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On 21 March 2003, Antigua requested consultations with the US regarding measures applied by central, regional and local authorities in the US which affect the cross-border supply of gambling and betting services.
Antigua considered that the cumulative impact of the US measures is to prevent the supply of gambling and betting services from another WTO Member to the United States on a cross-border basis.
Antigua noted that the United States’ Schedule includes a commitment to grant full market access in gambling and betting services . The USA claimed that it made a simple mistake when it first committed a sector called “other recreational services,” which includes “gambling and betting services” to WTO jurisdiction
WTO found that the United States’ measures are justified under Article XIV(a) of the GATS as measures “necessary to protect public morals or to maintain public order”;
BUT: the United States had failed to show that these measures satisfy the conditions of the chapeau of Article XIV.
Members may take measures necessary for certain overriding policy concerns, including the protection of public morals or the protection of human, animal or plant life or health.
However, such measures must not lead to arbitrary or unjustifiable discrimination or constitute a disguised restriction to trade.
- Panel found that the United States had not prosecuted certain domestic remote suppliers of gambling services,
- and that a United States statute (the Interstate Horseracing Act) could be understood, on its face, to permit certain types of remote betting on horseracing within the United States
“We believe that the United States has not demonstrated that it does not apply its prohibition on the remote supply of wagering services for horse racing in a manner that does not constitute "arbitrary and unjustifiable discrimination between countries where like conditions prevail" and/or a "disguised restriction on trade" in accordance with the requirements of the chapeau of Article XIV “.
When the U.S. did not change its laws as ordered by the WTO, Antigua brought a compliance case.
In March 2007, the U.S. lost that case, and Antigua was authorized to begin imposing sanctions.
Antigua’s lawyers raised the option of lifting Antiguan compliance with WTO copyright rules relating to U.S. music and software.
In May 2007, the U.S. gave notice to the WTO that it sought to withdraw “gambling and betting services” from WTO jurisdiction.
Under WTO rules, a country may withdraw a service sector committed to WTO jurisdiction only with the authorization of other WTO signatory countries interested in the sector and only after compensating for future lost revenue a WTO signatory country might have earned were the commitment maintained.
The U.S. is engaged in negotiations with the European Union, India, Costa Rica and Macao to determine how much it must pay them for withdrawing the gambling sector.
These negotiations focus on what new service sectors the U.S. will submit to WTO jurisdiction in exchange for withdrawing gambling.
The country of Antigua came out of World Trade Organization (WTO) arbitration with victory against the U.S. on the issue of gambling revenue.
The country, whose economy has shifted from being largely tourism based to having a thriving online gambling industry, was looking for $3.44 billion in compensation for U.S. violations of a WTO treaty.
The United States had claimed that its behavior had caused only $500,000 damage to the Antiguan economy.
Antigua won the right to violate copyright protections on goods like films and music from the United States - worth up to $21 million -
"Even if Antigua goes ahead with an act of piracy or the refusal to allow the registration of a trademark, the question still remains of how much that act is worth," said Brendan McGivern, a trade lawyer with White & Case in Geneva.
"The Antiguans could say that's worth $50,000, and then the U.S. might say that's worth $5 million - and I can tell you that the U.S. is going to dog them on every step of the way."
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