WTO Watch: US Strikes Jackpot

The WTO’s Appellate Body ruled yesterday that most U.S. laws (including state laws) restricting internet gambling do not violate WTO obligations (The decision can be found here). This reversed a Panel Report in favor of Antigua and Barbados alleging that U.S. restrictions on offshore internet gambling was discriminatory against their internet gambling industries. This is a complicated issue, and some U.S. laws with respect to horse racing will probably still be found in violation, but the upshot is that the U.S. wins big by getting the WTO to agree to a “public morals” exemption for its internet gambling regulations.

To me, though, what is interesting here is what would have happened if the Appellate Body upheld the original Panel Report against the U.S. Would the U.S. really have complied (by changing at least three federal statutes and six state laws) amid threat of trade sanctions imposed by Antigua and Barbados? It may be that other countries (like the EU) would jump on the bandwagon, but if not, I somehow doubt the U.S. would have ever complied with a negative WTO ruling in this case.