## Facts

- Antigua and Barbuda challenged U.S. federal and state measures that, in practice, barred offshore suppliers from offering cross-border (Mode 1) gambling and betting services to U.S. consumers, including via the internet.
- The challenged federal measures included criminal statutes commonly applied to remote gambling activity, including the Wire Act, the Travel Act, and the Illegal Gambling Business Act, along with related state prohibitions.
- Antigua alleged the measures operated as a “total prohibition” on the cross-border supply of gambling and betting services, contrary to U.S. commitments under the General Agreement on Trade in Services (GATS).
- A WTO panel found the United States had scheduled commitments covering gambling and betting services, that key measures violated GATS Article XVI (Market Access), and that Article XIV (General Exceptions) did not excuse the breach because the United States failed the Article XIV chapeau.
- Both Antigua and the United States appealed; the Appellate Body report was adopted by the Dispute Settlement Body on April 20, 2005.

## Issues

1. Whether the United States’ GATS Schedule included specific commitments for cross-border (Mode 1) gambling and betting services.
2. Whether U.S. restrictions that effectively prohibit remote gambling constitute prohibited “market access” limitations under GATS Article XVI:2(a) and (c).
3. Whether an alleged “total prohibition” and an alleged governmental “practice” may be treated as a challengeable “measure,” and what specificity is required.
4. Whether the measures, if inconsistent with Article XVI, are justified as “necessary” to protect public morals or public order under GATS Article XIV(a), and whether they satisfy the Article XIV chapeau’s non-discrimination conditions.

## Decision

- The Appellate Body upheld that the United States had scheduled commitments covering gambling and betting services under “Other Recreational Services (except sporting),” and that “None” for Mode 1 reflected an undertaking not to impose market-access limitations absent scheduled limitations.
- The Appellate Body largely affirmed that measures operating as a complete ban on the cross-border supply of a committed service can fall within Article XVI:2(a) and (c) because they function as quantitative limitations on the number of suppliers and/or service operations/output.
- The Appellate Body accepted that protecting public morals and public order in the gambling context is a legitimate objective and that, on the record, the measures could be capable of satisfying the Article XIV(a) “necessity” analysis in principle.
- The Appellate Body upheld the finding that the United States failed to demonstrate compliance with the Article XIV chapeau, because the application of the regime reflected arbitrary or unjustifiable discrimination in light of differential treatment involving certain domestic remote gambling activity (notably remote horserace betting).
- The challenged measures therefore remained inconsistent with GATS Article XVI and were not justified under Article XIV.

## Legal Principles

- GATS schedules of commitments are interpreted according to ordinary meaning in context and in light of the agreement’s object and purpose; broad sector headings can include specific services unless clearly excluded.
- Where a Member schedules “None” for market access in a mode of supply, it undertakes not to maintain Article XVI:2 limitations for that mode in the committed sector.
- A prohibition that closes the market to the cross-border supply of a committed service may qualify as a limitation “in the form of” Article XVI:2(a) and (c) quantitative restrictions, even if not expressed as a numerical cap.
- A complainant must identify challengeable measures with sufficient specificity, but may describe a set of identifiable measures by their combined effect; a “practice” can constitute a measure if attributable to the Member and sufficiently general and consistent, with proof required.
- Under GATS Article XIV(a), a Member may justify otherwise-inconsistent measures as necessary to protect public morals or public order, assessed through a weighing of objective importance, contribution, trade restrictiveness, and reasonably available alternatives.
- Even if a measure fits an Article XIV paragraph, the invoking Member must prove the measure’s application satisfies the chapeau by avoiding arbitrary or unjustifiable discrimination between countries where like conditions prevail and avoiding disguised restrictions on trade in services.

## Conclusion

The Appellate Body concluded that U.S. measures barring cross-border gambling and betting services breached scheduled GATS market-access commitments because a market-closing ban can constitute a prohibited quantitative limitation under Article XVI, and that the United States failed to justify the breach under Article XIV because it did not show even-handed, non-discriminatory application consistent with the chapeau.


Antigua & Barbuda v. United States, WTO Doc. WT/DS285/AB/R (App. Body Apr. 7, 2005), adopted Apr. 20, 2005