Why hurricane-ravaged Barbuda desperately wants to resolve a dispute over U.S. online gambling

Reporting from ST. JOHN'S, Antigua and Barbuda —  As the Caribbean nation of Antigua and Barbuda struggles to rebuild after Hurricane Irma, the tiny islands are demanding that the United States settle a long simmering trade dispute that could provide them with millions of dollars for recovery.

The conflict revolves around the U.S. government’s campaign to prevent Americans from gambling at online sites based in Antigua and Barbuda.

Antigua and Barbuda claims that the resulting trade dispute has cost the twin-island nation some $200 million — about four-fifths the estimated cost of reconstruction after Irma.

The conflict dates to the 1990s, when online gambling soared in popularity.

According to the industry website GamingZion, Antigua was the first country to license online casino sites in 1994. At its height, Antigua’s gaming industry employed 4,000 people, including call center employees, marketers and IT professionals, and generated around $3.4 billion annually in revenues, Antiguan officials said.

But concern over the practice, along with pressure from the domestic casino industry, prompted U.S. authorities to crack down, using an obscure law outlawing the use of telephone or wire communications to make bets. Then, in 2006, the U.S. passed regulations cracking down on internet gambling.

Today the industry in Antigua and Barbuda provides jobs for only 300 to 400 people, according to Prime Minister Gaston Browne.

“So the loss is real,” he said.

Antiguan officials said their economy needed an injection of cash now more than ever.

Hurricane Irma ravaged Barbuda, decimating most properties and knocking out water, electricity and telecommunications. All of the island’s 1,800 people were evacuated to Antigua. Most have still not been able to return.

Antiguan authorities estimate rebuilding Barbuda will cost about $250 million.

According to Ronald Sanders, Antigua and Barbuda’s ambassador to the United States, the U.S. has offered to pay Antigua less than $2 million to settle the trade dispute — a sum that was unacceptable, he said.

“The U.S. by its own policy has actually destroyed a thriving industry in Antigua and Barbuda,” said Browne.

The Caribbean nation has been trying to recoup its losses from the United States since 2003. When the U.S. turned down a request for compensation, Antigua and Barbuda asked the World Trade Organization to arbitrate the matter.

In 2004, a WTO arbitration panel found that the U.S. had violated its trade commitments and Antigua and Barbuda had been wrongly deprived of trade revenue. Over the years, the U.S. has appealed the decision and lost.

The WTO ordered the U.S. to pay Antigua and Barbuda for its trade losses at $21 million a year. To date, the cumulative sum is in excess of $200 million, Sanders said.

The U.S. has refused to pay that sum.

The Trump administration inherited the issue. In a statement to the WTO Dispute Settlement Body in Geneva last month, the U.S. Trade Representative’s office said it remained “committed to resolving this matter.”

In filings published by the WTO, past U.S. administrations presented various arguments as to why they opposed remote gambling. These include the risk of money laundering, fraud, organized crime, underage gambling and the threat of expanding the number of addicted gamblers.

In a recent interview in the Antiguan capital, St. John’s, Browne criticized the U.S. for claiming the moral high ground.

“As far as I’m concerned they have no moral authority whatsoever,” Browne said. “There’s more gambling in the United States than any other country on the planet. Whether or not it takes place on the internet or in a casino or in a house, it’s gambling. So we do not buy into this nonsensical argument of morality.”

In its filings to the WTO, the U.S. underscored that gambling in America was “confined to particular locations and operates under the most rigorous regulatory constraints.”

Todd Tucker, a fellow at the Roosevelt Institute, a Washington-based think tank, said the U.S. had “a good legal case for disregarding the WTO decision.”

“The U.S., under both Democratic and Republican administrations, has argued that the [WTO] appellate body lacks the legitimacy or mandate to refashion what countries and their legislatures agreed to,” Tucker said. “And a lot of anti-gambling activists and religious groups agree with them in this case.”

The Antiguan economy is around $1.5 billion, far smaller than that of a mid-sized American city.

Browne said that “$200 million means nothing” to the United States.His government is willing to accept less, he added. “All we’re saying is that we want something substantive to compensate for the damages over the years.”

Patrick Basham, founding director of the Democracy Institute, a politically independent public policy research organization based in Washington and London, has followed the dispute closely over the years and described it as “a David versus Goliath story.”

“We have a situation with the WTO where the U.S basically founded the club and encouraged all these other countries to join, drafted the rules and everybody signed up,” said Basham, who last month published a report on the matter called “Do As I Say, Not As I Do.” “However, the U.S. seems inclined … to only play by the rules when the rules suit the U.S.”

The WTO authorized Antigua to use other means to recover what it is owed, including breaking U.S. copyright laws. The Caribbean nation could allow the downloading of U.S.-made computer software and Hollywood movies and keep the profits.

In a statement to the WTO in Geneva last month, Sanders, the ambassador, said his government had refrained from taking such action because “we have too high regard for the U.S. owners of intellectual property, who have contributed much to the enjoyment and advancement of the world.”

Browne, the prime minister, said he was concerned that the U.S. might retaliate against his nation using underhanded methods.

“They have sinister ways,” Browne said. “They may say, for example, that there is the Zika virus in Antigua and Barbuda, so don’t travel [there]. We understand those risks, that’s why we haven’t pursued those remedies.”

Tucker, of the Roosevelt Institute, said simply allowing internet gaming and writing a check to Antigua was not necessarily the solution. Citing Antiguan authorities, he said those likely to benefit were financiers in the gambling industry who would claim 75% of whatever settlement is reached.

“Direct aid to the people of Antigua is a much better humanitarian solution,” Tucker said.

Browne was adamant that his country would continue to fight for what it is owed.

“What we’re saying at the end of the day is that you can’t operate on the basis that might is right and trample on the rights of a small state,” he said. “There must be some equity in the system. We love the U.S. We don’t wish harm to the U.S. But don’t treat us with this type of contempt and neglect.”

This story was reported with a grant from the United Nations Foundation.

ALSO

Rocked by the quake, Mexico’s economy could get a boost from the rebuilding

A look at the Caribbean islands Hurricane Irma is turning into a checkerboard of disaster

She was covered in insects and unable to walk: Doctors in Puerto Rico only now discovering the problems in remote towns

ann.simmons@latimes.com

For more on global development news, see our Global Development Watch page, and follow me @AMSimmons1 on Twitter