US Owes Antigua $120 Million in Damages Over WTO Online Gambling Dispute

Written by:
C Costigan
Published on:
Apr/10/2012
US Owes Antigua $120 Million in Damages Over WTO Online Gambling Dispute

In 2007 The World Trade Organization (WTO) demanded the United States government pay restitution to the tiny Caribbean nation of Antigua after the later won a judgment against Uncle Sam.  Antigua essentially accused the USA back then of protectionism and engaging in unfair competitive practices as it pertained to the Caribbean nation’s role in regulating what is now a multi-billion dollar online gambling industry.

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Restitution has now amounted to a whopping $120 million.  Among those companies targeted recently by US law enforcement, Bodog.com, which relocated much of its base to Antigua back in late 2006.  In February, the US Attorney’s Office in Maryland seized the Bodog.com domain name and indicted four of its executives including founder Calvin Ayre.  For a period of nearly two years, that same office ran a sting operation that netted several million dollars from a handful of Web gambling establishments by setting up its own payment solutions company.  Some in the industry called it “entrapment” while Antigua might see the matter differently.  The Baltimore office used seized funds to pay for upgraded police cars. 

It shouldn’t come as too much of a surprise that Ayre’s own media site reached out to Mark Mendel, Antigua’s lead attorney in the WTO dispute with the US, to get his opinion on the recent Department of Justice change of stance as it applies to online poker.  The DOJ late last year rendered a decision that it will no longer prosecute cases related to poker or online casinos as it had previously cited the Wire Act in previous matters. 

This has opened the doors for individual states such as New Jersey, Nevada and California to begin setting up their own online gambling empires.  But Antigua is quick to note that residents of all 50 states that allow gambling should also be able to play with sites licensed by its own gambling authority, Bodog included.

From CalvinAyre.com:

In 2003, when Antigua first asked the WTO to examine America’s online gambling stance, America’s defense centered on its proclaimed necessity to protect its citizens from the perils of online gambling. In 2005, a WTO Appellate Body concluded that America had the right to insist on such protection, but it couldn’t claim to be protecting its citizens from foreign firms while simultaneously permitting its domestic horse racing industry to offer interstate online wagering. This contradiction was a clear violation of US obligations under the General Agreement on Trade in Services (GATS). The WTO gave the US 11 months to either allow Antigua access to the US market or shut down US domestic online horse wagering.

A year went by without any action from the US, so Antigua went back to the WTO. In March 2007, a WTO Compliance Panel determined that the US had not lived up to its obligations and thus sanctions should be imposed. When it came time to determine the amount of those sanctions, Antigua went high ($3.4b) and the US went low ($500k). In December 2007, the WTO decided Antigua was entitled to $21m in annual damages. If the US refused to pay, Antigua was permitted to collect by other means, such as disregarding intellectual property obligations to the US. Antigua has yet to exercise this option, still hoping the US will choose to honor its treaty obligations.

As was reported last week, Ayre has hired the legal father-son team of Barry and Stuart Slotnick.  Father Barry once went 12 years straight without losing a trial case while son Stuart arranged a Non-Prosecution settlement for client Sportingbet with the US Justice Department, which was one quarter that for which rival PartyGaming had to pay in a similar filing. 

Ayre’s site is now claiming that Antigua is considering filing another complaint against the US Government.  The timing seems more than a little coincidental in light of the recent indictments. 

- Chris Costigan, Gambling911.com Publisher

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