US Gambling
A panel found on 30 March that the US had not complied with earlier dispute settlement rulings on the country’s restrictions on internet gambling. The dispute was brought by Antigua and Barbuda, which alleged that several US statutes discriminated against foreign providers of gambling services in violation of US commitments under the General Agreement on Trade in Services (GATS). Although the original panel, as well as the Appellate Body, agreed with the complainant, they also accepted the US defence that most of the disputed measures were justified under GATS Article XIV(a), which allows Members to apply GATS inconsistent measures that are “necessary to protect public morals or to maintain public order.”
The only outstanding issue related to the application of the Interstate Horseracing Act (IHA), whose ambiguous language appeared to allow domestic providers to offer internet betting services. The US told the Dispute Settlement Body that it was already in compliance with the finding, since its legal authorities had determined that existing criminal statutes prohibited domestic internet gambling under the IHA. In its compliance challenge, Antigua argued that the US had not taken any measures to implement the adverse ruling, or prosecuted any offenders. The compliance panel agreed with the complainant.
Antigua’s victory may, however, prove short-lived. On 4 May, the US announced that it would implement the dispute settlement rulings through formally clarifying that the government never intended to include gambling in its Uruguay Round commitment to open ‘recreational services’ to foreign competition under the GATS. While modifications of scheduled commitments in principle entail compensation to affected parties, Deputy US Trade Representative John Veroneau argued that the obligation would not apply to the gambling clarification since no concession had been withdrawn due to the fact that the US had never committed to opening the sector in the first place.