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Antigua-U.S. Gambling Conflict Continues Into the New Year

Published on October 25, 2014, 4:32 pm

by Jeff Grant Twitter account Jeff Grant LinkedIn account

Antigua's Map
Map of Antigua

Back in 2003, members of the Caribbean island nation of Antigua filed a complaint with the World Trade Organization, or WTO, against the United States. Antigua's complaint: The U.S. had been unlawfully blocking Antigua-based gambling companies from servicing American citizens online.

To add flame to the fire, Antigua argued, the U.S. had been allowing its own citizens to place horse racing wagers online with American companies. This juxtaposition seemed unfair to Antiguan representatives; the WTO agreed. As punishment, the U.S. was ordered by the WTO to pay millions of dollars in reparations to the Caribbean nation.

To date, the U.S. has not paid their debt. Years have passed and the annual damages have added up considerably; America now owes Antigua approximately $150 million. It looks as though the bill is not going to be paid, at least in cash, any time soon. America's most recent attempt to negotiate a settlement occurred in November of 2013, 10 years after the original conflict. Antigua balked at the U.S. Trade Representatives' monetary offer, which was considerably less than the $150 million owed.

Antigua's Point of View

The island nation turned to the WTO for help because, from their point of view, the U.S. has an obligation to keep its consumer market open to foreign products from foreign suppliers. In this particular case, the product is online gaming and the supplier is Antigua. By prohibiting Antiguan casino activity the U.S., therefore, the market is not free and open as the WTO specifies it should be.

Economic Damage

Colin Murdoch, an Antiguan ambassador who represents the island in this matter, has remarked that the U.S. needs to do something to "address the economic damage" that has resulted from its refusal to comply with the WTO. As of last August, the Antiguan government estimated its losses to be around $3.4 billion due to this ongoing issue.

decline of the Antigua's online gambling industry after the US law enforcements
The graph shows the steady decline of the Antigua's online gambling industry after the law enforcements taken by US in 2001

A Creative Way to Collect the Debt

Because the U.S. refuses to pay its bill, the Caribbean island has sought other means of collecting the money. In early 2013, the WTO gave its blessing to a measure in which Antigua would impose $21 million in sanctions toward America each year. One of the ways this would happen is through the royalty-free sale of U.S. intellectual property.

Specifically, Antigua has received permission from the WTO to set up a website on which American intellectual property can be downloaded without payment to the rights holders. This property includes American books, music, movies, and television shows. Even though the American rights holders are legally protected in the states, the WTO's ruling has trumped that protection.

Potential Harm to Antigua's Reputation

Such a maneuver would not be without risk to Antigua. U.S. Trade Representative Brian Quinn has said that the proposed website would damage the island nation's reputation with the rest of the world, rendering it an undesirable place for future "investment and innovation." The Motion Picture Association of America concurred that such a move would only hurt Antigua in the long run, and that the estimated $3.4 billion in damages was a gross exaggeration.

U.S. Stance on Online Gambling

U.S. online gambling laws can be difficult for citizens to interpret at times. Three facts remain without a doubt: First, American banks are prohibited by federal law from handling online gambling transactions. Second, U.S. computer servers are not authorized to handle online betting business except in Nevada, New Jersey (click here), and Delaware (click here); in these states, only servers affiliated with brick-and-mortar casinos may be linked to online gaming. Third, American citizens are not specifically barred from online gaming.

Whether it is done legally or not, U.S. officials would prefer that American online gambling cash stay within the country, where its revenue gives a healthy boost to the struggling economy. As such, it is understandable, though not necessarily legal, that the U.S. would try prevent its citizens from having access to Antiguan online gambling.

John Jackson, a Georgetown law professor, has said that in order for the U.S. to wholeheartedly comply with the WTO ruling it would have to do one of two things: Legalize offshore gambling in all forms, or ban Internet gambling in all forms, including the online sale of lottery tickets and horse racing wagers and the formation of online fantasy sports leagues. Neither move seems likely, according to Jackson, because it would be too much of a departure from America's status quo.

The WTO's Dilemma

World Trade Organization (WTO logo)
World Trade Organization (WTO logo)

The WTO is caught between a rock and a hard place on this issue. The organization was established in 1995 as a means of regulating international trade; at that time, it replaced the 1948 General Agreement on Tariffs and Trade, or GATT. As a newer organization, some feel that the WTO's credibility hangs on its ability to stand firm against the U.S. Equally compelling, however, is the fledgling organization's need to avoid negative backlash from influential Americans.

About Antigua

The tiny nation of Antigua is located in the West Indies and is home to about 70,000 people. The island's capital, St. John's, is a popular travel destination offering breathtaking beach views of the Caribbean Sea as well as the majestic St. John's cathedral and the historical Museum of Antigua and Barbuda.

The sunny island's main source of income is tourism, although investment banking is a secondary industry with many executives maintaining their office headquarters there. According to Antiguan officials, the gambling industry once reigned as the second largest industry on the island, employing approximately 4,000 people. Today, that same industry employs only about 500 people.

Calvin Ayre: 2014 Will Be the Year That Antigua Collects

Calvin Ayre, founder of the online gambling company Bodog, has made a prediction for 2014 regarding this conflict. Ayre suspects that, come the new year, the U.S. will decide to cough up enough money to satisfy the Antiguans. Either that, or Antigua will actually follow through on the WTO-authorized website as a means of getting the cash they are owed. Either way, Ayre predicts that the islanders will finally get the compensation they seek in 2014.


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