United States—Measures Affecting the Cross-Border Supply of Gambling and Betting Services

The General Agreement on Trade in Services (GATS) establishes rules regulating the measures that World Trade Organization (WTO) nations can implement to affect trade in services. Under the GATS, WTO members can make commitments in various service sectors, which are outlined in each nation’s GATS “schedule.” GATS Article XVI provided that a nation could not restrict trade in services unless the restrictions were included in the nation’s schedule. W/120 and the 1993 Scheduling Guidelines were documents issued to offer guidance on how schedules should be created. In its schedule, the United States (defendant) made commitments in Subsector 10.D to “other recreational services (except sporting).” The United States did not list any cross-border limitations under this commitment. In 2004, Antigua (plaintiff) initiated dispute proceedings against the United States. A WTO panel ruled that U.S. laws forbidding internet gambling, including the Interstate Wire Act, Illegal Gambling Business Act, and Interstate Horseracing Act, violated the GATS. The United States appealed, arguing (1) that it had made no specific commitments to trade in gambling, which was included under “sporting services,” and (2) that, alternatively, the regulations fell within the scope of the GATS Article XIV(a) exception, which provided that as long as the measures were not applied in an unjustifiably discriminatory manner, nations were permitted to implement measures that were necessary to protect public morals.