Costa Rica and Antigua File Arbitration Applications in WTO Dispute

In what is becoming one of the most drawn out online gambling disputes in history, the Antigua/US dispute over the UIGEA laws reached a new level this week as both Antigua and Costa Rica separately filed for World Trade Organization arbitration. Both countries are seeking compensation since the US withdrew from its commitment to cross-border internet gambling services.

Analysts have speculated that this may be these countries’ final move in attempting to reach a fair settlement over this controversial and drawn out dispute. At this rate no doors will close on this issue any time soon.

According to Nao Matsukata, formerly Director of Policy Planning for USTR Robert Zoellick and now the Senior Advisor for Alston and Bird LLP, ““The decision by Antigua and Costa Rica to take the United States to arbitration will test the limits of the WTO process and squarely challenge the U.S. resolve to withdraw its GATS commitments. If the U.S. finds the decision of the WTO arbitrator unacceptable, under procedures outlined in the GATS, it could unilaterally withdraw, creating an unprecedented crisis of confidence in the global trading system. The best solution remains for Congress to pass legislation that would create a legal and regulated framework for online gaming in the United States and for the United States to remain in the GATs schedule to provide all providers legal protection under the WTO.”

The US has already offered market access to domestic postal services, warehousing, R&D and technical testing to the EU, Japan, Canada and Australia. This was their compensation to these nations in order to settle their negotiations over the gambling dispute.

These market compensations were of no interest to Costa Rica, India, Macao and Antigua as well as a few other countries who are still battling with the US over this issue. This move by Costa Rica and Antigua may inspire other nations embroiled in the UIGEA debate to take more drastic measures. If the rest of these countries also file independent arbitration applications then perhaps the US will give a more reasonable package in face of all the pressure from different directions.

Antigua has already received a favorable ruling from the WTO receiving $21 million in compensation. So far it seems that they will take this compensation in the form of intellectual property, which the WTO has already approved.

The fact that the US is still fighting this issue instead of just regulating the industry is a joke. Congressman Jim McDermott has been fighting hard to pass legislation that would regulate and legalize online gambling in the United States. If passed, tax revenues from online gambling could earn up to $42 billion over the course of ten years. Instead they are choosing to open more sectors of the economy, creating a situation where many Americans who have nothing to do with the gambling industry will lose their jobs.

“It is time for the U.S. to end its hypocritical practices that discriminate against foreign online gambling operators, while allowing U.S. gambling operators to accept bets for certain forms of gambling,” said Jeffrey Sandman, spokesperson for the Safe and Secure Internet Gambling Initiative. “Regulation of Internet gambling should be supported as a means to resolve this trade dispute.”