The WTO on Wednesday set up a panel to investigate whether U.S. restrictions on Internet gambling comply with international trade rules.
The Caribbean country of Antigua and Barbuda had asked for the World Trade Organization to set up the panel after consultations with the United States failed to yield a solution.
The dispute centers on whether Washington should drop prohibitions on Americans placing bets in online casinos. A previous WTO ruling said that some U.S. laws were in line with international commerce rules, but others were not.
"The United States has been busy passing legislation that is directly and unequivocally contrary to the ruling," Antigua told a meeting of the WTO's dispute settlement body.
"Antigua and Barbuda considers that the United States has taken no measures to comply with the recommendations and rulings of the DSB (Dispute Settlement Body)," Antigua said.
The United States contends that Internet gambling should be prohibited because it violates some U.S. state laws, and told the WTO's dispute settlement body in April that it believed its laws were in line with trade rules.
Antigua says the offshore industry is a lucrative source of revenue and provides an income for hundreds of islanders. The prohibitions, it says, are hurting the two-island country's efforts to diversify its economy away from tourism.
In particular, Antigua cites three federal U.S. laws that effectively prohibited their companies from providing gambling services to consumers in the United States: the Wire Act, the Travel Act and the Illegal Gaming Business Act.
The panel will report on U.S. compliance within 90 days. That decision can then be appealed by either side.
Antigua, a former British colony, filed the case before the WTO in 2003, contending that U.S. restrictions on Internet gambling violated trade commitments the United States made as a member of the 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.