U.S. to keep Internet gambling ban

The United States will maintain a ban on Internet gambling services despite an adverse World Trade Organization ruling, the U.S. Trade Representative’s office said on Friday.

The move opens the door for other WTO members — ranging from tiny Antigua and Barbuda to the 27-nation European Union — to seek potential damages at 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 failed to make clear 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,” Veroneau said.

The Caribbean islands, which have built up a $130 million online gambling industry to make up for declining tourism revenues, argued that the U.S. measures hurt them while leaving some U.S. domestic operators alone.

The United States has argued at every step of the case it never intended to open its gambling market. Last year, the U.S. Congress passed additional legislation to ban online gambling.

PAYMENTS ILLEGAL

The new law makes it illegal for banks and credit card companies to make payments to online gambling sites.

Last month the chairman of U.S. House Financial Services Committee, Democratic Rep. Barney Frank of Massachusetts, introduced legislation that would lift the online gambling ban. But he conceded there is not enough support currently to pass the bill.

In March, the WTO said the United States had failed to comply with an April 2005 ruling against a portion of its ban having to do with online gambling on horse racing.

Having exhausted other options to fight the case, the United States will exercise a rarely used right under WTO rules to modify its services commitments and explicitly exclude gambling, Veroneau said.

Other countries will have 45 days to file a claim for compensation if they believe they are damaged economically by the U.S. move.

That would lead to 3-month period for the WTO to decide on compensation, in the form of reduced U.S. market access in some services sector of the WTO member seeking damages, USTR officials said.

The United States believes there is little, if any, basis for other countries to seek compensation because countries did not bargain for access to the U.S. gambling market as part of world trade talks in the early 1990s, Veroneau said.

Also, the long-standing U.S. ban on interstate gambling makes it “nonsensical” for countries to believe the United States was opening that market, even though it did not explicitly say that it was not, Veroneau said.