US laws banning cross-border gambling break international trade rules, the World Trade Organisation (WTO) ruled yesterday.

The judgement in favour of the tiny Caribbean nation of Antigua and Barbuda, home to many online casinos, puts free trade rules on collision course with US state and federal laws. US authorities have vowed to appeal the decision. If that fails they might even change the basis of their membership of the World Trade Organisation, the BBC reports.

A three-person WTO panel decided that US federal (such as the Wire Wager Act) and state laws breached the general agreement on trade and services (GATS), international rules that came into effect in 1994. Antigua and Barbuda argued that US laws prohibiting the use of US-issued credit cards or cheques to settle gambling debts threatened the job of 3,000 workers (five per cent of its 68,000 population) that made their living from internet gambling. Antigua and Barbuda officials said they had tried and failed to negotiate a settlement with their US counterparts without success on five separate occasions.

But US officials said its prohibition on offshore gambling helped prevent money laundering and protected vulnerable members of society against gambling (such as preventing kids using their parents' credit cards to gamble). These moral arguments held little sway with the WTO, much to the disappointment of US representatives. US trade representative spokesman Richard Mills described the panel's report as "deeply flawed".

The argument is far from academic. In August 2000, US citizen Jay Cohen was sentenced to 21 months in jail and fined $5,000 for breaches of the Wire Wager Act in marketing an offshore sports betting company he'd set up in Antigua to fellow Americans.

Estimates of the size of the online gambling market vary. Merrill Lynch, for instance, estimates the industry recorded a turnover of $6.3bn last year. This will rise to $86bn in 2005, it forecasts. ®

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External links

World Trade Organisation ruling (PDF) Background on online betting