However, the WTO has yet to give its final verdict on the case and the US has the option to appeal against the ruling. Online poker and other ''games of luck'' have proved popular in the US, which is described as a very profitable market for such gaming.

The twin-island Caribbean states Antigua and Barbuda, where a number of online gambling firms are based, had filed an objection against US laws against online gaming before the WTO

Describing the US laws as "discriminatory trade practices" Antigua''s finance minister Errol Cort welcomed the latest WTO ruling saying that it vindicated his country''s stand.

The new ruling is the latest twist in a long-standing dispute, with the WTO having ruled in favour of the US in 2005 against Antigua and Barbuda. The WTO had then said that the US had a right to prevent offshore betting as a means to protect public order and public morals.

The US has increasingly come down on overseas-based gambling websites to prevent them from targeting US citizens. In October 2006 it bought in a law that made it illegal for banks and credit card companies to settle payments to online gambling websites.

It has even arrested two owners of internet gambling sites who were travelling through the US, one of whom, former CEO of BetOnSportsis still under house arrest in St Louis. Though the US maintains that it is only interested in limiting gambling, overseas gamin firms claim that the US move is is aimed at removing foreign competition.

Any final ruling against the US would allow Antigua and Barbuda to seek trade sanctions against America.