There seems to be some misinformation in the gambling watchdog industry regarding the island of Antigua. Some other sites seem to feel that Antigua is somehow responsible for many of the issues currently facing the industry and that it is not fit to be a representative for the future of online gaming. That viewpoint is both inaccurate and short sighted. It would seem that the negativity in those articles is the result of a gambling operation which had set up in Antigua and abruptly closed shop. But instead of directing their anger towards the real culprits, i.e. the owners of said site and the government of the United States, the site's operator instead decided to point the blame at the place which issued the license. In this article I hope to show that since 2003, Antigua has not only become a great country to conduct business in, but has become the clear jurisdiction to represent the future of online gambling in the Western Hemisphere.
In 1994, the small island of Antigua and Barbuda decided to diversify its economy by setting up a free trade processing zone allowing services to operate tax free provided it met certain requirements. While gambling was not specified initially in the FTZ Act, it was always the expectation that betting services would be the primary industry which would take advantage of the tax free status. In return for the right to operate from the island of Antigua and sell its services worldwide, the companies setting up shop there paid a fairly large licensing fee. The fee was much higher than other jurisdictions which were offering similar services, but it was the belief of the Antiguan government that the size of the fee would keep away many of the shady operators. In return, sites were issued a seal that showed they were officially licensed by the island of Antigua which gave bettors confidence in the operations they were placing bets with. The idea proved to be a great success, and by 1999 there were 119 sites operating from Antigua, employing 3,000 people (almost 5% of the population) and raising over $7 million for the government coffers.
However, while the country tried to be proactive with regulatory requirements in various areas including money laundering, they were not up to the standards of the United States and United Kingdom who consequently issued warnings to financial institutions located in the U.S. and U.K. to avoid making transactions with Antiguan banks. As a result of that warning, Antigua toughened all its money laundering laws and also strengthened many other regulatory requirements involving fraud protection, underage gambling, responsible gambling, confidentiality, credit betting and also were more strict in who it allowed to set up an operation in the country. The regulations were strong enough that both the U.K. and United States lifted their warnings and a financial action task force (CFATF) set up from a G-7 summit meeting in Paris gave Antigua top marks for compliance with anti money laundering legislation.
While the regulations were a great benefit for the bettors and for all the legitimate operators on the island, they did indeed scare off many of the operators which may not have been ready to deal with all the new toughened requirements. In one of the most notable failures, Aladdin's Gold, owned by Eddie Hadeed, ceased operations in 2002 when the Antiguan government became suspicious of the company's activities. The director of offshore gambling in Antigua at the time issued the following statement:
Aladdin's Gold continues to be a source of significant concern for the Directorate of Offshore Gaming. Pursuant of our duties as a Regulatory Body, and mindful of the need to ensure the integrity of the jurisdiction and player protection, we have referred the conduct of this company to the Office of National Drug and Money Laundering Control Policy (ONDCP) for investigation. The ONDCP has obtained a warrant to search the premises of Aladdin's Gold and to seize records of transactions undertaken by the company.
Many bettors considered the failure of the company to be a black mark on the government of Antigua, but it actually demonstrated that Antigua was indeed serious about only licensing fit and proper establishments and that it was prepared to become a leader in the area of gambling regulation. Had the new requirements not come into play, more operators like Hadeed could have become the norm in the country.
Since that time Antigua has shown itself to be a prime example on how to run and regulate online gambling. In spite of the huge drop off in licensing following the new regulatory requirements, the country was determined to establish itself as the key to the future of online gambling and hired the law firm of Mendel-Blumenfeld LLP to represent them at the WTO dispute with the United States. Mark Mendel has shown himself to be not only a great spokesman and well versed in the area of online gambling, but he is also passionate about the issue and has demonstrated the wrongs that have been committed by the United States against Antigua. His summation to the WTO was brilliant, and he clearly showed the United States as the protectionist, hypocritical and egotistical country that it has been in the area of gambling. While many insiders would have argued that the country was throwing good money after bad by trying to take on the United States, Mendel and the Antiguan government were able to prove that smaller countries do indeed have rights, even against superpowers. When the WTO ruled against the United States in both the original ruling as well as the appeal, the country did not immediately try and determine how it could punish the United States for not living up to its obligations, but instead urged the United States to work with the country to come up with a solution which would be in the best interest of both countries. Unfortunately, the United States had no interest in negotiating. Even today, when there is much talk about Antigua dispensing with U.S. intellectual property rights as a method to punish the country, Mendel has stated that they would prefer to negotiate a solution rather than taking such drastic measures, even though such measures could be devastating to many United States corporations.
