updated 11/10/2004 12:11:45 PM ET 2004-11-10T17:11:45

In a ruling that could open the United States to offshore Internet gambling, a World Trade Organization panel Wednesday said Washington should drop prohibitions on Americans placing bets in online casinos.

In its final 287-page report, the WTO panel confirmed the preliminary ruling it issued in March in a dispute pitting the United States against the tiny Caribbean nation of Antigua and Barbuda, saying the ban represented an unfair trade barrier.

U.S. diplomats in Geneva said they would contest the ruling before the WTO's seven-member appeals body.

Antigua filed a case before the WTO last year. It contended that U.S. restrictions on Internet gambling violated trade commitments the United States has made as a member of the 148-nation WTO.

U.S. trade officials disagreed, saying that negotiators involved in the Uruguay Round of global trade talks, which created the WTO in 1995, clearly intended to exclude gambling.

Antiguan authorities also had argued that restrictions that barred U.S. residents from betting at offshore casinos were harming the country's efforts to diversify its economy. Antigua has been promoting electronic commerce as away to end the twin-island nation's reliance on tourism, a sector hurt by a series of hurricanes in the late 1990s.

Antiguan officials estimate that online casinos employ some 3,000 of the 67,000 residents of Antigua.

The current legal status of Internet gambling in the United States is in dispute. Some site operators have been prosecuted under the 1961 Wire Communications Act, which was written to cover sports betting by telephone.

The General Accounting Office has estimated there are 1,800 Internet gambling operations. Virtually all of them are based outside of the United States, posing an enforcement problem for U.S. authorities.

Washington has 60 days to file an appeal to the WTO's trade judges, who then must issue a final ruling within three months.

Copyright 2004 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.

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