An appeals panel of the WTO ruled on Thursday that the US can maintain many of its restrictions on Internet gambling, largely reversing an earlier ruling that the country was violating its international obligations.
But the appeals panel, ruling in a dispute involving the island nation of Antigua, also found that a US law on horse racing discriminates against foreign operators.
Both Washington and Antigua claimed victory after the appeals panel issued its decision in Geneva.
"This win confirms what we knew from the start -- WTO members are entitled to maintain restriction on Internet gambling," said Peter Allgeier, the acting US trade representative. "This report essentially says that if we clarify US Internet gambling restrictions in a certain way, we'll be fine."
But Mark Mendel, the lead lawyer for Antigua, a Caribbean nation of 67,000 people, said, "This is a big victory for Antigua."
"The United States will have to bring its gambling laws into conformity with the decision," Mendel said in a telephone interview from Geneva.
Given the conflicting interpretations of the 138-page decision by the WTO Appellate Body, Nelson Rose, a professor at Whittier Law School in Costa Mesa, California, who is an expert on gambling law, said: "Of course, both sides can say they won. But the reality is, it's a pretty big win for the United States."
The key to the victory for Washington, he said, was that the panel found that international trade law allows an exception to WTO rules in cases in which countries can prove that special laws are needed to protect "public morals." In the original decision last year, the WTO did not agree that the US was entitled to this exception.
On the other hand, Rose said, Antigua could claim victory because the panel found that the 2000 Interstate Horse Racing Act expressly allowed Americans to bet on horse races from their homes by computer or telephone, but only by placing the bets with US-based off-track companies.
"The panel quite rightly found that the US has not shown this is not discriminatory," Rose said.
Rose said he now expected there would be some further discussions and negotiations between Antigua and the US and that Washington would amend the horse-racing act to allow international bets on horse races placed through casinos in places like Antigua. The panel's decision is final, with no further appeal allowed.
The decision removes a major threat to US gambling law, several specialists said, but Internet gambling is already rapidly developing and there are questions about how long the US can hold out.
Under the 1961 Interstate Wire Act, which outlaws betting over interstate phone lines, Internet gambling has been illegal under federal law.
Nevertheless, "the average Joe doesn't see eye to eye with Washington on this, and the United States is the largest market for Internet gambling," said Sebastian Sinclair, president of Christiansen Capital Advisers, a New York-based gambling consulting and market research firm.
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