U.S. Response to Gambling Dispute Reveals Weak Hand

Antiguan operators such as the World Sports Exchange to consumers in the United States ("US"). For several months, Antigua went through a pre-dispute negotiation process with the US in an effort to resolve the trade dispute. Wire Act of 1961, 18 U.S.C. §1084 ("Wire Act"); (2) the Travel Act, 18 U.S.C. §1952 ("Travel Act"); and the Illegal, 18 U.S.C. §1955 ("IGBA"). Antigua had sought to have more federal and state laws considered "measures" that violate the US's GATS commitment. Antigua also contended that the US maintained a "total prohibition" against the supply of gambling services from Antigua, and that this "total prohibition" was itself a measure. The Appellate Body disagreed with these additional arguments, finding that the other list of federal and state laws were not discussed in sufficient detail by Antigua in its submissions and that a "total prohibition" cannot serve as a measure by itself. With respect to the first element of this morals defense, the Appellate Body determined, over Antigua's objections, that the three federal statutes were necessary to protect public morals or maintain public order. With respect to the second element of this defense, the Appellate Body ruled that the US did not establish the chapeau. The Dispute Panel had found several reasons why the US could not meet the chapeau. Dispute Panel's reasoning, but nevertheless ruled that the US could not establish the chapeau because the US either sanctioned or permitted "remote gambling" in the US, primarily in the form of off-track account wagering on horse races. The Appellate Body noted that there were several companies in the US that provided telephone and Internet betting services on horse races. Body concluded that the US could not justify why it permitted US-based companies to offer remote gambling in the form of telephone and Internet account wagering while the US prohibited Antiguan companies from offering the same type of gambling services. IHA to make things somehow "clear". The indecisiveness and ambiguity of the Appellate Body's report combined with the desire of the US to claim victory led to much confusion as to what the decision really meant. WTO rules, the US had a "reasonable period of time" to correct its offending laws. The parties were unable to agree on what the period should be and so under the rules had to request arbitration to set the compliance period. Antigua, the US took the unprecedented step of declaring that it was going to withdraw the original commitment to allow the cross-border provision of gambling and betting services that had resulted in the adverse rulings in the first place. While there is a provision of the GATS that allows the withdrawal of a commitment, it has never before been used as a means of settling an adverse WTO ruling. Barbuda, a tiny island nation with about 70,000 inhabitants and an annual gross domestic product of $900 million, would seem to be no match for the United States in any conflict. Antigua and Barbuda now dispute that recent U.S. policies, including the recently enacted Unlawful Internet Gambling Enforcement Act of 2006, correct the errant policies. The most important of those conditions is nondiscrimination: that, should a member wish to prevent certain goods or services from entering its market, then the restrictions apply to domestic as well as foreign suppliers. Internet. The act also forces financial institutions to identify and block gambling-related transactions transmitted through their payment systems. Those exemptions would seem to back the claim by Antigua and Barbuda that the U.S. laws are aimed at discriminating against foreign Internet gambling interests rather than at restricting gambling in general. United States, under proper supervision and regulation to prevent, say, children, from accessing sites, is a less blunt way of limiting the “social ills” that politicians insist come from gambling. The British government, for example, has legalized and licensed Internet gambling and recently hosted a gambling summit to discuss regulating the industry to protect children and otherwise prevent fraud and other crimes such as money laundering. Offshore online gambling operations would seem, from the domestic industry’s point of view, to cut into their market share. WTO established another panel in August 2006 to rule on whether the United States has complied with the original WTO rulings. No doubt the new panel will consider the provisions of the recently passed Unlawful Internet Gambling Enforcement Act of 2006 in is deliberations. Internet gambling is an industry that is growing exponentially and its perception as criminal is a matter of intense debate. On the transnational scene it has emerged as a public policy issue of significant ideological interest and of massive financial importance. Public order was defined as “the preservation of the fundamental interests of a society, as reflected in public policy and law.”  Such fundamental interests related, inter alia, to standards of law, society, and morality. Other exceptions besides public morals and public order include the protection of human, animal, and plant life and health, and the protection of exhaustible natural resources. Plender, a Queen’s Council from the United Kingdom.  Besides the contesting nations, Canada, the European Union, Japan, Mexico, and Taiwan joined the litigation as third parties, indicating the considerable international significance of the issue.

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