The United States won an important victory today when the World
Trade Organization (WTO) Appellate Body sided with the United States
on key issues in a challenge to U.S. laws on internet gambling.
"This win confirms what we knew from the start – WTO Members are
entitled to maintain restrictions on internet gambling," said Acting
U.S. Trade Representative Peter F. 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.
By reversing key aspects of a deeply flawed panel report, the
Appellate Body has affirmed that WTO Members can protect the public
from organized crime and other dangers associated with Internet
gambling. This is also a victory for the federal and state law
enforcement officers and regulators who protect the public from
illegal gambling and its associated risks of money laundering and
"U.S. restrictions on internet gambling can be maintained,"
Allgeier said. "This report essentially says that if we clarify U.S.
internet gambling restrictions in certain ways, we’ll be fine."
The Appellate Body found that the concerns addressed by the three
U.S. federal gambling laws at issue in this dispute "fall within the
scope of ‘public morals’ and/or ‘public order’" under an exception
to WTO rules for trade in services. It merely found that, for this
exception to apply, the United States needs to clarify one narrow
issue concerning internet gambling on horse racing. USTR will be
exploring possible avenues for addressing this finding. USTR will
not ask Congress to weaken U.S. restrictions on internet
The next step in the process is for the WTO’s Dispute Settlement
Body to formally adopt the panel and Appellate Body reports within
30 days. There is no further appeal.
This dispute concerns Antigua’s allegation that U.S. state and
federal laws prohibiting the cross-border supply of gambling
services (e.g., Internet and telephone gambling) are inconsistent
with U.S. obligations and our schedule of specific commitments under
the General Agreement on Trade in Services ("GATS"). Antigua argued
that the United States 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
The Panel released a final report to the parties on May 25, 2004.
The parties suspended the panel proceedings for settlement
negotiations from June through October 2004. The final panel report
was made public on November 10, 2004.
In today’s report, the Appellate Body reversed key aspects of the
panel’s finding that U.S. federal laws did not meet the requirements
for application of WTO exceptions for "public morals" and "public
order." As a result, the Appellate Body found that U.S. laws qualify
for these exceptions, except that the United States 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,
the Appellate Body found that the United States made a GATS market
access commitment for gambling services during the Uruguay