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WTO Adds Another Twist to Internet Gambling Roller Coaster Ride

Internet gambling has been on a roller coaster ride since the Unlawful Internet Gambling Enforcement Act was passed back in October. The Neteller arrests last week and the following pull outs of all major third party billing companies has seriously damaged the $12b a year industry. The roller coaster ride got another twist as a result of the report that follows.

The United States has suffered a new setback in a four-year-old legal battle with Antigua and Barbuda over U.S. restrictions on Internet gambling, a U.S. trade official said on Thursday.

At issue is an April 2005 World Trade Organisation ruling against U.S. prohibitions on online horse race betting. Since then, the U.S. Congress has passed additional legislation to ban betting over the Internet.

Gretchen Hamel, a spokesman for the U.S. Trade Representative's office, confirmed press reports that a WTO panel "did not agree with the United States that we had taken the necessary steps to comply" with that ruling.

At the same time, Hamel downplayed the decision contained in a preliminary, confidential report to the two parties.

"The panel's findings issued today involve a narrow issue of federal law" and the United States will have opportunity to submit comments to the WTO before it issues its final, public report in March, Hamel said.

"Nothing in the panel's interim report undermines the broad, favourable results that the United States obtained from the WTO in April 2005," she said.

The issue is a touchy one for the Bush administration, which supports free trade but whose conservative allies in Congress pushed through a bill late last year to ban most forms of Internet gambling.

Gretchen Hamel, a spokesman for the U.S. Trade Representative's office, confirmed press reports that a WTO panel "did not agree with the United States that we had taken the necessary steps to comply" with that ruling.

At the same time, Hamel downplayed the decision contained in a preliminary, confidential report to the two parties.

"The panel's findings issued today involve a narrow issue of federal law" and the United States will have opportunity to submit comments to the WTO before it issues its final, public report in March, Hamel said.

"Nothing in the panel's interim report undermines the broad, favourable results that the United States obtained from the WTO in April 2005," she said.

The issue is a touchy one for the Bush administration, which supports free trade but whose conservative allies in Congress pushed through a bill late last year to ban most forms of Internet gambling.

Antigua and Barbuda, with few natural resources, has sought to build up an Internet gambling industry to provide jobs to replace those in its declining tourist industry.

It argued in a case first brought to the WTO in 2003 that U.S. laws barring the placing of bets across states lines by electronic means violated WTO rules.

An April 2005 ruling by the WTO's Appellate Body, which both sides claimed as vindication, focussed on the narrower issue of horse racing, saying that foreign betting operators appeared to suffer discrimination.

Antigua and Barbuda complained the United States had not complied with the decision and the WTO agreed in July 2006 to look into the matter, resulting in the ruling on Thursday.

The United States will decide after the final panel decision ruling in March whether to appeal.

The Bush administration may not have to ask Congress to pass new legislation in any case, Hamel said.

"The panel report clarifies that compliance does not necessarily require new legislation, but could instead involve other steps, such as administrative or judicial action," she said.

First Published by Reuters UK.

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