U.S. Ban On Web Gambling Rejected

The U.S. ban on offshore Internet gambling payments is illegal, the World Trade Organization said yesterday, upholding a decision that allowed for sanctions.

The WTO said the United States ignored the previous ruling, which challenged the U.S. ban on payments to gambling Web sites while allowing bets on its own soil.

Antigua and Barbuda, a Caribbean nation with about 70,000 people, challenged U.S. government efforts to close the estimated $12 billion worldwide business to U.S. residents, who accounted for half the market. Last October, the U.S. government banned credit card companies from processing payments to betting sites such as SportingBet and Empire Online, which then ceased U.S. operations or sold them for nominal amounts.

The ruling "vindicates all that we have been saying for years about the discriminatory trade practices of the United States," L. Errol Cort, the Antiguan finance minister, said in an e-mailed statement.

In response to a complaint from Antigua and Barbuda, the WTO found in April 2005 that the United States had pledged to open the industry to competition 10 years earlier. Yesterday's ruling rejected a U.S. appeal against that decision.

The Bush administration did not dispute the ruling's finding that it failed to comply with the 2005 decision and said it was allowed to maintain a ban on Internet gambling to "protect public order and public morals" if it doesn't discriminate against foreign companies, said Gretchen Hamel, a spokeswoman for U.S. Trade Representative Susan C. Schwab. "We are currently reviewing our options," Hamel said in an e-mailed statement.

Gary Kaplan, founder of British Internet sports bookmaker BetonSports, was arrested Wednesday in the Dominican Republic and transferred to U.S. authorities, federal prosecutors said yesterday.

Kaplan, 48, was indicted by a U.S. grand jury in June with his company and 10 other people on charges of racketeering and conspiracy related to illegal Internet gambling. He was arrested at a hotel in Santo Domingo, U.S. Attorney Catherine L. Hanaway of St. Louis said in a statement. Prosecutors are seeking the forfeiture of $4.5 billion.

The U.S. government has argued that the prohibitions predating the October law apply to both foreign and U.S. betting services, and that the WTO's decision applies only to gambling on horse racing, in which discrimination against foreign companies is allowed.

The U.S. government "had an opportunity to remove the ambiguity" between legal betting on horse racing across state borders and bans on other forms of gambling, the WTO judges wrote. "Instead, rather than take that opportunity, the U.S. enacted legislation that confirmed that the ambiguity at the heart of this dispute remains."

The United States said the October law was not covered by the WTO ruling and that its 1995 commitment to open gambling to foreign companies was an oversight by the Clinton administration.

Antigua and Barbuda may seek sanctions in the form of withdrawing protection for U.S. trademarks or copyrights. Known as "cross-retaliation," such sanctions are legal under WTO rules when a nation can't afford to impose higher duties on imported goods.

"We're really hoping that as their options run out . . . they'll enter into negotiations with us," Mark E. Mendel, a Texas lawyer who represents Antigua and Barbuda, said of the United States.

Income for the 32 registered online casinos in Antigua and Barbuda has fallen to $130 million a year, from $1 billion in 2000, the Antiguan government said. The country developed online gambling to boost a tourism-dependent economy after several hurricanes in the 1990s.