Antigua and Barbuda Continues to Seek Resolution of Its Online Gambling Dispute with the US Government

The small island nation of Antigua and Barbuda is renewing efforts to get the United States government to change its online gambling enforcement policies. Antigua won a court case against the United States in the WTO’s international court, but the Bush and Obama administrations have not recognized that ruling.

The dispute involves the role played by the Antiguan Directorate of Gaming in licensing online gambling companies. Antigua licenses online casinos, poker sites, and sportsbooks. The United States has taken measures to squelch the offshore online gambling industry, which is the source of a significant portion of Antigua’s tax revenues. The country has a population of 81,000 people.

$200 Million in Lost Tax Revenue

In the 12-year dispute, Antigua claims the United States government has cost their nation about $200 million. Antigua took the United States to court before the World Trade Organization. It argued that the US is working in violation of the General Agreement on Trade and Services (GATS).

Both the United States and Antigua signed the GATS Treaty. The treaty states that all signatories agree to apply the same considerations to international business ventures that they would to their own businesses in the same industry.

Thus, if the United States allowed American citizens to gamble legally at US ventures, then it could not punish ban US residents from gambling with ventures legally licensed by another GATS Treaty signatory. Any nation doing so would be enjoying the advantages of free trade, while also erecting protectionist barriers to benefit native business ventures.

Antigua Wins a WTO Ruling

Before the WTO court, US advocates (in 2006) claimed the United States bans all online gambling, including online casinos, sportsbooks, and poker sites. Because of iGaming bans stemming from the 2006 UIGEA and the 1961 Wire Act, the United States claimed it was fairly applying the same standards to its own industry as to Antigua’s interactive gaming industry.

Antigua argued that the United States allows some forms of online gambling, including horse racing, off-track betting, sports lotteries, and online lottery ticket sales. Thus, they allow US businesses to prosper, while erecting trade barriers against foreign businesses. The WTO court agreed with Antigua and stated the United States should stop its discriminatory policies.

US Ignores the GATS Treaty Ruling

The United States ignored the WTO ruling. Some thought the Obama Administration would take a different tack than the previous Bush Administration, but it continued to ignore Antigua’s complaints. When this became apparent in 2009, Antigua went back to the WTO court to collect damages. That is when the WTO gave Antigua the right to collect $21 million a year from pirates US copyrights.

In 2009, the World Trade Organization gave Antigua and Barbuda to collect revenues from pirate US copyrights. For the past several years, the leaders of the small Caribbean island chain declined to take those measures, hoping they could negotiate a square deal with officials in the Obama adminstration. The copyright material involves US movies, music, and books, so Antigua’s officials preferred a negotiated solution.

Ongoing Negotiations

Over that time, it appeared that a resolution might happen. Mid-level US officials spoke with Antigua’s president about ending the dispute, but nothing ever came of those meetings. Now, Antigua and Barbuda says it is taking proactive steps to gain remuneration. One of those steps might be the US copyright material.

Ronald Sanders, the Antiguan ambassador to the United States, said his country’s goal remains a negotiated settlement. He added, though, “We’re now entering the 12th year, where the United States has not made sensible proposals to settle the matter.”

Selling Copyrighted Material

The way the WTO ruling works, Antigua and Barbuda could sell movies, music, and books which were created in the United States. Because Antigua would not have to pay licensing and royalty fees, this copyrighted material could be sold at lower-than-market cost. A total of $21 million could be sold in a year’s time and the WTO would consider it legal.

The artists involved likely would cry foul, and they would have a point. Through no fault of their own, damages which should have been paid by the United States government would instead be paid by US artists and business people. It’s an imperfect way to collect revenues, which is why Antigua and Barbuda has not gone down that road for the past 7 years.

Dispute Resolution with the Next Administration

With a new administration looming, Antigua appears to be calculating whether the new administration will settle the dispute or perpetuate the divide. Given the unpredictable and sometimes troubling nature of U.S. politics in 2016, Antigua might be calculating that no deal is likely to happen anytime soon.

Since the original WTO ruling and its subsequent damages judgment, the United States’ position is less-defensible. In 2011, the US Justice Department ruled that online casinos and poker sites should not be banned by the federal government. The decision to ban or regulate was referred to the state governments. Three state governments — Nevada, New Jersey, and Delaware — have legalized online poker and/or online casinos.

US Defiance of International Standards

Thus, the US federal government now has divested itself of the power to ban online casinos and poker sites in the United States. Still, it claims to have the right to ban such activities when they involve foreign operators. Such a double-standard directly contradicts the GATS Treaty.

Those concerned that American sovereignty is impinged by international treaties or that leaders of one political party or the other are anti-American should take a look at the GATS dispute with Antigua, because it shows that Republicans and Democrats alike are willing to ignore inconvenient rulings by the WTO.