to the U.S. gambling market, the world's biggest.

WTO rules on commercial services allow governments to exempt industries from competition ``necessary to protect public morals or to maintain public order.'' Today's ruling reversed the WTO's initial finding that the U.S. measures, subject to changing the way they are implemented, didn't qualify for that exemption.

Negotiating Access

Antigua's chief legal counsel, Mark Mendel of El Paso, Texas- based Mendel Blumenfeld LLP, said the ruling will allow the nation to negotiate access to the U.S. online gambling market.

"It will be a long time playing out because the U.S. is going to try to delay and find reasons why it shouldn't comply," Mendel said, in a telephone interview. "When push comes to shove the U.S. will comply, but I would prefer to negotiate a settlement, even a limited form of regulated access to the U.S. market as we have been pushing for all along."

The U.S. House of Representatives passed a bill in February 2003 making it illegal for banks to process credit card payments, checks and electronic fund transfers to Internet gambling companies.

Citigroup Inc., the world's biggest issuer of credit cards, stopped processing online gambling transactions using its cards in 2002. In most U.S. states, unauthorized betting and gambling are illegal, regardless of whether it is done online.