Tropical Paradises Challenge Internet Gambling Ban

Gretchen Gallen
WASHINGTON – Two tropical gambling paradises that generate enormous revenue in the online gaming sector have put up a formidable defense to the U.S. ban on Internet gambling.

With backing from the World Trade Organization, a global international organization that deals with the rules of trade between nations, the islands of Antigua and Barbuda have taken a stand behind an earlier WTO ruling stating that the U.S. has no right to enforce a ban which effectively poses a threat to those economies that profit from Internet gambling.

According to reports from inside the WTO, the panel determined that the U.S. ban on Internet, telephone and online gambling services violated WTO commitments to fair trade.

The legalization of online gambling in the U.S. moved one step closer to reality in March after the WTO said that prohibitions on Americans placing gambling bets on the Internet represented an unfair trade barrier to other WTO-member countries.

The Bush administration ramped up an aggressive retaliation to the WTO's decision, which has so far bellyflopped.

Because Internet gaming operations are often located outside of the U.S., there has been little recourse for the U.S. to interfere, and a prohibition-like policy could only worsen the situation say critics, possibly forcing many operations underground or offshore.

Numerous bills placing restrictions on the online gambling industry have hit snags in the U.S. Senate and the House of Representatives, leaving it up to individual states to determine their own restrictions on this booming Internet industry.

One of the most popular forms of online gambling is sports betting, which is currently illegal in all states but Nevada, online and offline.

According to a study produced earlier this year by the National Gambling Impact Study Commission, individuals wager between $80-$380 billion dollars with illegal bookmakers online and off. That number accounts for almost 100 times the amount bet on professional sports with legal bookmakers in Nevada.

There are an estimated 1,800 (and growing) offshore websites that take in yearly revenue of between $4-6 billion from U.S. residents. Internet gambling sites catering to U.S. citizens operate from bases in countries like Antigua, Costa Rica and Australia.

Today's final report from the WTO compounds several other issues the U.S. and the WTO have butted heads over in recent weeks. The WTO issued a preliminary ruling earlier this week that U.S. cotton subsidies violated WTO rules, followed by a North American Free Trade Agreement ruling that the U.S. failed to prove that imports of Canadian lumber threatened to injure U.S. timber companies.

According to a U.S. trade official, there will be an appeal to the seven-member WTO appellate body of trade judges within the coming weeks.