WTO Arbitration Looms on Horizon for Online Gambling Claims Against U.S.

Unless the U.S. adjusts its stance regarding the online casino gambling industry very soon, it definitely looks like they're going to find themselves in a deep hole dug by European Union countries and the World Trade Organization. As determined by a trade forum held this week in Brussels, it's now estimated the U.S. could be liable for financial claims in excess of $100 billion. That's even more than Congressman Barney Frank estimated earlier in the month.

After the World Trade Organization ruled the U.S. had violated its WTO treaty agreement by banning online gambling sites regulated in Antigua and Barbuda, while still accepting online betting activities within its own borders ( thanks to the online horseracing, lottery and fantasy sports betting carve outs of the UIGEA), the U.S. withdrew its obligations to the WTO treaty, which it had hitherto signed over ten years ago. Essentially telling the WTO that it can do whatever it wants to, and thus undermining the entire existence of the WTO, the U.S. has attracted a tremendous amount of scorn and resentment from the international community.

Part of this scorn has been in the form of several other claims from countries following the lead of Antigua and Barbuda. And if other EU countries get into the dispute, which they likely will, these claims will amount to what the entire U.S. online gambling industry is worth - roughly $100 billion. A World Trade Organization arbitration will determine the exact figures, and at this point, an arbitration is in the making.

At the recent forum in Brussels, several top-level trade representatives spoke out regarding the actions by the U.S. Obviously, the credibility of the U.S. government is at serious risk, considering these bullying actions, which many believe could disrupt the entire World Trade Organization. What the U.S. has done is exactly the type of behavior the WTO was setup to prevent. This has not just become a case for online gambling claims. It has become a case of questioning the authority of the WTO. The U.S. has broken international law - an international law which they agreed to honor ten years ago. And now it's time they pay up.

Nao Matsukata, who formerly served as a trade official under the Bush administration, said this case is a "watershed moment" for the WTO. Not only is this a first in terms of a world power thumbing its nose the WTO, it's a case of unprecedented financial compensation. Up until now, financial claims in WTO disputes reached no more than $4.3 billion. Just how high the claims against the U.S. will get this time around largely depends on how much pressure is put on by the European Union. When all is said and done, if the U.S. cannot resolve negotiations with the EU by the end of October, the claims will go to WTO arbitration.

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