Expert says Antigua unlikely to gain entire $3.4 billion in WTO dispute

Antigua & Barbuda, which has requested $3.4 billion in compensation from the U.S. after winning a WTO dispute over Internet gambling, most likely will have to settle for a much smaller amount according to John Jackson, an international economics law expert and professor at Georgetown University Law Center.

The U.S. lost its dispute with Antigua because the WTO ruled that it does allow domestic interstate Internet gambling on horse races, but bars foreign competition for those bets. Soon after losing its final appeal, the Office of the U.S. Trade Representative announced that the inclusion of Internet gambling commitments in the General Agreement on Trade in Services (GATS) was a mistake and that it would withdraw those commitments.

"The U.S. could withdraw the whole sporting commitment, but then the compensation will be more than it needs to be," Jackson said at a policy forum hosted by the Cato Institute on Wednesday. "More likely, it will carve out of the sporting commitment just the horse racing gambling question."

Jackson surmised that by withdrawing the horse racing commitments, the U.S. would be compliant with the WTO ruling without subjecting itself to an evaluation of how Antigua is affected by the entire U.S. ban on foreign Internet gambling providers.

"Arguably, the compensation only has to deal with the horse racing problem," Jackson said.

Mark Mendel, Antigua's attorney, disagreed with Jackson's assessment, stating that the ruling goes beyond Internet betting on horse races.

"This is not about horse racing," Mendel stated. "That's one of the most maddening things about the USTR. They were very successful in spinning this as if it's only a horse racing issue. This isn't about horse racing, it's about remote gaming."

One member of the audience questioned how Antigua arrived at the $3.4 billion figure, remarking that the amount is three or four times the nation's annual GDP.

Mendel stated that a group of economists had determined the economic damage to Antigua, though he couldn't discuss how they arrived at the $3.4 billion figure.

"Anecdotally, if you look at the two or three year period when some of these companies were going public, immense value was created in these companies in a very short time," Mendel said. "As contrary to reason as a number like $3.4 billion might sound, we have a sound basis for it and I'm looking forward to justifying it."

Mendel noted that at the industry's peak, roughly 100 operators employed over 3,000 Antiguans, or approximately 10 percent of the work force. Those numbers have dropped to roughly 30 operators and 1,000 jobs since the UIGEA went into effect.

"The people of Antigua have enjoyed this industry particularly because it has offered people all kinds of hi-tech jobs," Mendel said. "It provided a real decent source of new interesting jobs for Antiguan people and that's one of the reasons that the government is so committed to this case."

While Jackson and Mendel disagreed on most of the issues, Jackson did agree with Mendel's approach of visiting Congressional leaders to search for a legislative solution.

"That seems to be the most logical approach," Jackson said. "It certainly wouldn't hurt to have a definitive study if we could get that."