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Gambling on-line: US breaking international law?

Antigua has taken the US before the World Trade Organisation alleging that its hard line on internet gambling amounts to protectionism. The tiny Caribbean state says that the country's moralistic stance is seriously damaging its economy.02 Feb 2004

Internet gambling is generally illegal in the US, whether it is based within the country or off-shore. In practice, however, it is difficult for enforcement officials to prevent US citizens accessing off-shore internet sites, and the industry is therefore growing.

US criminal law applies to companies operating out of the Caribbean, but it is often difficult to physically get the accused into court to adjudicate the matter. The most commonly used legislation to control internet gambling is the Wire Communications Act of 1961, albeit intended to prevent gambling over the telephone.

The most recent attempts to prevent US citizens gambling on-line focus on methods of paying for the gambling services. Bills to ban the use of credit cards or any other form of electronic payment for off-shore internet gambling sites are going through the Senate and House of Representatives at the moment.

One such bill was passed by the House of Representatives in October 2002, only to fall in the Senate less than three weeks later. In practice, many credit card companies refuse to process gambling transactions on a voluntary basis.

Despite the enforcement difficulties, Antigua, with a population of less than 70,000, has complained to the World Trade Organisation, claiming that the US approach has had a negative effect on the country.

The bulk of the Antiguan economy relies on tourism, but internet gambling has been a growth sector in recent years. According to a report on Caribbean Net, the country has lost around US$30 million since the US began its attempts to restrict Americans' access to on-line gambling services.

Antigua took the matter before the WTO, claiming that these prohibitions are discriminatory and in breach of international trade agreements that require the US to allow foreign internet companies to offer their services to US citizens. The EU, Canada and Japan are supporting Antigua in the action.

The US argues that gambling on the internet is different from casino-based gambling, not least because of the difficulty in preventing children from accessing the services. It also says that the restrictions it has put in place do not in fact breach the trade agreements.

According to The Wall Street Journal this is the first time that a country has applied international trade agreements to an internet dispute and will result in the WTO deciding whether internet services must be treated in the same way as their traditional counterparts.

The WTO ruling is expected in about a month.