Antigua and Barbuda (hereafter referred to simply as "Antigua" for convenience' sake) comprise one of the smallest nations on Earth. In fact, if you read a history of Antigua you won't find much information about wars and conflicts, although the first European settles cleared Antigua and nearby islands of Native Americans in the first half of the 17th century. Thereafter the history of the area was dominated by Spanish treasure fleets, pirates, and privateers as European wars swept into and out of the Caribbean.
In 1994 the government of Antigua saw an opportunity to cash in on the emerging popularity of the Internet, which had grown from a small experimental network in the late 1960s to include tens of thousands of connected networks around the world by the early 1990s. The creation of the World Wide Web made accessing all of this information feasible for everyone with a connection to the Internet. Antigua passed the Free Trade and Processing Act, authorizing the granting of licenses to companies for operating online casinos.
As the first online gaming authority Antigua was able to boost revenue for its data center operations. However, when the Kahnawake Gaming Commission was set up by the Kahnawake Mohawk Territory in 1996, some of the gambling companies left Antigua for North American connectivity. Nonetheless, Antigua remained a major force in online gambling. One reason, suggests this 2003 article from CNN, was that Antigua was a port of refuge for many of online gambling's less reputable entrepreneurs.
Antigua's differences of opinion with US lawmakers eventually led to a major confrontation before the World Trade Organization. When the US enacted its Unlawful internet Gambling Act of 2006 the world's most powerful nation handed a huge legal argument to Antigua. The USA is technically in default in complying with its WTO obligations, a case that Antigua has carried far enough to the point where it is sanctioning US intellectual property rights owners with WTO approval.
Antigua will no longer honor or defend US intellectual property rights. The potential loss to the entertainment and publishing industry in terms of diverted sales revenue is estimated in the tens of millions of dollars. That's not yet enough to get Washington's attention but it inflicts some pain upon a nation that deprived Antigua of billions of dollars in annual revenue.
The WTO-authorized sanctions send a message to the whole world, not just the United States. Any nation that violates a WTO obligation to honor online gambling activities risks losing its intellectual property rights in whatever nation can prove harm by the non-compliance with the WTO rules. The question of how powerful a weapon this IPR stick proves to be remains to be settled but as more software and entertainment providers transfer their customers to online "cloud-based" solutions the opportunities for price-slashing alternatives abound.
In software copyright may or may not be extended to the user interface. The US courts have published mixed or complicated decisions on the matter, ranging from "there is only one reasonable way to design a spreadsheet" to "that code in paragraph 2031 creates a unique widget". If a sovereign government sanctions online gambling through a licensing authority, then what other sovereign government is to deny that right? A war of sanctions could gradually wind its way through the international economy and wreak havoc. Some columnists are already asking why the MPAA and RIAA are not raising red flags about Antigua's sanctions against the US. They have gone after people for far less money.
In hindsight we see that Antigua has been ahead of the game with online gambling law. They not only created a precedent for licensing online casinos and supporting local infrastructure providers, they saw the US authorities coming years in advance and took pre-emptive action to get WTO authorization on the books for wrangling money out of the US economy regardless of which treaties Washington capriciously decides to honor.
Another reason Antigua is important to the online gambling industry is that Antiguan companies are permitted to advertise their services in the United Kingdom, a major gambling market. Antiguan companies can also be listed on the London Stock Exchange, a relationship exploited by some gaming companies based in Gibraltar, which remains a British overseas territory. Antigua has been independent since 1962 but was a British colony for over 300 years.
Antigua's land-based casino industry is not only thriving it plays a major role in the Antiguan economy. The close connection between land-based and online gambling in this small nation serves as a counterpoint to arguments raised by land-based casino operators in the United States against legalizing all forms of regulated online gambling.
Looking forward, Antigua could put two options on the negotiating table to help persuade US lawmakers to comply with the WTO. First, they can offer extradition for US citizens who are wanted for crimes in the United States. Antigua has proven to be a haven for some people and that is no doubt a sore point with US leaders.
Second, they can offer restitution to US intellectual property rights owners. After all, the WTO-based sanctions only authorize Antigua to collect about $21 million a year, approximately how much the US horse racing industry makes from online gambling. But by some estimates Antigua lost about $1 billion per year in revenue when the US outlawed online gambling in 2006. If the country can recover even just $50 million a year it will be better off.
This is still a relatively weak bargaining position for a small country like Antigua. But if other nations with trade grievances against the United States use the WTO to seek sanctions US lawmakers may sit up and take notice. It's hard to see the United Kingdom or Canada pursuing such a policy so maybe Antiguq is the country best suited to lead this fight against what many see as politically motivated intransigence. The US government's argument that online gambling should be outlawed simply to protect children makes no sense, given that horse racing and lotteries are still legal.