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WASHINGTON, DC - 04/21/05 - The US won an "important victory" when the World Trade Organization (WTO) recently ruled that WTO members are entitled to maintain restrictions on Internet gambling, said the Office of the US Trade Representative (USTR).

In a reversal of a 2004 WTO panel report, the ruling upheld the US restrictions on Internet gambling because "these laws qualify for WTO exceptions for public morals and public order."

The WTO decision "confirms what we knew from the start…that WTO members are entitled to maintain restrictions on Internet gambling," said acting USTR Peter Allgeier. 

"We are pleased that the [Appellate Body] has agreed with our position that the U.S. gambling laws at issue here protect public order and public morals."

The original dispute revolved around allegations by the Caribbean island nation of Antigua that US state and federal laws prohibiting the cross-border supply of gambling services - Internet and telephone gambling, for example - are "inconsistent with US obligations and our schedule of specific commitments under the General Agreement on Trade in Services ("GATS")."

Antigua had argued that the US violated the market access provisions of the GATS by barring supply of gambling services on a cross-border basis - such as supply of gambling services by Internet from Antigua-based web sites.

The Panel released a final report to the parties last May with the parties suspending its proceedings from June through October. The final panel report was made public in November.

In its report, the Appellate Body reversed key aspects of the panel's finding that US federal laws did not meet the requirements for application of WTO exceptions for "public morals" and "public order." 

As a result, it found that US laws qualify for these exceptions, except that Washington must clarify a narrow issue relating to Internet gambling on horse racing. 

The Appellate Body also found that Antigua failed to prove that any of the state laws at issue were inconsistent with WTO rules. 

However, it found that the US made a GATS market access commitment for gambling services during the Uruguay Round.

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