Antigua's win at the World Trade Organisation (WTO) over the US's online gaming policy might end up being an empty victory for the small, but feisty, island-nation.

After all, what kind of measures could a pipsqueak like Antigua take against the economic elephant of the world to force it to comply with the WTO ruling, which the US will probably just ignore?

Put a ban on buying burgers?

Make US tourists do silly dances when they visit?

There is just not a lot of leverage to implement WTO-approved economic sanctions against the US for failure to comply.

Call it a moral victory.

The background: This month the WTO issued a preliminary decision in favour of Antigua and Barbuda, supporting the country's claim that US restrictions on Internet gambling violated its international trade commitments.

The WTO decision is the first that has focused on online business activities and perhaps foreshadows larger trade disputes over the cross-border provision of services made possible by the Internet.

The US bans online gaming, a policy that resulted the decline of a once booming and lucrative sector in Antigua.

The US even imprisoned one operator for operating an online gaming company from Antigua.

As part of running a newsletter on offshore financial centres, I've kept a close watch on the developments in Antigua's online gaming sector.

I can tell you that the country argued an excellent and very smart case before the WTO, an example perhaps for Bermuda if it joins the organisation?

What was surprising about the WTO hearings was the weak presentation made by the US. Perhaps this showed just how much of a sideline the US thought of the online gaming dispute, compared to the US$4 billion dispute it has with the EU over foreign sales corporations (one which it lost in the WTO).

Still, Antigua has set the example for how a small nation can at least try to protect itself against any unfair economic policies.

This is the way the WTO is supposed to operate, with nations, large and small, arguing on equal terms before the dispute panels and trade issues being resolved on a fair basis. The man representing Antigua before the WTO was Sir Ronald Sanders, the country's chief foreign affairs representative, who must have run up quite a legal bill in attempting to make sense of US federal and state regulations on gaming.

He is quite forceful on the subject, just as he is when he gives frequent speeches railing against the OECD for being unfair in its tax haven crackdown.

"We do not ask to be treated more favourably," Sanders told the WTO panel on 26 January.

"We simply want the right to compete, nothing more. And more importantly, while the United States may want to make this a case about what it has called remote supply, what Antigua wants to compete in is the colossal United States domestic gambling market. And the only way we can compete is on a cross-border basis - something that the United States, in its GATS schedule of commitments, told us we could do."

While Bermuda decided, very wisely, to stay out of the lucrative online gaming sector during the years when everyone was trying to launch an Internet start-up company, Antigua embraced the industry, which for the country was also a smart move.

Bermuda's decision was wise because it already had a healthy financial sector, one that could have been harmed by an over extension of its regulatory system or any association with gambling. Antigua's decision was also a wise one, mainly because its offshore sector was not booming and was under attack by international organisations.

This time it decided to make the regulatory system tight through restrictions it placed on the sector.

At its peak in 1999 employment in the gaming industry in Antigua reached an estimated 3,000 persons and there were up to 119 licensed operators on the island.

The government estimated the gaming industry accounted for about ten percent of the country's gross domestic product in 1999, generating wages and salaries of US$12.9 million. Licensing fees to the government in 1999 brought in US$7.4 million in revenues. But by 2003, due to the US crackdown, the number of licensed operators had declined to 28.

The government estimates that current employment in the sector is under 500 and in the most recent fiscal period licensing fee revenue had declined to about US$1.8 million. Some of the decline was due to the increased regulatory standards. Probably the decrease was also due to the shakeout in the overhyped Internet sector, something that also occurred in Bermuda.

Unless the US suddenly sees the light, the sector will probably remain as is for Antigua. If the US allows online gaming, perhaps that will be the time for Bermuda to think about allowing online gaming companies to operate from the Island following Antigua's regulatory example.

Ironically, Jay Cohen, one of the founders of World Sports Exchange in Antigua, was released from a US federal prison on March 22 after serving an 18-month sentence.

He was charged in March, 1998 with violating the US Wire Act and was convicted in New York federal court in February, 2000.

A federal appeals court later upheld Cohen's conviction. Cohen, a US citizen, had returned to the US from his home in Antigua to challenge the US ban. A brave move but not a very wise one. The WTO documents are available at www.wto.org under the 'Disputes' section.