Raising the stakes: can Antigua’s David win against the US’ Goliath?

Antigua and Barbuda plans to raise the stakes in its on-going dispute with the US on online gambling. Can it win?

David and Goliath by Fried Dough (flickr)Since late last week, regional and international press has been abuzz about reports that Antigua and Barbuda intends to launch a piracy website in retaliation for the United States (US) blocking that country from hosting online gambling sites. Discussions have been animated, but the views are divided on whether Antigua should pursue the alleged course of action. Local officials have been quite guarded about what they will implement, hence there is a sense of anticipation about how this matter will unfold.

Having said this, the tension between the US and Antigua has been longstanding and contentious. This post will briefly outline the history between the two countries, along with some views on the current situation. Have a read, and do share your thoughts with us.

Antigua vs. US at the WTO

In the late 1990s/early 2000s, some states in the US began enacting laws that effectively barred another country from engaging in the cross-border supply of gambling and betting services to United States. From as early as 2003, Antigua and Barbuda requested the World Trade Organisation (WTO) to intervene. The WTO’s Dispute Panel supported Antigua and Barbuda’s position that the US was implementing discriminatory measures, which contravened key provisions in the GATS (General Agreement in Trade in Services). The US appealed the ruling in 2005, but the WTO’s Appellate Body, upheld the more damning aspects of the earlier decision.

Following the outcome of its appeal, the US expressed a willingness to comply with the recommendations made, but timelines could not be agreed, which effectively delayed resolution. In the intervening period the US enacted the Unlawful Internet Gambling Enforcement Act of 2006, which reinforced its stance by

…prohibits gambling businesses from knowingly accepting payments in connection with the participation of another person in a bet or wager that involves the use of the Internet and that is unlawful under any federal or state law…

The enactment of this law caused online gambling websites to bar US players from their sites, resulting in a significant contraction in the global market. More importantly for Antigua and Barbuda, it obliterated its online gambling industry, which had served the US market almost exclusively.

In 2007, WTO’s final report was issued, which again upheld the earlier rulings that the US was discriminating against online gambling businesses located in Antigua and Barbuda, and was in breach of Treaty obligations by not granting full access to its market. Antigua and Barbuda sought restitution in the amount of USD 3.5 billion per year, but was only granted USD 21 million per year. However, in light of the US’ unwillingness to comply with the GATS, based its behaviour following the earlier rulings, the WTO also permitted Antigua and Barbuda to take retaliatory steps such as the right to ignore US intellectual property laws.

The current situation

Representatives for the Antiguan and Barbadian government have indicated that since the WTO’s 2007 ruling, the US has been stonewalling discussions regarding compliance with the GATS and the monetary compensation. However, recognising that the WTO had already allowed for retaliatory steps to be taken, the Antiguan and Barbadian government appears to be prepared to establish a mechanism that would not only get the US’ attention, but also encourage “fair and equitable resolution” of the outstanding matters (Source: BBC).

The BBC also reported that on 28 January, “the WTO’s dispute settlement body gave final authorisation for Antigua to sell movies, music, games and software via a store that would be able to ignore US copyright and trademark claims”. Hence Antigua and Barbuda might be planning to roll out its response soon.

Is Antigua in the right?

The question as to whether Antigua and Barbuda is right to retaliate against the US is generating extensive debate. On the one hand, it is acknowledged that the WTO’s ruling was clear: Antigua and Barbuda in the right, and is entitled to take punitive measures; the US is in the wrong and is in breach of the GATS, but more importantly, has been unwilling to remedy that matter.

On the other hand, concern is being expressed that copyright holders’ might be unsuspecting casualties in the dispute between Antigua and Barbuda, and the US, and ultimately pay the price for the US’ stance. Not only might US copyright holders’ intellectual property rights be violated, they are also likely to experience considerable loss of revenue, should a scheme be implemented where they are not compensated.

Is it worth the gamble?

The continuing dispute between Antigua and Barbuda and the US might be considered akin to the biblical characters, David and Goliath. Although Antigua and Barbuda, and the WTO, might be of the view that it is justified in seeking to retribution for known injustices, its opponent is formidable, and the world is watching.

The US is still the largest economy, and wields considerable influence in the Caribbean. More importantly, should it comply with the WTO ruling, online gambling is likely to compete directly with casinos, and possibly cripple states that rely on casino-generated revenues for their survival. Hence the US might instead opt to stick to its guns and make life even more difficult for Antigua and Barbuda.

It is also sobering to note that at its peak, 2000—2001, Antigua and Barbuda reportedly controlled over 60% of the global online gambling market, and was estimated to generate almost USD 2.4 billion in revenues (Source: Global Betting and Gaming Consultants). Currently, the industry employs less than 500 persons, and represents a negligible size of the global market.

Should the US remove its current restrictions, Antigua and Barbuda might be hoping to re-establish its thriving online gambling industry, but competition for that market would be fierce. More importantly, much has changed in the online space the past 7 years, and one has to wonder how successful it might be in returning to its former glory.

Is Antigua and Barbuda’s plan to retaliate utter folly?

Will the US finally adhere to the GATS?


Image credit: David and Goliath by Fried Dough (flickr)