The WTO requested that neither country make any public announcements about the decision prior to the official papers being released in a confidential report, but the United States instead chose to ignore the WTO request and made a public announcement suggesting that the WTO was prepared to rule against them again, but that it was just a minor setback with regards to remote betting on horse racing. That breach propelled the Antiguan Minister of Finance Dr. Errol Cort to issue a complaint with the WTO that the United States was trying to undermine the ruling. Still, despite the constant efforts by the United States to make the WTO and the island of Antigua look bad in the eyes of the public, Antigua still wishes to work with the United States to reach a fair settlement in regards to the dispute.
The one "blemish" that has been attributed to the country of Antigua at other watchdog sites involved BetOnSports. The story of BetOnSports is well documented. The company was operating from Antigua, was listed on the UK AIM stock exchange and was always seen as a mainstay in the area of online gambling. In July of 2006, David Carruthers was arrested by the U.S. Department of Justice while landing in Dallas, and a series of events led to the eventual shutting down of the business and suspension of its stock. Consequently, bettors and creditors were left high and dry, although in November Antigua put a restraining order on all BetonSports assets still held in the country. Somehow, there is a feeling that Antigua did not act appropriately because the company shut down, but that of course is an inane argument. There can be no argument that BetonSports was a growing concern. The company was part of a $12 billion dollar industry and was listed on the UK stock exchange.
Antigua was correct to offer a license to the company and it is clearly not their fault that the company chose to shut down the way they did. If one wants to use the same logic, then the United States government should be blamed for allowing Enron to operate in the United States in the first place. Obviously a country can only issue licenses to operate based on what was known at the time of application. If the company later pulls out, the country can't be blamed for the company's decision. Heck Hershey's is pulling out of Smith's Falls Canada and moving to Mexico which will essentially shut down the small city. That decision isn't Canada's fault for allowing Hershey's to operate there in the first place. Clearly the anger here should be aimed at the United States who obviously overstepped their boundaries by arresting a non American citizen for operating legally in the country where they were located. And let's not forget, the main reason Carruthers was singled out was his outspoken attacks against the U.S. government and in particular his April 4th debate with Congressman Jim Leach where he illustrated that regulation was a better approach than the prohibitionist approach the U.S. government was pursuing. Nevertheless, on February 20th, the Antiguan government announced that it was working with BetonSports to have the debtors and creditors paid as best they could. Again, another thumbs up is owed to the country.
Lastly, to show that the country is indeed a leader in online regulation and is well respected in their efforts, the country is planning to work with the United Kingdom to help set up gambling regulations in the U.K. A communiqué released by the UK's Department of Culture, Media and Sport on January 29th, highlighted the fact that the country would be welcome to participate in an expert working group to advise on the scope for developing international minimum standards for regulating remote gambling. Clearly, if the regulatory format of Antigua was not up to snuff the U.K. wouldn't want them there. Instead it shows that the country indeed has much to offer.
So to sum up, Antigua has done everything right since 2003. The country is a model for online gambling regulation and the anger towards it with regards to the UIGEA seems to be misdirected. The WTO has clearly demonstrated they believe Antigua is in the right on the issue of online gambling and they seemed to have no objections to Antigua's regulatory model. As well, the European Union seems convinced that Antigua is right on the issue, and are consequently considering working with Antigua to enforce the WTO ruling. As for the closing of BetonSports, that was indeed a setback to the country and to the bettors, but put the blame for that debacle where it belongs: with Uncle Sam.