The issue of internet gambling was brought before the WTO in June 2003 when the tiny Caribbean state of Antigua and Barbuda complained that US prohibitions against internet gambling were discriminatory and in breach of international trade agreements that require the US to allow foreign internet companies to offer their services to US citizens.
According to reports, Antigua and Barbuda has less than 67,000 citizens, but 3,000 of them are employed in the on-line gambling industry. The country's economy has consequently been hit hard by the moralistic stance of the world's only superpower.
The US argued that the restrictions it has put in place do not in fact breach the trade agreements, which allow for exceptions for moral reasons. In this case, said the US, the restrictions are necessary because 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 pointed out that when the WTO was set up in 1995, gambling services were excluded from its remit.
But these arguments were rejected in a preliminary ruling by the WTO in March and then again in early May, when the organisation issued a final report finding that the US was in breach of the WTO rules.
The report has now been published; with the panel keen to stress that the finding relates purely to the circumstances of this complaint and that the US may well have not intended to bind itself to the protection of on-line gambling when it negotiated the relevant provisions of the General Agreement on Trade in Services.
"It is not for the Panel to second-guess the intentions of the United States at the time the commitment was scheduled. Rather, our role is to interpret and apply the GATS in light of the facts and evidence before us," said the panel.
"In this case, we came to the conclusion that the US measures at issue prohibit the cross-border supply of gambling and betting services in the US in a manner inconsistent with the GATS. We so decided, not because the GATS denies Members such a right but, rather, because we found," says the report, "that, in the particular circumstances of this case, the measures at issue were inconsistent with the United States' scheduled commitments and the relevant provisions of the GATS."
Richard Mills, spokesman for US Trade Representative Robert Zoellick, was quick to decry the findings.
"Throughout our history," he said, "the US has had restrictions on gambling, like many other countries. Given these restrictions, it defies common sense that the US would make a commitment to let international gambling operate within our borders. Antigua is arguing for a result that was never imagined, much less bargained for, in the Uruguay Round negotiations."
"We will vigorously appeal this deeply flawed report to the WTO Appellate Body and remain confident in the basis for reversing this panel report," he added.